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Expenses for limited company contractors who are new to the world of self employment can appear challenging; what can you claim for, how should you manage your receipts?
As a permanent employee, claiming expenses is typically a fairly simple process. You might pay for things like travel to a client, taxis, or buying software with your company credit card, or use your own money (depending on the set up) and then claim it back.
Most large companies have expense policies, so you know what you can and can’t claim for. You send in copies of all your receipts, and if you’re personally out of pocket, there are usually some well-oiled procedures to make sure you’re reimbursed in full.
As a contractor the process is similar. You just need to be more aware of what you can legitimately claim for, and spend a little time keeping on top of your expense paperwork.
Most contractors have relatively simple accounting needs, with perhaps half a dozen expenses to record each month. Several are recurring expenses such as accountancy fees and subscriptions, and there are usually a few extra ones (such as software purchases, or replenishing the stationery cupboard).
You will likely only spend a few hours every few months to keep your records and spreadsheets updated.
The key thing is to get hold of a good, specialist accountant. They will take on most of the burden for you – or at least point you in the right direction when you’re wondering if you can claim for a Christmas meal.
We discuss the most popular queries surrounding claiming expenses below:
The critical thing to remember is that you’ll be taxed on anything which HMRC states are a personal benefit.
If you’re a limited company contractor, you’ll almost certainly take an annual salary.
There are quite a few costs which are business expenses, which are all tax-deductible, and pretty straightforward. Your accountant’s monthly fee and other professional costs (such as legal costs for your company) are typical examples.
Always speak to your accountant if you are unsure whether you should or shouldn’t claim something against your company.
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Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.