Recommended Books for a new Contractor

[ladymuck]

I would also add that you shouldn't let your expectations around how long you'll keep your company for cloud your judgement over whether to capitalise an item or not. If you choose to depreciate an asset over 5 years but shut up shop in 4 then there will simply be residual value left in the asset that you can choose to either write off at the time you close your company or use as the valuation basis for you to buy the asset from the company.

The key point with assets is to keep track of them. This is especially important around disposals and write offs.

[ladymuck]

Fantastic, that's the most clear I've seen it so far. Is there any more detail I can read up on?

Interesting, the item (a NAS) is on the verge of that £500 mark. I can't be sure I'll still be contracting in 5 years time, which is how long I'd hope it would run, so maybe expensing it would be better option. I will have to speak with my accountant and Pandle to work out how to mark the transaction in there as reducing my profit.

Like I said, my limit is £500 and there's wiggle room within that depending on my perception of the devices' longevity. Your limits may well be different but as long as you have a defined policy and stick to it, then it'll be easy to answer any questions.

This guide looks quite comprehensive (but I've not read it)
The Beginners Guide to Fixed Assets

To reduce the cost from your profit, you charge it to an expense/overhead account such as consumables.

[FreakShow]

Fantastic, that's the most clear I've seen it so far. Is there any more detail I can read up on?

Interesting, the item (a NAS) is on the verge of that £500 mark. I can't be sure I'll still be contracting in 5 years time, which is how long I'd hope it would run, so maybe expensing it would be better option. I will have to speak with my accountant and Pandle to work out how to mark the transaction in there as reducing my profit.

[ladymuck]

Thanks, I will take a read through this.




My current big unknown is about the purchase of IT equipment. I'm using Pandle, which my accountant recommended and the categories section is a bit confusing to me. I've pinged both Pandle help and my accountant for help on this. If I was to purchase something its best to purchase with company funds, not personal money and then "expense" that to the company.

But purchasing of assets does not reduce the profit of the company, correct? Once I purchase equipment, is that an expense or an asset purchase?

Depending on the value of the item, the equipment purchased could either be an expense (which will affect your P&L) or be an asset (which won't). Different people have different cut-offs for what is/isn't capital expenditure. For example, I treat equipment under £500 as an expense and over that it gets recorded as an asset and I put through a depreciation journal (e.g. straight line depereciation over three years for a laptop) each year. Depreciation is an expense that affects your P&L and smooths out the cost of the item over a number of years. However, a straightforward expense is allowable for CT but the depreciation is not.

[FreakShow]

Try the First Timers Guides...

First Timers Guides - for IT Contractors | Contractor UK

Thanks, I will take a read through this.

I know it's hard when you don't know what you don't know but can you give us an idea of the topics you want to know more about?

My current big unknown is about the purchase of IT equipment. I'm using Pandle, which my accountant recommended and the categories section is a bit confusing to me. I've pinged both Pandle help and my accountant for help on this. If I was to purchase something its best to purchase with company funds, not personal money and then "expense" that to the company.

But purchasing of assets does not reduce the profit of the company, correct? Once I purchase equipment, is that an expense or an asset purchase?

[ladymuck]

I know it's hard when you don't know what you don't know but can you give us an idea of the topics you want to know more about?

Accounting?
IR35?
Your duties/responsibilities as a director?
Marketing?
How to bleed a radiator?

[FreakShow]

Google
/thread

MY GODNESS WHAT AN IDEA WHY DIDN'T I THINK OF THAT ORIGINAL SCENE - YouTube

[heyya99]

CUK Cook Book
Google

/thread

Oh dear he has changed his profile picture.

[cojak]

Try the First Timers Guides...

First Timers Guides - for IT Contractors | Contractor UK

[northernladuk]

CUK Cook Book
Google

/thread

[FreakShow]

Hi all,

I'm just getting into being a contractor. I have an accountant and using their software to record everything. I feel bad for hassling my accountant all the time. Part of the difficulty is that I am not too good on the phone at retaining information and emails can take a while to be turned round with the relevant information.

Could you recommend reading materials that could help me get up to speed on how best to run the comapny? I've only just managed to sort out my SIPP being marked as an expense for my Ltd, rather than an asset!

I know with equipment that I purchase, they do not come out of the profit of the company, and that the cost of them can be spread across a number of years by depreciating the assets. But a lot of online videos/discussion seem to speak of this in a very high level abstracted way without some specific examples.

Any recommendations to get me up to speed would be great.

Thanks