Guide to marketing and advertising expenses for contractors

If you are a professional contractor, you may need to invest in marketing for your business at some point – but can these costs be offset against your company’s tax bill?

What does marketing have to do with contracting?

Many small firms invest in physical and online marketing activities – 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 services has increased massively.

Setting aside a modest chunk of your company’s profits for marketing and publicity may significantly increase your chances of securing fresh sources of contract work.

Typical marketing and promotion expenses for contractors

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.

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 Premium

LinkedIn is an essential tool for professionals. You can upgrade to the Premium version, which will give you an edge, such as InMail, which allows you to message any LinkedIn members and access job insights and ‘Learning’ courses.

Professional CV review

Paying for a professional CV review – your CV should be concise, focusing on relevant experience and skills. Since 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 include advertising on Google Adwords, promoted ads on Twitter and paying for other things that will boost your online profile, including LinkedIn Premium (see above). From our experience, LinkedIn dominates the contractor world in terms of gaining visibility – so don’t spend time on other platforms until you’ve exhausted your efforts on LI.

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.

Web hosting

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 professional help to boost your website rankings, although we’d urge you to take great care, as Google can easily spot unnatural activity. 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.

Domain names

Securing a domain name will provide your company with a professional image. You can use the name for your custom website and business emails. 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.

Stationary costs

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 on paper or online magazines, newspapers, and websites.

For more ideas, read our 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.

However, there are significant exceptions, particularly entertainment expenses, which cannot be offset against your limited company’s Corporation Tax bill.

You can claim sponsorship costs (e.g., for a local sports team) as a business expense. Still, charitable donations that do not directly benefit your business in return cannot be treated as ‘expenses’ in your accounts. However, they still can be offset against your Corporation Tax bill.

As always, if you have any questions about expenses in general, contact your accountant.