Freelancers have to submit their VAT returns on time even if they are not able to pay off the whole amount in time. If they avoid paying this amount, then they can become a target for a tax audit. They have to remain consistent in paying these taxes in time because they can become a target for a tax authority if they become a persistent offender. VAT Registration is dependent on the actual turnover of the freelancer that they make per year, and it is an indirect tax that has to be paid by the employer who hires his services. They have to be filed in time so that people can reclaim refunds, and if freelancers have incurred expenses then they can also reclaim VAT by showing the proper documents. One thing a person has to realize that the size of your earnings have to be big enough to be worth reclaiming, else this tax can become more of a burden than a cure. Hence, all those people who intend to use this system for their benefit on a long term bases, have to understand the finer details and calculate the amount that they would end up saving if they use this system.

Many professionals have opted to become a Contractor Accountant to break themselves away from their ties of a regular day job. These are the kind of people who have found that they have the right skills that can help them make more amount of money compared to a full time day job. It is a natural human tendency to prefer to regular day job as it provides many benefits along with the regular pay. Working as a contractor takes away the benefits that most people get in a day job, and keeps them from thinking about the possibility of freedom they can achieve from being a freelancer. Yet, this is a game that only the people with the right kind of motivation can play. The need of a skilled accountant never goes out and it is up to the accountant if they can play their cards right to make up for the lost benefits. It is a sharp mind that can find the true path in the world of freelancing by solely depending on their personal skills. It also depending on the way they deal with a specific company by giving them quick service. If they can build a good relationship with them, then the flow of work can remain a constant.

Many professionals in the world have changed their course towards freelancing as an option to free themselves from the right knit schedule. These professionals have found out that they can make more money when they dispense their services in the form of contracts. This has been a boon for many small companies that cannot hire full time employees. The economy has not been very supporting of businesses and they have been looking for ways to cut down their over all expenses. Contractor Accountants have changed the way they have worked in their lives, and set themselves free from their mental bonds that kept them from taking up this option. Life is all about change, and saving money along with time is the best way to do it. The fast life that most people live in these times has made them unhappy, and it is ripping the bonds between families. In this modern age, people are not able to find the time to spend with their families, hence freelancing has given them a great choice to be more close to them. Children are the most important link towards the future, and they always need the right attention of their parents. These are just some of the reasons that this option is the best way to go for both companies that are struggling to survive, and professionals that want to make more money by spending less amount of time on the job.

IFRS is an acronym for International Financial Reporting Standards. It is a set of principles and regulations for reporting many different operations in the financial statements.

Very much like USA uses US GAAP, Canada uses its own Canadian GAAP, Great Britain applies UK GAAP etc., the whole world will use its global GAAP – IFRS.

Why do we need IFRS?

Today, everything on the globe comes closer than ever before. All things are harmonizing and people study how to behave globally.

And really, it is clear in each move you make – it is possible to purchase the same products in any location, you can find similar meals in “Jack in the box” anywhere in the world and it is also possible to fly wherever on earth within one day.

Accounting together with financial reporting is not any exception. That is where IFRS has its own position – it will act as a harmonized group of regulations with respect to financial reporting around the globe.

Do you know the primary benefit of IFRS?

Here, in the globalizing planet, the crucial idea is the ability to compare.

Picture yourself as the owner of multinational company who wants to examine economic outcomes of your organizations from various areas. But – every single area applies its own bookkeeping guidelines!

Let’s say that revenues are reported on accrual basis in some area, and on cash basis in a different location. How can you know which of your organizations reaches nicer revenues when these results are incomparable?

Or possibly, you are a tiny investor acting in the stock market. Investors usually review financial reports of their potential shares prior to buying. How can you read all the documents when everybody reports differently?

You get the understanding. IFRS gives us harmonized guidelines for bookkeeping and presenting the financial information, so that everybody understands financial reports from any place in the world. And not only this – if some corporation tries to get abroad funding or enter the stock exchange, it should prepare its financial reports in line with IFRS.

What countries present their financial statements according to IFRS?

Currently, more than 120 countries follow IFRS, some of them entirely, a few of them partially. In ideal case, IFRS should be implemented globally by 2015.

In fact, undoubtedly one of the key participants in the worldwide economy, the USA continues to use their own US GAAP. Under this circumstance, US GAAP and IFRS will converge and also gradually reduce dissimilarities. The IFRS convergence process should have been completed until 2012.

But, FASB (setter of US GAAP) and IASB (setter of IFRS) slowed up the convergence progress and latest due date is approximately 2015. Additionally, SEC (Securities and Exchange Commission) should have decided with regards to inclusion of IFRS for U.S. companies by the end of 2011, but the decision has been postponed by several months.

You can find helpful information, examples and free e-book about IFRS at http://www.ifrsbox.com – a site dedicated to online IFRS training: helping accountants, chief financial officers, finance students and anyone interested in understanding IFRS and its application in their daily job.

Handle paper once.

Buy yourself an expanding plastic folder, the concertina type, and keep it within arms reach. Label each of the tabs to cover all instances of paperwork. These include supplier quotes, supplier invoices, client quotes, client invoices, expenses, government documents and bank statements.

Open your mail weekly, print any emailed PDFs and file paperwork under the correct tab. Prevent paper accumulating on your desk and crowding your productivity. Handle every piece of paper once and you’ll make life easier when you do you books at the end of the month.

Report monthly profit and loss.

Don’t be talked into buying software. For a service-based business, MS Excel will suffice. Setup MS Excel using two sheets. One tab for expense items (out), and the other for income (in). From these two sheets you can quickly calculate monthly profit and loss. At the very least record income so you can chase accounts receivable (people who owe you).

Check you have been paid by ticking off income line items on your bank statement. Note any missing sums or discrepancies and chase them up diligently. The more granular the Excel spreadsheets, the more data you capture when you import later into a professional accounting application.

Money makes relationships.

Set a recurring day in your calendar to do the books each month. This is a sacred day when you put aside all other duties and ensure you maintain good relations with stakeholders by paying them on time. Brand your company a good pay master and you will receive triple back in reputation.

By being disciplined about the pay day, you condition suppliers to your billing cycle and reduce the number of nuisance inquiries on outstanding payments. If you are drafting contracts include a clause on the billing cycle.

Summon a finance advisor.

Create a fictitious finance advisor. They are going to be your exchequer when it comes to all matters of money. They are a great asset to the team, especially when the money you are spending is not yours. Each time you reach for the cheque book or the credit card, your finance advisor will appear and interrogate your decision to purchase.

Look after the pennies, and the pounds will take care of themselves. Give them their own email address and watch them come to life as they chase payments and scrutinise expenses large or small. Pretty soon you will develop a six sense for numbers and won’t need a report to tell you how well the company is performing.

Your new friend will help during negotiation. Ask them to budget for salary, suppliers and cash expenses. When lured into situations where you may be tempted to overspend, explain to the other party that ‘finance’ has set a budget. Refusing to spend beyond a limit gives you leverage when negotiating salaries and supplier quotations.

Read part 2