Being a CIS Contractor, what do you need to know?

You may ask your self; what is it like to be a CIS Contractor? Things are built step by step and this does not only apply to construction work but to the discipline of it as well. Everyone gives them contributes when it comes to building strong foundations that leave behind footprints of hard work. Whether you’re a subcontractor or a contractor this relies upon you too. And we’re not talking about bricks that are needed to make the best building, but “bricks” of responsibility and hard work. Strong cooperation skills and a strong desire of helping each other by working hard are much more needed than anyone can imagine. But as these are too general and apply to both subcontractors and contractors, is there a difference between both? And what is it like to be a CIS Contractor? What responsibilities do they have? 

Cis Contractor

Being a CIS Contractor

If you’re thinking of being a contractor yourself you should never forget some crucial things. Unlike subcontractors which are hired by you as a contractor, you will be hired by customers. This should give you a general idea of the important client’s needs have to you. You should never forget to prioritize their needs throughout everything they ask you about on the preferred project. And most importantly, it is your absolute responsibility to not only maintain a good relationship with clients but also deliver every project on a specific schedule. The way you create and maintain these collaborative relationships with your customers leaves behind a great impact on how they view your work and business. That’s why it is important to leave behind good impressions not only through great construction work done by you or your subcontractors but also by collaborative skills and really good impressions. Never forget how these impressions build the future fate of your company or business so give them the importance needed.

But being a contractor is much more than that. You’re also responsible for the people you hire. Every subcontractor is hired by you. You should be able to get the right difference between hiring a subcontractor or an employer. As known, a subcontractor is someone who works for you and who you’re responsible for paying. And here’s where CIS Construction Industry Scheme comes into work. It is a scheme set up by HMRC (HM Relations & Customs) and it is mainly used for tax requirements. These tax requirements are between subcontractors and contractors and allow contractors to make off deductions from subcontractors’ payments. Deductions made go to HMRC and National Insurance as tax payments. By the end of each month, you as a contractor need to make off these deductions and send the according to payments. These allow subcontractors to pay their taxes at the moment and get rewards by the end of the year on the amount that is returned to them. 

You also need to make sure to make the right amount of deductions for your subcontractors as you may face penalties later on. Subcontractors who are registered for CIS scheme will get 20% deductions while others who are not will get 30%. To do all this work you need to be registered for CIS contractor scheme. Whereas subcontractors have a choice of registering or not, you should keep in mind that it is a must to register as a CIS contractor. You register as a CIS contractor only if these rules apply to you. First, you need to make sure that you are responsible for paying subcontractors for their work. Secondly, even if your business does not do construction work but has made at least £3 million spending on construction work in the last year period you still need to register as a contractor for CIS. 

How to register as a CIS Contractor 

Now that you know these tips, we have to tell you more about registration. To register as a CIS contractor you need to check many things beforehand. One of the most important ones is to make sure your subcontractors are registered under CIS or gross payment. This avoids problems with payments and registration too. You need to check which one of your subcontractors will need to use the reverse charge VAT. It is also advised to keep records of everything including bills, receipts, purchases made, bank statements, invoices, etc. This is a big plus for your registration. To prepare all these things it is better to start preparing some days before your registration day. 

CIS contractor scheme

Since CIS contractor scheme is different from a subcontractor’s one when you register you have a slightly different approach. You need to follow an online procedure where you first register as a new employer. After doing so you will have to wait until getting a letter from HMRC. The letter will include the information you need to start working as a CIS contractor. A really important thing is to always give the right information and full legal business name for your registration. In case you don’t, you will face penalties later as false registrations are prohibited. 

We made sure to give you a general idea of what you need to know about being a CIS Contractor and most importantly how to register for a CIS scheme contractor. In case of having difficulties with the process, you can simply call the helpline. It is a long journey that awaits you. For more information or help needed get in touch with our team of experts who will find a solution for each problem you have. 

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