How Consultants Can Increase Their Marketing Efforts, Win More Clients, and Comply With IR35
Early next year, a series of stricter IR35 rules will come into place. These new IR35 rules will bring about changes to off-payroll working - largely to prevent consultants, contractors, and freelancers being used as ‘disguised employees.’ This practice is viewed by the law as an elaborate way of avoiding paying tax and benefits.
If you have employees on contracts then you are obliged to use PAYE, pay National Insurance contributions, and offer other benefits - such as holiday or sick pay. But in the private sector with contractors this is not the case. It is a situation that has been mutually beneficial to both parties. However, it has also been open to some abuse.
Why the new IR35 rules are being introduced
Some businesses have been accused of employing contractors in name only. This means that they have essentially been hiring staff without paying the additional tax or benefits. In addition, contractors and consultants have been accused of using their position as a sole trader or limited company to avoid paying income tax. This is tax that they would otherwise be required to pay if they were an employee.
These new IR35 rules will make employers responsible for their use of contractors, reducing their ability to use them as a tax-free way of getting the staff they need for their business. HMRC will have the power to look into these relationships and into the use of contractors. If they find that there has been any wrongdoing in the nature of these business relationships, then the employers could be liable for a hefty fine.
Of course, if you are a genuine sole trader with a roster of clients, there is nothing to worry about. Likewise, if you are a business that uses consultants or contractors on some projects or in areas of your enterprise where you lack expertise, then this is absolutely fine. The new rules are supposed to be there to close loopholes only.
The grey areas
However, as with many areas of taxation and business practice, there are some grey areas. Imagine you are a contractor or consultant and are offered a large job working for a prestigious business. The money on the table is great and the job is a big one, lasting six months, maybe more. These are the kinds of deals that many contractors dream of – steady income over a long period of time.
This would naturally mean that you would turn down other opportunities for short-term and poorer paid contracting work. As always as a contractor, you would be without the holiday pay, sick leave, and other benefits of full-time paid employment. But you would have the tax benefits of being a sole trader, as well as lower NI contributions.
According to the new rules, this may place both you and the company employing your services at risk. Then imagine that after a successful first contract, the project continues and you are offered further work. This was not foreseen by either party, but it is a necessity for successful completion. This will place you at further risk, according to the new rules. So, what can you do to ensure that you are still visible as a sole trader or contractor for hire?
How you can protect yourself
The good news is that there are a few simple things to ensure your status is protected. And one of them is to make sure that you are constantly marketing and projecting yourself as such.
One of the easiest ways to do this is with a website and online marketing tools. You may be taking on long-term contracting work, but you are not neglecting your status as a consultant or contractor for hire in the long term. By creating and maintaining a website, this is proof to HMRC and others that you are indeed a true sole trader and not just relying on the tax breaks of being a full-time non-contracted employee.
This is where we can help. If you are working on big projects, then you are unlikely to have the time to develop and maintain your own web presence, let alone social media and other online marketing. But we can do all of this for you.
For an affordable fee, we can create, design, and launch your website, fully branded and SEO ready – all according to your specifications. We can also help you to create and upload regular content, relevant to your work and with added SEO benefits. We can help you to generate traffic and leads, which could develop into future work.
In addition, we can create strategic social media and online marketing campaigns to promote your services to the right people.
Creating the right impression for your business
All of this will help to create the impression that you are a legitimate sole trader, even if you are engaged in long-term contractual work. While the aim of these new regulations might be to close a loophole that lets big companies avoid paying the right amount of tax and providing benefits to their staff, it does fail to consider this from the other side of the coin.
Contractors and consultants take on big project work because it is often well paid, as well as being steady and consistent. But, as any person who does this knows, the project will come to an end and you will be in a position to look for more work - another major reason why keeping on top of your website and marketing is so important.
If you would like to know more about our web design and online marketing services for Kent based businesses, get in touch with a member of our team. We know better than anyone that as a sole trader, you need all the help you can get – through the good times and the bad. We’ll work closely with you to create a website and marketing strategy that generates work, and also proves that no matter what you may be doing, you’re out there working for yourself first of all.
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