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Top Tips for Contractors on How to Save Money

As the national rate of unemployment in Spain soared beyond 25% last week, the issue of global unemployment is once again dominating media headlines. In the wake of this, the continuing Eurozone crisis and the impending fiscal cliff that faces the U.S. federal government, it is little wonder that jobless individuals are looking to market their skills and find gainful employment as independent contractors.

The Mindset of an Independent Contractor: How to Save Money

While being an independent contractor may allow you to find employment, however, it does not necessarily deliver the financial rewards expected. This is due to a number of costs and legal factors that are associated with freelancing, and it is important to develop a mindset that enables you to cope with these accordingly. Consider the following:

The Cost of Illness and Idle Time

Perhaps the single most challenging aspect of independent contracting is the lack of support from a single employer, which means that any time spent idle costs you significant sums of money. Whereas traditional employment affords you access to a host of benefits including sick and holiday pay, for example, as an independent contractor you only receive remuneration for work or projects that are completed. With this in mind, you need to maximise your productivity during the working in order to make a viable living.

Increased Energy Usage in the Home

Whether you become a contractor through choice or in response to the prohibitive macro-environment, you will often start by working within your home. Although this may save you money in travel costs, however, these will be offset by increased energy usage within the home. You must prepare for this in advance, and maintain vigilance when it comes to leaving appliances on stand by or switching off light switches. It is also worth contacting your energy suppliers and explaining your circumstances and the need for a more competitive deal, as this may prompt them to offer an improved package to retain your custom.

Set Money Aside for Tax Purposes

According to a study by the Alliance & Leicester Commercial Bank, paying VAT and corporate tax is not something that all British based contractors or small business owners are comfortable with. An estimated 3.4 million independent contractors and small business owners struggle to make their annual payments, which can lead to significant financial issues further down the line. It is important that you make provisions for these payments once you are making a profit, however, especially when you consider the potential consequences and fines associated with tax evasion.

Author Bio: This article was written by Nixon Williams. To discover more about independent contracting and its requirements, visit nixonwilliams.com today.

Sources:
L1) http://www.nytimes.com/2012/10/27/business/global/jobs-data-underscore-rajoys-woes.html?_r=1&adxnnl=1&adxnnlx=1351432987-2SLcuGfrJhBCxfrL7A7XEQ
L2) http://www.contractorcalculator.co.uk/contractor_corporation_taxes_vat_274310_news.aspx

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