Money.
It's why we do contracting, heck it's why we go to work. I've never understood the shyness we have in the UK about talking about money. Never ask anyone what they earn, how much they have saved, how their pension is going. I get it in the main.
We all struggle day to day just to pay the bills on time every time, pay the mortgage off (a dream for many), have a holiday once in a while and hey maybe even save up towards a pension. Not that anyone is going to retire in the future... It narks me that pulling together even a modest amount is such hard work, even when contracting. The 7-year cycle hits and knocks you down a few pegs. Tough but again, it's part of why we do contracting. To gain an accelerated income and make a better financial life for ourselves and our families.
But how much do YOU make?
To answer the question, £400 to £600 per day on average. That's been my contracting rate for pretty much the entirety of my contracting. I wonder if anyone reading this who knows me is surprised by that. I'd take £400/d for a sit-in-the-corner doing coding stuff and towards £600 for a management role. There's been higher, but they were outliers.
Now, even though £400/d may seem low for someone with 20+ years of experience, it's still a truck tonne of money. So many contractors lose sight of that. 12 months of 20 days is 240 days, that times £400 is £96,000. That's nothing to complain about. A more typical minimum rate is £450/d, that's £108,000. Even if you don't bill all the days, due to holidays or gaps in contracts, you're still earning a shed load of money (running out of these now...)
Here's a reference to put that in context: (accessed today)
http://www.gq-magazine.co.uk/article/average-uk-salary
Even on the minimum of £450/d you're better paid than just about anyone. OK, no Million ££ bonuses for you but still something to pat yourself on the back for.Average UK salary: £27,271
Before you start celebrating/consoling yourself, this data was taken by the Office For National Statistics from 21,563,000 people's earnings, with averages broken down for each profession. Topping the charts were brokers, who earned £133,677 on average, followed by chief executives and senior officials (£107,703), aircraft pilotsand flight engineers (£90,146) and marketing and sales directors (£82,962). At the other end of the scale are retail assistants (£10,296), hairdressers and barbers (£10,019), cleaners (£7,919), waitresses (£7,554) and bar staff (£7,404).
But can you manage it?
Gfeat, so you can pull in the revenue, but can you manage it? Let's loop back to the hands-on stuff.
Recapping - Expense it
Let me touch on this again. I'm always shocked how small minded fellow business owners are about what they put through their business. HMRC rule is that whatever goes through the business has to be a legitimate business expense. If you're going to reduce profits and so the tax paid, it has to be on something for the business.
So no, a night out at the cinema isn't a tax deductible, legitimate expense. Nor is that shiny new suit or fancy jacket you've been looking to buy. But it's a fine line. If that suit is a uniform, perhaps with a tailored company logo then it's got a unique use for the business and is a valid expense. If that cinema trip is corporate entertainment it can go through the books, but remember you pay tax on it so HMRC aren't going to panic.
If in doubt, leave it out. Or something like that. You know how I keep going on about not getting on the tax man's radar, this is a good example. Again, I've seen fellow business owners do all sorts of stupid things - just don't. Will a small business like us get queried? Probably not, but if you do then everything is up for investigation. You don't need that in your life.
In closing
Check every year what is and isn't the case with the above. Figures, allowable items, etc. change all the time. However, I hope the above has given you a sense that as you run a business now, you need to shift your mindset to that of a business owner. Be bold!
Until next time,
BTW... see that Mark J Diez, Hannover Game ad at the top right? That's me, I wrote that.
Click it and buy a copy.
Mark
0 comments:
Post a comment