One thing you probably didn’t know about Twitter: 42% of users are aged between 30 and 49. Not only that, they are likely to be educated professionals.

So, even if you’re not a fan of Lady Gaga, you should almost certainly be using Twitter as part of your marketing strategy.

Twitter is a microblogging site where users broadcast their status in 140 characters. However unlikely it sounds, Twitter has transformed the way businesses communicate and is part of a larger revolution where communication has become a two-way stream and user-generated content is king.

Twitter can be used to build awareness of a brand or business, it can be used to generate sales leads, and it can be used to retain customers.

It is also crammed full of jargon such as retweets, at mentions and hashtags. Don’t let that put you off though, once you get the hang of it, it can even be fun!

To help you make the most of it, here are some tips:

1. Decide what you want out of it – set some objectives
2. Commit and use it regularly
3. Be yourself – twitter users can sniff out a fake!
4. Don’t sell or shout
5. Engage – have conversations
6. Add value – provide useful information
7. Mind your manners – always say thank you
8. Help people
9. Add some personality
10. Measure the results – are you meeting your objectives?

You’d have to be a hermit to have avoided the news about Rangers Football Club going into administration this week. It’s been all over the news, with wall to wall coverage on social media channels and the printed media.

Putting aside the emotion that football generates, and I’m writing this as a St Johnstone supporter, what are the lessons that can be learned from this debacle?

First of all, for the contractor community, there’s a very direct link. For several years now we’ve seen some accountancy providers pushing offshore EBT schemes, “guaranteeing” that they will enable contractors to take home upwards of 80% of their income. This is substantially more than would be taken home even using the most tax efficient, legal, structures in the UK. Understandably perhaps, a number of contractors have gone down this route.

However, HMRC have challenged Rangers’ use of offshore EBT’s to pay players & staff, believing this to constitute tax aviodance. HMRC have gone back over a decade and levied a claim of some £49m. By the time penalties are added Rangers are looking at a claim of around £75m, and that’s before legal costs!

For an oil & gas contractor earning the industry average day rate of £540, and operating under an EBT, an HMRC claim for tax avoidance, over a ten year period, would amount to almost £150,000. Add penalties at the same rate as Rangers and you’d be looking at £225,000.

You wouldn’t be insured for this, so you’d have to foot the legal bills yourself. Lose the case and you’ll end up on the tax payers Blacklist. So as well as losing your home and most, if not all of your assets, you’d never get credit again, assuming you can work your way out of this hole.

Worth the risk?

The other interesting angle in Rangers’ demise is that the reason they went into administration this week wasn’t the EBT case, although it would have led them there anyway (it’s going through the Tax Tribunal at the moment), it was due to some £9m of unpaid taxes since new owner Craig Whyte took over last May. The £9m is made up of VAT, PAYE tax & National Insurance Rangers have deducted from their staff but not paid over to HMRC.

I’ve seen a few SME businesses go down this route over the years, and in these recessionary times when bank funding is difficult to get your hands on, I would expect more to follow. But as HMRC have shown here, it won’t be tolerated and you’ll be in court facing a winding up order before you can say Super Ally!

Our advice is that as soon as you think you may have cash flow problems, speak to your accountant. We’re trained in how to deal with these situations and can guide you through the maze. It was no surprise to hear that Rangers had been working with Administrators Duff & Phelps for several months as they trying to work their way out of the mess.

So, plenty lessons for all to take on board. I’m just hoping that with their ten point deduction we can overhaul them and get the mighty Perth St Johnstone into the Champions League next year!

Why is maintaining a good relationship important?

If a friend calls you for a chat or keeps asking you to meet them for a coffee and you continuously fail to meet up or answer your phone, you’re not going to get the best out of your relationship with them. Eventually, they’ll feel you’re not making an effort and will stop trying. The same can be said about your accountant; if your accountant is asking you for information about your records or has queries about your business and/or financial transactions and you take a long time  to answer these (or even ignore the requests!), you can’t possibly expect to get the best service they can offer.

A relationship is a two way process, and both you and your accountant should put in the effort to maintain it. If you are not in regular communication with your accountant at least once a month, you should consider switching as they are not making the effort you deserve. On the flip side, if your accountant has tried numerous times to contact you, with no reply, or is not getting answers to their queries, then I wouldn’t expect them to keep trying; they would rather focus on clients who they feel they can add value to. After all, if you tried to contact your accountant to no avail then you wouldn’t be keen to continue with them either.

What should you expect from your accountant nowadays:

It used to be the case (and actually still is for the majority of traditional accountancy firms) that your typical accountant would speak to you a handful of times a year to request your financial information and then prepare your accounts/tax returns and charge you a hefty fee without adding any real value to your business. You would pay to meet your accountant, and would usually clock watch, knowing that each minute would cost you. You would also be charged for any time they spent on the phone or emailing you (similar to an architect or lawyer).

At Freelance World, we think your accountant should be much more than a number cruncher or simply someone who minimises your tax liability. Don’t settle for a poor service. Your accountant should be:

• Understanding – The accountant should understand your business, how it works and your vision for the future.
• Flexible – available to meet at different times – including out of hours.
• Pro-active – taking an active interest in your business and offering you advice.
• Contactable – Through different communication channels such as Skype, Twitter, Facebook etc.
• Plain talking – there’s no point in paying someone to help with your business if they speak to you in a language that you can’t understand (namely Accountancy Jargon).
• Enabling – Able to help you grow your business, advise on financing, asset investment and business strategy.

What your accountant expects from you:

• Keeping good records – I wrote about this in a previous blog post. If you keep bad records, it is going to take your accountant more time to work through them, and therefore cost you more.
• Timely answers to queries – If your accountant sends you a list of queries or a request for information and you are not in regular communication (or indeed neglect to send it altogether) then don’t expect your accountant to stick around. The service they offer is only as good as the information they are given.
• Honesty – Be completely honest with regard to your transactions and your level of knowledge. If you don’t understand something then NEVER be afraid to ask. Your accountant (if they are good) should be willing to explain anything without jargon to ensure you understand it.

As with any relationship in life, it requires that both parties work together. Make sure your accountant is working for you –  and you’re providing work for them…

…and you will be a match made in heaven!

First of all, E&Y stressed that MSC had not gone away, and although there have been very few cases under the legislation, HMRC are still keeping an eye on the sector. For the moment their focus is on the umbrella sector. However, contractors should ensure that they are compliant – something that all Freelance World clients can take comfort from due to the work we have done with KPMG and E&Y over the years.

There is also a very strong rumour that HMRC is planning to abolish the Flat Rate Vat Scheme, which most of our contractor clients benefit from. E&Y believe that they will not be able to do this due to some obscure law, however if that is the case then E&Y suspect HMRC will simply adjust the FRVS percentages to remove the profit opportunity.

Finally, E&Y spoke about offshore schemes. We’ve seen a couple of accountants hawking these around Aberdeen recently – they typically promise that you’ll be able to keep up to 82% of your income via these complex arrangements. HMRC are increasing their activity in this area, and unless you are genuinely a non-UK resident then expect to hear from HMRC if you’re using one of these schemes. With heavy fines & penalties being applied, the old adage that if it looks to good to be true, it usually is, seems apt here.

Non-payment for work for many of these self employed people can mean no food on the table, and a disheartening feeling that they have slogged their guts out for, literally, nothing in return. Not to mention that, with the current economic climate, businesses can go bust due to lack of payment from debtors.

Would these same customers go for a delicious meal at a top restaurant but then scoot away without paying – goodness me! No! That is against the law! Then why, you ask, is not paying for services or products created for these clients any different?

Often freelancers want to know what their rights are in this situation, and it usually boils down to a legally binding contract. Without both you and your client signing a contract, there is nothing to stop them not bothering to pay you – as frustrating as that is.

Our in-house Compliance Advisor, Nosheen Bashir, MBA, knows the importance of a compliant contract, being in charge of administering contract reviews for our clients, and states the following:

‘The importance of having a contract in place between all entities within the contractual chain protects you and the relationship with your clients.  More important is to ensure that as freelancers you are paid!  A recent study by the Freelance Union found that 40% of freelancers polled went unpaid when their clients refused to pay them fully for work performed. See full study here.

A written contract sets out the framework for a contractor’s working arrangements and defines the terms of your relationship.  It provides legal protection and, where there are disputes, for example with regard to non-payment of services, a written contract will expedite matters, as the agreement would normally clearly set out what the client’s obligations are.

Not having a contract in place could severely delay any disputes being settled and it is much more likely that a contractor would need the professional services of a solicitor in order to settle such disputes.

In terms of IR35 legislation (relevant for Contractors) it would make it very difficult for the contractor to assess their level of risk with the absence of a written contract and business operations will be more intensely inspected by HMRC and is less likely to go in your favour.’

Thanks Nosheen J. As a side note, it’s a good idea to have clauses in the contract to ensure that either half money is paid before work begins or that there is a clause to ensure that if money is not paid work will not begin/continue.

So, where on earth do you get this legally binding contract to use –well, we highly recommend discussing this with a lawyer who specialises in contracts.  It might sound expensive – but one meeting with a lawyer could provide you with a contract that lasts you for years – and saves you large amount of money in unpaid work. If you already have contracts in place, and the client still refuses to honour them, think nothing of phoning, emailing and writing numerous times to this client and even visiting them in person to ensure that you obtain payment. Ensure that you have given them definitive deadline dates for payments, so that you are acting reasonably and fairly.

I hope not to offend you with a swear word – but it is a truly emotive topic that people are passionate about – and I think this smart video by American Designer, Mike Monteiro, of Mule Design Studio (muledesign.com) really tackles the issue of non payment for services, specifically for the Design Professional. Click here to watch the video: ‘F*ck You, Pay me’ – the morals of the story are ‘don’t leave money on the table’ and ‘know your rights’.

To finish here’s a guide from FreelancerFolder on 5 reasons a Freelancer should have a contract:

http://freelancefolder.com/do-you-need-a-contract-for-freelance-work/

You pay National Insurance contributions, whether you’re an employee or self-employed, you’re aged 16 or over and you earn more than a certain level, in order to build up your entitlement to certain state benefits, including the State Pension. The contributions paid, depend on how much you earn and whether you’re employed or self-employed. You stop paying National Insurance contributions when you reach State Pension age.

If you are self-employed, you stop paying Class 2 contributions as soon as you reach State Pension age, and Class 4 contributions from the start of the tax year after the one in which you reach State Pension age.

State Pension age is 65 for men born before 6 April 1959 and 60 for women born before 6 April 1950. But it will gradually increase to 65 for women between 2010 and 2020.

State benefits dependant on National Insurance contributions

Your entitlement to certain state benefits and the amount you can get depends on your National Insurance contributions record. (In some cases it depends on your spouse or civil partner’s contributions.) These benefits include:

• State Pension
• contribution-based Jobseeker’s Allowance
• Bereavement Allowance
• contribution-based Employment and Support Allowance

How much you pay

The amount and type of National Insurance contributions you pay depend on whether you’re employed or self-employed and how much you earn. The rates shown below are for the 2011-12 tax year.

If you’re employed

If you’re employed you pay Class 1 National Insurance contributions. The rates are:

• if you earn more than £139 a week and up to £817 a week, you pay 12 per cent of the amount you earn between £139 and £817
• if you earn more than £817 a week, you also pay 2 per cent of all your earnings over £817

You pay a lower rate if you’re a member of your employer’s contracted-out pension scheme.

Your contributions are deducted from your wages by your employer

If you’re self-employed

If you’re self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

• Class 2 National Insurance contributions are paid at a flat rate of £2.50 a week
• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits – 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount

If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions.

From April 2011, your Class 2 National Insurance contributions payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.

Contribution classes

National insurance contributions (NICs) fall into a number of classes. Class 1, 2 and 3 NICs paid are credited to an individual’s NI account, which determines eligibility for certain benefits – including the state pension. Class 1A, 1B and 4 NIC do not count towards benefit entitlements but must still be paid if due.

If so, you might appreciate these words of advice from the Dollymix crew, all of whom have worked freelance at some point or another in their careers. I’m sure we don’t need to remind you that you’ll have to pay a fine if you’re late in submitting your return and payment, but if you want to scare yourself into action you might want to familiarise yourself with what those penalties are.

So, what can you do to ease the pain?

1. Get an accountant. Getting an accountant almost always makes financial sense when filing a tax return. Unless the total amount you expect to pay is around £500 or less (or if you just particularly enjoy paperwork – I’m not kidding, these people do exist) then you’ve got absolutely nothing to lose by getting an accountant. In actual fact you’ll pay about £200, but it will almost certainly be worth your while to appoint a qualified professional to do the sums for you. Many people also find it helpful to have someone giving that much needed kick up the backside and to prompt them to dig out and pass on all the necessary paperwork: accountants are generally quite well versed at this!

The best tax accountant get their gigs through word-of-mouth, so speak to other freelancers and get personal recommendations to find the best person for the job. There’s no need to look locally: all correspondence can be done over the phone or online. If, however, you can’t bear the idea of someone going through your paperwork (even though they’ve seen it all) or you’re reading this on 29 January and you really have left it too late to call one in, read on…

2. Get online

Filing your tax return online is the best way to do it, and very few people actually choose to submit paper returns nowadays. As well as the ease of being able to correct mistakes at the click of a mouse, HMRC’s online service does the calculation for you, removing that niggling worry that you might have got your sums catastrophically wrong. It’s also too late to file a paper return at this time of year, since the deadline is 31st October.

Other online services you’ll want to have running smoothly when you come to file your return include your online banking services (not just for your current account but any savings, pensions, etc) and also your utilities. You’ll want to be able to refer to these if you have a home office, so you can see how much you spend on gas bills, lighting etc so you or your accountant can figure out how much of these figures to expense. If you’ve saved your bills in one place you’re already ready to go, but having them online makes life much easier.

3. Watch out for the ‘hidden’ paperwork

As well as the obvious financial records like receipts, bank statements and other paper trails, you may need paperwork relating to previous or current employment: this is particularly important if you’ve changed jobs recently, work part-time or have gone from employed to self-employed within the last tax year. Make sure you can contact your previous employer if so, and can request forms such asP45s or P60s, which the tax office will want to see. These can be generated by HMRC if necessary, but it’s much better to have them in hand.

Ready to go? Here are some useful numbers, websites and other resources to keep close by while you file your return.

At-a-glance tax guide

Tax Year: Self-assessment is now due for the tax year April 2010 – April 2011

HMRC self assessment helpline number: 0845 900 0444

Deadline for paper tax return submission: 31 Oct

Deadline for online tax return submission: 31 Jan

Self Assessment Online at HMRC

HMRC login page

We’d like to take a moment to thank Abi Silvester, from DollyMix.tv for providing us with this post, which you can read in its original context here, on their website, alternatively, you can copy and paste this link into your browser: http://www.dollymix.tv/2012/01/how_to_file_your_tax_return_pa.html

1. Set yourself some goals. It’s a cliché, but if you don’t know where you’re going, how will you know how to get there? The new year is a great time to reflect and set yourself some new targets or objectives. Twitter & LinkedIn have been full of people talking about theirs over the past two weeks!
2. Diet time! Get your business lean & mean for the year ahead – what fat can you cut out? What are you spending money on that you could get cheaper elsewhere?
3. Are you on Social Media? If not, why not?!? It doesn’t have to be Facebook or twitter – what about LinkedIn? If you’re a contractor, then there is no better way to get your profile out there than a good LinkedIn presence.
4. But get on Twitter too! You’ll be amazed what you can use it for. Think of it as the virtual pub – you need a plumber in Kemnay? Just get on twitter and ask. You’ll be blown away how quickly you find someone that will come recommended. Much better than just Googling, or using the Yellow Pages (does anyone still do that?).
5. Review your business relationships. What’s working & what’s not? How can you further leverage the good ones, and what do you need to do to make the others work? Or do you need to change them?
6. What will your funding requirements be for the year ahead? Are you planning to grow your business? If so, will you be able to finance it yourself, or will you need to raise money? Given the current banking climate, you may need to be creative!
7. Consider Crowdfunding – an innovative and different way to fund a business. Established crowdfunding models include Kickstarter in the US, and now Bloom VC here in Scotland. From recording artists to charities, crowdfunding opens up a whole new world of raising money.
8. How can you be disruptive in your industry? The days of just doing what you’ve always done are over, unless you want to be history. Everywhere you look markets are being disrupted. What’s happening in yours? And can you be the catalyst?
9. Are you optimising your tax position? Well, it’s what we do, so you’ve got to let me have this one! Consider getting a review of your company’s tax structure and talking to your accountant about how you can be more tax efficient.
10. Last, and by no means least, make sure you get some balance in your life. Life is short, as we see far too often, so make time to enjoy it !

Why do we need to keep records?

The first (and perhaps most important) reason in terms of your business, is because you owe it to yourself to do so. Presumably, you have a real passion for what you do, and have spent a lot of time and effort growing your company. Many businesses fail because their owners don’t keep an eye on the ‘back-end’ of their affairs, failing to accurately track cash flow, pay suppliers on time or chase up old and outstanding debts etc. Although this may not be the best part of running a business, it is absolutely vital that you have accurate and organised records in order to keep track of things. A good rule of thumb is that you should keep all records for at least 6 years. If you are VAT registered, you have a legal obligation to keep records of any VAT related invoices or purchases.

It’s a good idea to get a lever-arch folder and split each month into sections such as:

1. Notes
2. Bank Statements
3. Sales Invoices
4. Purchase Invoices
5. Payroll
6. HMRC/Legal Correspondence

Not only will keeping good records ensure that you know exactly what’s happening with your business – it can also save you money!

Since we do a lot of accounting and bookkeeping work for our clients here at Freelance World, allow me to pose two different scenarios to you:

Scenario 1

Client X sends their records in a couple of old shoe boxes. They have literally just stuffed everything together without any organisation and lack back-up spreadsheets to support their records. This means the accountant, or bookkeeper, will need to spend roughly a full working day (sometimes longer) going through everything, categorising all the expenses and putting the records into an organised format so they can prepare a set of accounts.

Client X can expect the accountant to send a lot of queries back to him due to the state of submission.

Scenario 2

Client Y sends their records in a lever-arch file, with the records for each month neatly categorised and filed . In addition, Client Y has supporting monthly spreadsheets to back up each section in the folder. This is a delight for the accountant, as all that is needed is a sense check between the spreadsheets and physical records to ensure everything looks to be in order, then go ahead and prepare the necessary documents. Client Y should only get a small number (if any) queries back from his accountant because they have kept good records.

So, do you think that Client X in scenario 1 should be charged the same as Client Y in scenario 2?

If you keep unorganised and poor records for the year – then expect to be charged more.

Why not find a coffee shop (or pop into our Creative Space which is free if you are a Freelance World client) and dedicate one morning each month to tidying up your records? Sure, it might not be the most exciting of things, but doing this will ensure you save a lot of time in the long run, and most importantly, could save you money!

If you have a book keeping software system such as FreeAgent or Kashflow – which tracks transactions and documentation – life is simplified even further owing to their expertly designed interfaces. Such software not only benefits you at the year end, but also on a monthly basis as you receive reports showing how well your business is doing. This means you no longer have to wait until the year end to find out if all your hard work is paying off!

As we stagger through the closing days of this year, in awe of the events that have come to pass; from the crumbling of militant regimes to the dethroning of demagogues and the passing of too many good souls, let us pause for a moment and reflect just how eventful the year has been.

Rather than begin the ponderous task of chronicling and documenting the past twelve months, where, I doubt, firstly, that I would barely even scratch the surface, but most importantly, grant each event the justice it deserves, I felt that the embedded video said all that needed to be said, and a little more.

And to complete the post, I thought I’d include my favourite two images from the past year. They have both, in my opinion, very quickly, become iconic pictures and will continue to both haunt and inspire for generations to come.

Images sourced from BuzzFeed and The Atlantic , both of which have beautiful photographic look-back’s at 2011, The Atlantic also has a brilliant feature on 2011 as a whole, with mini-features on nearly every topic. You can find it here