Administration Support

As freelancers, your skills lie in the profession, discipline and industry in which you provide your services. You are in effect a small business whether you are incorporated or not. All businesses have support functions that run in parallel to the services that are charged out to clients, you are no different. The decision as to what support service you need depends upon your trading model but in most cases you will need accountancy, insurances and financial services. The overriding decision is a simple financial one. Assume your charge out rate is £500 per day and you have to undertake the support activities listed below, this will cost you £12,000 (see table below). If you can buy these for less and have them delivered professionally, you have the opportunity to either work more days or get leisure time back. In addition you are more than likely to benefit from expert tax optimisation and so you, like 95% of all freelancers, should give careful consideration to outsourcing these activities. Apply the same business logic to your business as your clients do when they engage you, hire a professional.

Administration Active Annual Loss of Earnings (£500 per day) Typical Annual Out Sourced Cost
Set up trading model 5 days on off £2,500 £250
Invoice, bookkeeping 1 day a month £6,000 £1,500
Allowance for fines and penalties £1,000 £0 **
Annual tax & company document submission 4 days per year £2,000 £0 *
PAYE/VAT audit allowance 4 days every 4 years on average = 1 day per year £500 £0 *
Annual Total £12,000 £1,750

*Normally included in annual fee
**No fines as this is the responsibility of the professional you hire

Administration Support Services

The following provides an outline of the activities normally performed by a provider of accountancy services.  Within the UK great care must be taken regarding the appointment of an accountant provider as under MSC and IR35, you could lose all benefits to incorporation tax breaks if you or your provider fails to comply with this legislation.

Administration Activity Administration Activity Administration Activity
Start up Taxation Advise on appropriate Trading Model
Personal tax returns completed Company incorporation or self-employment registration Mortgage reference letters
Provide registered office address VAT registration Opening Freelancer Bank Account
VAT returns Company Secretary Registration of flat VAT rate scheme if appropriate VAT returns
National Insurance Contributions calculations, deductions and payments PAYE registration PAYE returns
Timesheet processing Expense processing Expense allowances advice
Calculation, deduction and payment of corporation tax Credit control – i.e. chasing clients when payment is late National Statistics Compliance Weekly/monthly income statements
Financial and taxation projections upon your request Mail sent first class Accounting
Contracts Legislation Compliance Review (IR35,MSC,s660,CIS) Annual Return Completion
Employee Contract Review Company statutory books Standard End User IR35 Contract Supply
Dividend Vouchers Standard Employee Contract Supply End of year accounts preparation, checking and submission
Employment Handbook Company closure P35s
Contract Risk Assessment advice Contract Administration (posting to client, query liaison etc) International taxation
Insurance Access to international division with competencies Contract Risk Assessment advice
Research undertaken on foreign taxation with information currently available on Ireland, Spain, France, Kazakhstan, Denmark and Germany etc Employers and Public Liability Insurance Advice on working overseas and obtaining non-residency status in the UK
Assistance with International Bank Accounts and Company Formation Professional Indemnity Insurance Directors Indemnity
General Loss of Driver's Licence Insurance Death in Service Personal tax advice
Key Man Insurance Wealth Management Analyse review on retention of funds within the company
continuous income monitoring (tax limit review) Director Loan analysis and advise Recommendation of FSA Financial Planners