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Re-evaluate Your Take-Home Pay

Wed 4th Jul 2018

You’ve worked hard all month, you’re busy building a business, you have contracts lined up but are you taking home the pay that you expected to at the end of it all?

Evaluate your situation

Taking a step back to re-evaluate your situation is always a good idea, especially when you own a business. Learning more about your incomings and your outgoings will give you better understanding of how your business runs and what you should be expecting at the end of the month.

Benefits of being a contractor

One of the benefits and most important aspects of being a contractor or freelancer is the work-life balance and flexibility available to you as you decide on your independence and working pattern.
Another one of the benefits you should enjoy as a contractor or freelancer is the opportunity to claim legitimate business expenses and costs. Have you factored these into your calculations?
Take home pay is important because as a contractor you are not guaranteed the regular income and stability as you would in standard employment and knowing what to expect in order to plan your finances is necessary.

Consider using an umbrella company

If you’re a contractor using an umbrella company, it can be a good idea to have regular contact with them to know that you’re doing everything needed to keep your taxes down and running your finances as should be. Using an umbrella company will mean that you become in affect, an employer of the umbrella company and you will receive a regular wage as you would in an employed position. This can have its benefits for contractors who are just starting out and are looking for minimal distraction from paperwork and the hassle of payroll. You still have the flexibility of moving from contract to contract and working in the way that you want your business to go in. And the plus side is that you’re entitled to holiday pay when you decide to take a break!
This really can be a good option if you’re unsure that your take home pay is making sense and you feel that you may be paying out more than you should be. Having the guidance of professionals behind you can be the net that you looking for.

Evaluate your goals

Wherever you decide you want your contracts to take you this year, it’s always good to have a plan and a purpose behind what you do. Re-evaluate where you are now and what you want to achieve. Is what you did last year what you want to achieve this year or is there more to be achieved? Plan where you want to go, establish what income you need to be earning in order to be comfortable and how your flexible work-life balance comes into that.
There’s still a struggle with savings for many self-employed contractors who simply do not have the spare funds available to save. According to a recent LV= survey, out off the 9,000 self-employed workers surveyed, 41% admitted that they can’t afford to save money each month, with 11% saving less than £50. Lack of protection seemed to be a recurring theme amongst the respondents, with only 11% having some form of income protection.
Knowing and understanding what your take home pay will be and ensuring a good quality of living is important for anyone. Always stop and re-evaluate, never take anything for granted and take an invested interest in what your incoming and outgoing funds are to give you a better position each month.

If you’re a contractor or freelancer and struggle to understand how your finances are worked out or perhaps are unsure on the accounting side of your business, we’d love you to speak with our qualified and professional advisers regarding how we can help you build a better future for your business. Get in touch today to find out more.
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