There are many business owners and individuals who even today neglect to see the importance of accountants. Filing of Income tax returns and audited financial statements are some of the accounting services which every individual ought to be aware of in the modern world. Many often feel the need to find an accountant when it’s already too late.
There are three different kinds of working folks; the employee, a freelancer and a worker. Understanding and evaluating the difference between these three is very essential because it majorly affects the tax liability as well as the rights you have under the business law.
To find an accountant who can provide you with exceptional services, you need consultation from an accounting firm. These firms are capable of providing the best accounting services like inspection of account books, to improve the business efficiency, organize and maintain financial records and, most importantly, they suggest professional ways to enhance revenues, improve sales and widen the profit margin.
Who am I out of these three?
Most individuals have a wrong notion surrounding the difference between an employee, a worker and a freelancer. They believe the format of payment is what differentiates them from each other, which is not always applicable and true. Though there are no hard and fast rules that determine who you are out of the three, we do have some pointers that will help you decide your employment status:
- An employee is mainly hired to perform some specific tasks for which they are given tools and equipment. An employee is under the obligation to work individually without any substitutes and an employer holds control over the employee.
- At the time of employment, an employee is given a written contract or even a verbal one (it counts). It’s the boss who decides what work you do, when you do it and also how you are supposed to do it.
- A regular amount is paid by the employer to the employee in accordance to the working hours completed and working arrangements ascertained. The amount paid to the employee is provided after deducing tax and national insurance amounts.
- In this case, the employee is completely stress-free and certainly doesn’t need to look for an accounting firm to solve their tax and accounts related problems.
- A worker doesn’t work under the contract of service; instead, they are hired for a short duration of time on an irregular basis. Like on a day to day wage basis. These include the short-term casual workers.
- Generally, a worker has to carry out the work for his/her client as a contractual arrangement.
- They don’t get the benefits of employment and labour.
- A worker agrees to do the specific work in return for an agreed salary or wages and on certain terms & conditions laid down by the employer.
- The short-term casual workers are hired straight away by the employer. They are not usually counted as a part of the permanent workforce but supply services on an irregular basis, having ‘zero hours’ or ‘minimum guaranteed hours’. The pay is often done after deducting income tax and national insurance contributions.
- Freelancers are those who don’t work for a specific institution or an organization, rather they are expert in handling different works from several organizations without being under the obligation of any corporation. They work according to their suitability.
- Freelancers don’t work under the ticking pressure like employees; they work according to their convenience but have to follow some set deadlines.
- Freelance workers can also work as representatives of the company or some temporary agency.
- As they are basically self-employed, they have the authority to hire a substitute to work for them.
- Self-employment doesn’t in any way mean that you can avoid taxes. It’s possible to get away without paying the taxes but it’s not legal.
- The income from self-employment or freelancing is a taxable income. If you are new into this then find an accountant who can help you out in filing tax returns.
Now that we have painted a clear picture, you can ascertain your employment status vividly.
Accounts are a major part of any business or individuals that make a profit. To manage the financial records better, there are several accounting firms out there in the UK who can provide a list of proficient accountants for those who are looking for best-in-class accounting services.