As contractor accountants, ICS Accounting work closely with individuals and entrepreneurs across almost all industry sectors.
It can be easy to assume that the same basic rules will apply across all industries, but there are enough variations in how taxes might be applied, what expenses look like, and just different common assumptions that contractors face different issues depending on their line of work.
Specialist knowledge is called for, so here are some things that many architects and surveyors, in our experience, have to factor in.
Payment Models Matter
With three main three structures plus various hybrid arrangements in play, how much you’re paid, how often, or at which deadlines can be just as much a part of your financial calculations as the total you expect to receive.
With hybrid models you might see a shift between payment structure at several points during the process; for example, we know some architects who charge hourly rates during RIBA stages 0-2, fixed fees through the stage 3 process, and then charge a percentage of the final agreed construction cost while on-site work is carried out in stages 4-6.
Depending on when you’re engaged, how steadily the work progresses, and any external complications, the amount you receive within a given quarter (and even a given tax year) can really change. This means your tax obligations on the work can end up looking very different to how you originally expected, making calculating the real-terms profitability of the job more difficult.
That’s especially the case when any part of the work is handled through percentage fees, as those can only be estimated at project start.
As such, making the right decisions financially while also making the right decisions for your client and portfolio is a matter of keeping careful track of details which may shift while the work takes place, staying up to date, and paying attention to projections.
Fortunately, this is something architects are very good at! However…
Regulatory Change
Legislation, guidance, and other regulations regarding tax obligations evolve steadily, and the state of affairs when you start a project may have changed by the time it finishes.
Again, this is nothing that architects can’t handle, and we know many architects who take the time to keep up with financial regulations as well as all the legislation, regulation, and guidance governing building design, as well as taking the time to keep their accounts up to date for clear oversight.
Sadly the time to do this has to come from something else, be that building a business or living your life outside of work.
Passing work to an expert is also something architects understand very well how to do. If you’d like to start a conversation, contact us directly.
