When you are a contractor or business owner, how can you change your small business accountant?
At one time or another, many small business owners, including sole traders and limited company directors, may feel the time has come to look for a new accountant. As a contractor, you may have been with your existing accountant for quite a while. The relationship may have been good for the early years. However, lately they are not being as attentive as they should be.
Therefore, you may now be looking into switching contractor accountants. When you do this, you will be looking for one who is:
- They offer a good deal overall.
Therefore, what is the best process to follow when you are looking how to change your accountant?
When you run your own company, it is best practice to find a good limited company accountant to look after you from the outset. There are lots of accountancy firms out there and many on the local high street. However, as a contractor it is important when you consider how can you change your small business accountant, you look for a dedicated accountant who specialises in contractors and small business. You can do this before you start your own company, or shortly after this has been set up.
Not all accountants, just like anything else in life, are up to scratch. Therefore, there may come a time when you decide you would like to change to a new contractor accountant.
Throughout your contracting career, you may have several small business accountants. Eventually, after moving a few times, you may find the one that makes you happy.
Change your company’s accountant
Where to start
A good place to start when you are looking into how you can you change your small business accountant is to find one that is knowledgeable. They should be able to guide you when you run your own company. When switching accountants, you also need to find one that is qualified with one or more of the UK’s professional bodies. They should also provide a high level of service.
As part of looking after you, they should send a letter of engagement. This will set out what you can expect as part of the service that you are undertaking for the future. What’s more, you should have peace of mind that your new business accountant will take care of all of your tax affairs and advise you accordingly.
Your ideal new accountant
Your new choice of accountant should have specialised knowledge in the contractor / small business areas. They should also be able to advise you on the best ways to be tax-efficient. As part of looking after you and your company, they should be able to advise:
- Which is the best VAT scheme to use (normal or Flat Rate).
- Advise of any exemptions and allowances available from HM Revenue & Customs (HMRC).
- Suggest the best ways for you to extract income from your company.
Another thing to watch out for when looking at how can you change your small business accountant is that a new accountant is familiar with online accounting. This is a legal requirement now under Making Tax Digital (MTD). If your company is VAT registered, it now needs to use MTD compliant software from 1 April 2022.
Your new accountant should also make sure that you prepare and file your tax return on time and advise you accordingly.
The areas that your new contractor accountant should be familiar with
When you look to find an accountancy for small business or a specialist contractor accountant, they should be educated in their field and be able to advise you all of the things that affect you as a UK contractor. This includes:
- How to operate tax efficiently in terms of taking a contractor salary and taking dividends.
Further still, they should also be able to advise you what you can claim for as expenses as mentioned above. In particular, travelling type expenses such as:
…and also, other less well-known allowances such as:
Please have a read of the article covering tax tips for contractors. This contains some good advice that you should be aware of, when you have your own business. This includes the latest advice for best tax planning ideas.
For the ease of reference, please also take a look at limited company taxes. Another important read for a UK business owner is the filing dates for official documents and tax payments.
How to change accountant -the process
Deciding to change your business accountant
If you do decide you would like to change, you should first check your Terms and Conditions (T&Cs) with your present accountant. When you choose a contractor accountant for the first time, they should be clear with you from the outset. In addition, they should also explain what your responsibilities are and what fees they will charge.
As part of your current service, your company may pay a monthly fee. When this is so, you may have done this for much, if not all, of your current accounting year. If this is the case, the payments made so far should include the work required to prepare and file your company’s accounts for the current year.
Some accountants will try and refuse the preparation of year-end accounts if you say you are going to leave them. Therefore, it is key to check what your T&Cs include.
When you are looking to change your accountant, do your research
If you would like to change your company’s accountant, you should do your research. This will involve finding a new one that fits your requirements. Once you do find the right one, you can make contact. Then, once you know they are happy to take you on, you can make a move.
Making the move
What if you change your small business accountant, and they have yet to prepare your latest financial accounts? Do you expect your new business accountants to prepare these as part of a new monthly fee? You need to bear in mind that in most cases you will be charged an extra fee for the work related to these. Annual accounts are the main task every year for your accountant for small business. Therefore, as part of changing your accountant, it is good to plan ahead.
Important to note and to reiterate here, unless you do not mind paying an `extra fee,’ it is best to make sure that your present accountants prepare your latest set of accounts before you make the change. You can contact your planned new accountant either before your current year end finishes, or shortly after. Once contact has been made, you can make plans for the move to them shortly into your new financial year.
Contact your current accountant
When the time is right, you will need to contact your present accountants and let them know that you are leaving. In addition, you will also need to let them know what work you expect them to do for you before you leave.
An e-mail will usually suffice, although they may require a formal letter. You will need to let your present accountant know that you are moving to ABC accountants. Furthermore, you should also let them know ABC accountants will be contacting them shortly to request the relevant handover information.
Checking what you have paid for
As mentioned, when you change your small business accountant, you should check what work the payments that you have made in the current year cover. It is best practice to make sure that you have paid enough to cover the cost of your current year’s financial accounts.
The best time of all to change your company’s accountant is at the start of a new financial year. The new accountant can then pick up at a `clean edge’. Please note, you can also change mid-year if the need arises. However, this is not as straightforward as changing at the start of a new financial year.
What your new accountant will need
As part of looking after you and your company in the future, your new contractor accountant will require various information. This information will include identification for money laundering purposes. As part of this, you can supply a copy of your photo passport or photo driving license. You will also need to provide a copy of a recent utility bill showing your home address. The new accountant will also need other various information to make the handover as smooth as possible.
Your new business accountant will need to deal with HMRC going forward. To assist in this, they will need to add your business to their HMRC agent account for the various company taxes. They will need to do this for both the company and for you personally. This can be done via form 64-8 however nowadays the accountant can request this via their HMRC account or, better still you can add them via your own HMRC Business Tax and Personal Tax accounts.
When you change your accountant, your new appointment will need to write to your soon to be previous accountant to request professional clearance. They will also ask for any relevant handover information as part of the change.
When you change your small business accountant, after a few weeks, you should be properly up and running with your new accountants. They should then be in a good position to look after your affairs going forward.
As a final note, the best time to change your company’s accountant is at the start of a new financial year. Therefore, it is good in this respect to plan ahead.
Link to Contractor Advice UK group on