How to make your company more profitable
Are you claiming all the expenses you can?
As a freelancer, assuming you are not caught by IR35, there are a wide range of expenses you can claim to keep your tax bill down. For example:
- Travelling from home to work (provided you haven't worked, or expect to work at the same place for more than 24 months).
- Mileage allowance
- Computer consumables and hardware
- Professional subscriptions
- Accountancy fees
- Postage and stationery
- Books and journals
- Trade publications
- Use of home office (tip - don't claim a round sum amount. Calculate the cost of running your house, so heat, light, insurance, rent, cleaning etc, then divide this figure by the number of main rooms in the house. This way you will avoid Revenue scrutiny).
- Pension contributions
- Legal fees
- Internet Access
- Telephone (tip - make sure the phone is in the name of the Company, otherwise you will be hit for a benefit in kind charge).
- Bank charges and interest
Are you working for the most profitable clients?
Work out which clients provide the best stream of reliable income for you and try to find more clients akin to that culture/size/industry.
Understand how you currently spend your time, perhaps by keeping a detailed diary over a period of time. Analyse which of those activities add the most value and profit to your business and those that add the least. Devise a strategy to ensure that you focus your time and efforts on the former and not the latter. Time management is key in making a success out of your business.
Are you billing for your all your time and materials?
Be fair but business-like in charging for any client amends, additional proofs/client visits/consultancy over and above that agreed. Your terms and conditions should clarify what's billable.
Have you considered diversifying?
Can you offer different services to your existing customers or different services to new customers? Copywriters will often take on proof reading work to supplement their income, or journalists turn their hand to ad copy for instance. If your contacts book is heaving, can you act as a print broker for a company? Is there some other way of leveraging your skills or market knowledge or contacts base?
Are you being paid what you are worth?
Keep up to date on the going rates for your skill in your area. Call a few agencies handling freelancers or discuss on freelancer forums. If you are currently earning less than the rates shown you should bring the matter to the attention of your client or end user when your contract is next due for renewal. Sometimes just asking will be enough to secure a better rate.
Do you have insurance?
With Revenue inspections becoming more and more common, and the culture as whole becoming more litigious we recommend you take out tax investigation and professional indemnity insurance as a minimum. Nothing will sap your profits quicker than an unhappy client, or perhaps worse, the Revenue, starting proceedings against you.