Understanding the way tax impacts your business is really important, and there are a lot of things to keep in mind when you are thinking about the implications of tax. Being able to save on certain tax obligations, or finding loopholes you can legally use to reduce the amount of tax you have to be is so important moving forward.
As a business director, there are a lot of things that you need to keep in mind, and plenty of questions you have to ask yourself moving forward. One of the most pressing issues surrounds whether a company director can be paid as a consultant, and what this means for your business. So, you need to be clear about the best ways of being able to achieve this, and it is important to make sure you understand the laws surrounding this.
What is a consultant?
The definition of a consultant is a person who provides expert advice or support in specialist fields of business, in order to help improve an individual or company as much as possible. There are a lot of factors that you need to consider here, and it is true that a lot of company directors and professionals would categorize themselves as consultants. Consultants help business performance in terms of things like operations, management, profitability, structure and strategy.
Can a company director be paid as a consultant?
Now, one of the key things that a lot of people want to know is whether a company director can be paid as a consultant. Well, the accepted answer to this question is no. However, there are a couple of occasions on which company directors can be paid as consultants, and it’s important to know what these are. Directors can be paid as consultants in these scenarios:
● The services they are providing are outside of the realm of their regular duties as a director
● They are providing these services to other clients as well
So, there are a lot of things to consider here, and it is very important to get the right outcome from your role as a director. You need to know whether the role you are fulfilling can actually be classed as a contractor, and what this means for the future of the company.
There have been plenty of implications, and this is something that you have to make sure you think about the best ways of being able to make the right choices here. There is no question that working as a company director has plenty of implications when it comes to consultations. HMRC has deemed that directors should not be paid as contractors as they are employees of the company, and hold shares in the business.
Of course, it is important to make sure you are taking the right steps to make sure your business is legally protected, and this is something you have to make the best of moving forward right now. Understanding the different implications of this, as well as being able to ensure you are keeping your company legally sound is so important.