If you are a freelancer shopping around for an umbrella company, there are a few things to look for in a firm. Some companies advertise with misleading statements and claims, so it’s best to get all the facts and know what you’re looking for.

While many companies will advertise that they are IR35 compliant, in reality, all umbrella companies are. With changes in the laws over the years, the only remaining option is to be paid by PAYE, making compliance irrelevant. One sign that a company is not trustworthy is if they claim that you can submit expenses without receipts. That may be true, but the HMRC will likely investigate the company eventually, and you will be held accountable for any expenses you cannot prove.

Pay particularly close attention to the company’s fee structure. Most charge a flat rate for the services they provide, but some charge a percentage of your wages. This can be bad, especially if you make good wages. The more you make, the more they will charge you, so look out for this type of plan. Also, check to make sure they charge no entrance or exit fees, or a penalty for early termination of your contract.

A good question to ask a perspective umbrella company is how quickly they pay. Some companies take too long to send invoices and release payment. This will leave you waiting to get paid. Also, see if they hold money out for things like holiday pay. This may be something you want, but if it isn’t, it’s best to know upfront.

Make sure they have good customer service. It’s great that they have a quick online system, but how do they do when you need to talk to a live person for assistance? If you call with a problem, how long will it take them to get you the help you need? Find out if you will have to deal with whoever answers the phone or if you will have a designated manager for your business.

A good umbrella company should be able to provide you with testimonials from clients and good references. Another useful tool is to ask around for referrals from fellow freelancers and friends. Word of mouth is usually a good indicator of a company’s reputation, and friends and colleagues will be able to tell you which companies are good, and which ones to avoid. As long as you know what you want in an umbrella company and can ask the important questions, finding the right one will be easy.

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A complete set of records and books must be kept by every business, new and old. The problem is for most business owners this process can be time consuming and difficult to understand, making it hard for them to keep these records themselves. As a business grows owners need to make the decision of where their time should be best spent, often the choice made is not to spend that time bookkeeping. For these reasons there are a number of benefits to outsourcing your bookkeeping needs as a business. The main benefit is the simple fact that you will now be able to focus on other things, such as liaising with clients, handling your human resources and marketing your business along with plenty of other important aspects to running a business. Along with these benefits you will also be safe in the knowledge your books are being kept to a high standard and you will be passed on any important information regarding your accounts by those professionals.

However there are also reasons supporting the argument for a business owner covering their own bookkeeping. One thing every business owner should consider is the massive benefit to understanding the intricacies of their business finances. If a business owner knows how to handle their own bookkeeping they will have a deeper understanding of not only their finances but their business as a whole. They will also be able to use this information to influence the quality of their business decisions in the future. Many will argue that learning how to keep financial accounts yourself is far better than allowing a professional to do it for you. The reason for this may be that there is a greater risk of error if a business owner does not know or understand the process of bookkeeping and where the numbers originate from.

There are two factors that come into play when it comes to deciding on your bookkeeping options. These are how much time you have to spare, and how much money you want to spend. When it really comes down to it the more cost effective choice would be to hire a bookkeeper, although there are many benefits to doing the bookkeeping yourself, such as the amount of time you save which can be applied in other areas of your business, and the potential penalties and fines you will avoid thanks to professional bookkeeping, make it a great choice. If however you decide to take on the bookkeeping yourself after all you will want to have help from a professional at the start as you learn, and continue to seek advice every now and then so you can stay updated on any important changes to regulations you will need to know.

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You should look into hiring a tax accountant if any of the following points apply to you…

You lack knowledge of tax law basics – If you want to work on your own tax returns, you have to know about expense limits, depreciation schedules, and payroll taxes. In the event that you do not understand any of those terms, it is necessary to read up on them, as they are all part and parcel of a standard tax return. Tax professionals are there to help you understand exactly how to work through the many tax laws that businesses have to abide by, including the intricacies of mid-quarter conventions and the like. There are always by-laws you will forget or not know about, and breaking them through ignorance could result in a fine

You are not willing to keep up to date with tax law advances and changes – Though you might have some knowledge of tax law from previous years, that does not equate to an adequate knowledge of current tax laws. They change every year, with new rulings put forth by Congress and the IRS, as well as new judgments. While your newspaper could keep you apprised of some new rules, they will not cover everything, so you have to keep on your toes, or hire a professional tax accountant to help you through the process.

Your free time is limited – Though you might have gotten the latest tax software on your side, you might not know all that much about it, and it will take days or weeks at a time to really determine how to figure all of this out. You might even think you have it all figured out, but you miss a vital figure that will spell doom for your tax return. Professional tax accountants can take out all of this guesswork and work with you, getting your return done in as little as a half hour to an hour, given the right preparation.

You need tax advice throughout the year – What kind of IRA should you be getting, from deductible to Roth? How are your investments doing, and are they were they should be? Would it be a good idea for you to pay off your mortgage? Are there adjustments that you need to make to your federal and state income tax withholding? While you can try to consult all manner of tax guides to learn these answers, you might have a different situation than they describe, which is why a professional tax accountant will be able to fit these rules to your circumstances.

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When considering your financial affairs a main aim is to reduce the amount you pay in taxes. There are two ways in which to do this, firstly you can reduce your income and secondly you can increase your deductions.

Reducing Income – You’ve seen the line on your tax return marked AGI (adjusted gross income). This is essentially the amount of income you pay taxes on. It’s your yearly income in total minus the adjustments you claim. The more money you make, the higher your adjusted gross income. The higher your adjusted gross income, the more money you are expected to pay in taxes. The flip side of that coin is that the less income you earn, the fewer taxes you pay. If you want to reduce your income, you can do this by contributing to your employee retirement plan. Money you funnel into your retirement fund lowers your income, which means you owe less taxes. Another way to lower your AGI is by making adjustments to your income. Adjustments in terms of taxes means things like contributions to an IRA, alimony, classroom expenses, or interest paid on a student loan. If you’re interested in a complete list, visit the IRA’s website.

Increase Your Tax Deductions – Your AGI is further reduced by deductions and exemptions and this total is your taxable income. Typically, you are eligible for the standard deduction. But many people could itemize their deductions. The standard deduction and personal exemption relies upon filing status and number of dependents. If you marry or have more children, you raise your standard deduction and personal exemptions. If you want to itemize your deductions, you can count things like your state and local taxes, property taxes, gifts to charity, health care costs, tax prep fees, expenses incurred from investments, interest paid on your mortgage, and expenses for your job. There are other deductions you can take. Again, check the IRS website for a complete list. If you’re not sure which way to go, calculate your itemized deductions and compare the total to what you could write off if you took the standard deductions.

Along with these methods for saving on income tax, you will find there are a number of lesser known techniques. These techniques will depend upon which country you reside and when added together can really give you some serious savings. There are a number of tax credits you can use to your benefit along with investment funds, a thorough search online will enlighten you to those methods available to you in your country. However it is worth noting that these methods can be rather confusing and therefore it is advised if you want to take advantage of them you should hire somebody who specializes in tax to do it for you.

You may wish for a tax free income, this however is impossible and likely always will be. Although if you do your research and hire the correct people you can certainly take a surprisingly large chunk out of the money you currently pay in tax. Meeting with a tax specialist will likely be a great investment and get you on track to saving money each year for the rest of your days.

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