If you are a professional contractor, at some stage you may need to invest in some kind of marketing for your business – but can these costs be offset against your company’s tax bill?
What has marketing got to do with contracting?
Many small firms invest in both physical and online marketing activities – on anything from producing flyers and leaflets to building a web presence and injecting funds into social media ads.
On first inspection, you might think that marketing and PR are two business activities far removed from the everyday life of a typical professional contractor.
This may have been the case a decade or so ago, however competition for many roles has increased in recent years, and web technology has increased the number of channels available for hirers to find workers.
At the same time, the number of methods contractors can use to promote their own personal services has increased massively.
To maximise your chance of securing fresh sources of work, you may benefit greatly from setting aside a modest chunk of your company’s profits towards marketing and publicity.
Here we look at how marketing costs are treated by HMRC and have compiled a list of typical marketing costs you may encounter as a contractor.
Typical marketing and promotion expenses for contractors
LinkedIn profile review
Paying for a professional LinkedIn profile review – to make sure your profile stands out to potential hirers, achievements are listed in the correct order, and the right keywords are used and your content is primed for recruiter searchers.
LinkedIn is an essential tool for professionals. You may decide to upgrade to the Premium version which will give you an edge, such as InMail, which allows you to message any LinkedIn members, access to job insights and ‘Learning’ courses.
Processional CV review
Paying for a professional CV review – your CV should be concise, with a focus on relevant experience and skills. Given that many recruiters judge a CV within seconds, this is a worthwhile cost for a minimal outlay.
Social media expenses
Social media / web-based profile costs, such as advertising on Google Adwords, promoted ads on Twitter and paying for other things which will boost your online profile, including LinkedIn Premium (see above).
Website for your company
Creating a website for your company – this needn’t be an expensive exercise. For many tech-savvy contractors, you can simply use an out of the box CMS, such as WordPress. However, unless you have design experience, you may need to pay for the one-off costs of creating a logo and/or designing your core website templates.
The ongoing costs of hosting your site on shared or dedicated web servers. For most contractors’ needs, a shared hosting package is more than enough – often costing under £100 per year.
Search Engine Optimisation
You may benefit from some professional help to boost your website rankings, although we’d urge you to take great care, as Google can spot unnatural activity with ease. Writing great content, and securing relevant and strong inbound links to your company site are the two tried and tested ways of strengthening your search engine rankings.
Provide your company with a professional image by securing a domain name – to use with your custom website, and use the name for business emails too. Domain names are inexpensive (often under £30 for a 2-year .com name, and under £15 for a 2-year .co.uk name), however, you will need to renew them periodically.
A wide variety of physical products, including business cards, professionally printed company paperwork (for those increasingly rare offline communications), pens, paper, notepads, etc.
Traditional advertising costs
You may also incur costs for advertising your services in paper or online magazines, newspapers and websites.
For some more ideas, read some further ideas about promoting yourself as a contractor.
The tax treatment of marketing expenses
As with all types of expenses, you can legitimately reclaim the cost of all sales and marketing costs you incur, as long as they are entirely business-related – such as those listed in the previous section. You can read the ‘golden rules’ of expenses here.
There are significant exceptions, however, particularly entertainment expenses, which cannot be offset against your limited company’s Corporation Tax bill.
You can claim the cost of sponsorship (e.g. of a local sports team) as a business expense, but charitable donations which do not provide a direct benefit to your business in return cannot be treated as ‘expenses’ in your accounts, although they still can be offset against your Corporation Tax bill.
As ever, if you have any questions about expenses in general, get in touch with your accountant.