A good accountant

Introduction 

First of all, when you are setting up your own company, choosing a good contractor accountant to guide you from the outset is a wise choice. It will also stand you in good stead going forward when you are actually running your own company.

Please note, there are plenty of accountants out there. Within these, there are the ones that are contractor accountant specialists when it comes to taking care of contractors. In an ideal world, this is where you should start your search for an accountant for your business. The one that you choose should know about certain business taxes and the tax savings that can help your business and you on a personal level.

A good contractor accountant will make sure that your company meets all of its official requirements which are part of your director duties. These include legal, statutory, and financial.

They will also make sure that you do not pay any more tax than you need to. 

My tips and recommendations   

Have a read of my article covering tax tips for contractors for handy tips you should know when you have your own business. This is a member only article and you can read it if you sign up as a member. This includes my latest advice for best tax planning ideas.

There are also various filing dates that you may need to meet as both a company director and someone who files a Self-Assessment Tax Return. Although your accountant will help you meet all of these it is handy to know yourself when you need to file the company accounts and other documents and make certain tax payments.

I have also for the ease of reference, written about limited company taxes and the filing dates for official documents and tax payments.

What to watch out for   

Initial thoughts 

There is nothing worse than hiring a contractor accountant who is not good at communicating with you. It is also not good to hire someone who has skills in accounting that are not up to scratch. Being late when filing documents for your business, and you are also something else to avoid. For a stress-free time as a contractor, you should check the current market. Please look for the best contractor accountant or accountancy firm to look after you and your business. They should also be reasonable on the price of their services.

A specialist contractor accountant will be very used to the annual accounting processes of a typical contractor. Indeed, when you compare this to a standard or high street accountant, you may wonder who knows what is best. Some of these may not understand what a contractor does. An accountant who is not a contractor specialist may also not recognise the importance of complying with IR35. These rules can have a dramatic effect on take-home pay if you do not take steps to stay outside of them.

More things for you to watch out for 

You may have heard that there is `hassle’ that comes when you run your own company. Indeed, this comes when you appoint yourself as a director. You have to deal with the tax and VAT offices, Companies House, and so on. It is also true that when you are a director, you do undertake to carry out certain duties each year. All legal and other duties ultimately fall with the director. However, a good accountant who is a specialist will manage most of these in exchange for a monthly fee.

Overall, a good contractor accountant will make sure that you do not have to worry about most of your duties. They will also look after you on a personal level too. On an ongoing basis, you are then able to focus on finding yourself suitable contract work.

Accountancy costs 

As mentioned, most contractor accountants charge a monthly fee for their annual cycle of work. However, some will apply extra fees during the year. Others will also try to charge you an extra fee if you leave them at a later date. You should, therefore, make sure that you know what your monthly charges cover, and it is also good to be aware if there will be any extras at any time.

You may expect to pay between £60 and £150 per month. The fee will cover an all-inclusive type of service for your business. The cost will include who deals with the tax and VAT offices and Companies House. It will also include running and reporting a monthly payroll and filing annual accounts and tax returns. The service will also include some admin type tasks and general advice including updating your company’s statutory records. Indeed, this should also cover the preparation and filing of your personal tax return.

The number of specialist contractor accountants out there has grown at a fantastic rate over recent years. The UK contracting industry is a lucrative one. Contractors typically have relatively simple accounting needs.

Therefore, it is not surprising to see so many firms out there looking for business.

Finally, there are, of course, many reasons why a contractor may choose one accountant over another.

What to consider when you choose your accountant 

Initial considerations 

Is the accountant a genuine specialist in the UK contracting industry?

I would recommend that you hire a contractor accountant specialist. They can then look after you from the get-go. They will be able to form your company for you and advise you from the outset. The accountant will be able to let you know what they will do. They can also let you know what you will need to do.

You should also check if you were assigned an account manager who will look after you from each day.

Qualified accountants should also run your contractor accountant or accountancy firm. They should be either certified or chartered.

As a specialist contractor accountant, I have on this website detailed expenses guides on entertainingbusiness clothingpersonal incidental expensescompany donationsbusiness giftstrivial benefits and many other areas. These are areas that need detailed research and consideration to see what you are able to claim as an expense and save tax.

Further things to consider 

From the outset, please find out what the charges are. As in life, going for the cheapest option will more than likely not be the best service. What’s more, it is also not always true that the more that you pay, the better service you will receive. Therefore, you will need to look into this and do your research here.

A good accountant will let you know how to maintain your business records and how long to store the records for. Your accountant should also make you aware that you can claim any pre trading expenditure. These are expenses that you have incurred personally before you set up your business.

Please make sure that your accountant can prepare and file your personal tax return for you.

It is vital to feel happy with your accountant. Peace of mind comes with having the knowledge that they are looking after your affairs competently. Indeed, this should be both for your business and for you personally. They should also be doing things correctly and before any respective deadlines.

Please make sure that you check if the accountant has a good reputation. You can do this by looking to see if they have recommendations on social media, i.e., on their LinkedIn profile.

Some more things to consider 

Gone are the days where you would send all of your receipts each month for your contractor accountant to process. If you are going to be a VAT registered business, you need an accountant that uses specialist software. 

The software must also be compliant with Making Tax Digital. A popular choice here is FreeAgent, and this software is for smaller type businesses such as one-person companies.

An excellent place to start your search is to ask your colleagues for recommendations. They can advise you how their contractor accountant deals with their affairs. What’s more, your colleagues can also let you know if they do this on time and if they are accurate with their work.

Finally, you may be new to the contracting world, and you do not have any contractor colleagues to ask for help. Your recruitment agency may also be trying to encourage you to join a large contractor accountancy firm. There is, in lots of cases, a ‘preferred supplier’ relationship between recruiters and some accountants. In this instance, the agent receives some ‘commission’ for every contractor that they sign up.

If you would like to change your accountant

If you already have an accountant and decide for yourself that you would like to change the best time to do this is at the start of your new financial year. I have written about the things to consider when changing your accountant.

Final thoughts 

I would advise you not to rush into deciding on the spot. Please do your research and take your time to look into what else is on offer out there. Please look for:

  • A good specialist service for contractors
  • They are competitive on the price for their work
  • They have recommendations on their social media profiles. Or your contacts can help you form a good decision.

Link to Contractor Advice UK group on 

LinkedIn    https://www.linkedin.com/groups/4660081/

Published On: March 21st, 2021 / Categories: Accountant, featured, First timer guide / Tags: /

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