Money management tips for contractors

Thursday 14th November, 2013
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Working for yourself as a contractor brings with it a lot of responsibility. Working as a contractor means that you have to stay on top of your own workload, generate your own income and keep yourself on the right side of the taxman. As we reach the end of the year, many contractors are wrestling with whether to stop earning and take time off over Christmas. Whether you decide to do so or maximise your income in the winter months, here are some tips for managing your finances.

Manage your time

Time is money for freelancers, and you need to make sure you don't sell yourself short. Keep a strict record of how long you spend on each of your assignments and make sure you get paid for every hour you work. Equally, if you're being paid for a set number of hours, limit yourself to that. Apps like Harvest and mobile contractor can be very helpful - minimising the amount of time you waste will boost your capacity to earn.

Stay on top of invoices

Once you've calculated exactly what you should be paid, make sure you get it. Waiting for payments can play havoc with your cash flow and that's rarely something you can afford. To avoid this, make sure you send invoices promptly. You must then try and agree payment dates in advance, ensuring you chase them up if they're late.

Don't ignore the taxman

Self-Assessment is never going to be a highlight of self-employment, but however your taxes are calculated you need to stay on top of them. The best way to make sure you're always compliant is to hire a credible contractor accountant. Not only will they help you avoid the taxman's wrath, but they give you peace of mind in knowing that your tax return is completed on time. It also helps to avoids any nasty penalties or unpaid taxes further down the line.

Weave a safety blanket

For all of its advantages, working as a contractor does come with a level of uncertainty. If there's a family emergency, you become ill or just want to take some time out, you'll be glad of having enough funds to cover a couple of months living expenses. Our advice is to put away a bit of money each month for that rainy day! Having a financial reserve will provide you with an added peace of mind, if your personal circumstances were to changes overnight.



Self-Assessment is never going to be a highlight of self-employment, but however your taxes are calculated you need to stay on top of them. The best way to make sure you're always compliant is to hire a credible contractor accountant.