As a contractor, how can you change your accountant? When you run your own company, you will need an accountant. You can do this from either from the outset or shortly after you start your own company.
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 accountant.
You may, throughout your contracting career, have several accountants. Eventually, after moving a few times, you may find the one that makes you happy!
Where to start
A good place to start is to find one that is knowledgeable and can guide you when running your own company. They should also let you know about all of the business expenses that you can claim. Another thing to watch for is that a new accountant is familiar with online accounting -this is a requirement now under Making Tax Digital if your company is VAT registered.
When you look for a contractor accountant, they should be knowledgeable in their field and be able to advise you all of the things that affect you as a contractor. This includes how to operate tax efficiently in terms of taking a contractor salary and taking dividends. What’s more, they should also be aware of how IR35, S660A and the two year rule work and what precautions you can take. 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 mileage and meals and also other less well known allowances such as PIES, Trivial Benefits and the Annual Event (Christmas party).
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.
I have also for the ease of reference, written about limited company taxes and the filing dates for official documents and tax payments.
Decide to change your 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 will be clear with you from the outset. They should also explain what your responsibilities are and what fees they will charge.
You may pay them a monthly fee and have done so for much, if not all, of your current accounting year. If this is the case, it should include the work preparing company’s accounts for the current year.
Some accountants will try and `get out of’ preparing the year-end accounts if you say you are going to leave them. Therefore, it is key to check what your T&Cs include.
Making the move
What if you change your accountant, and they have yet to prepare your latest financial accounts? Do you expect your new accountants to prepare these as part of a new monthly fee? You will find 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.
Therefore, 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.
When you are looking to change your accountant, do your research
If you would like to change your accountant, you should do your research to find a new one that fits your requirements and make contact.
Once you know they are happy to take you on, you can make a move.
Contact your current accountant
You will need to contact your present accountants and let them know that you are leaving. You will also need to let them know what work you expect them to do before you leave.
An e-mail will usually suffice, although they may require a formal letter. You will need to let the present accountant that you are moving to ABC accountants. You should also let them know ABC will be shortly contacting them soon to request the relevant handover info.
Checking what you have paid for
As mentioned, when you change your accountant, you should also check what work the payments that you have made in the current year covers. It is best practice to make sure that you have paid enough to cover your current year’s financial accounts.
The best time to change your accountant is at the start of a new financial year. The new guys can then pick up at a `clean edge.’
What your new accountant will need
To be able to look after you in the future, your new accountant will require various info from you. This info will include an ID for money laundering purposes. As part of this, you can supply a copy of your photo passport or photo driving license and a copy of a recent utility bill showing your home address. They will also send you various registration forms for you and your company to make the move to your new accountant official.
They will also need to register themselves as agents with HM Revenue & Customs (HMRC). You will need to do this for both the company and for you personally. You can notify HMRC by filing a 64-8 form with them.
When you change your accountant, your new one will also need to write to your previous accountant requesting professional clearance. They will also ask for any relevant handover information as part of the change.
When you change your accountant, after a few weeks, you should be properly up and running with your new accountants. They should be looking after your affairs going forward.
If you find after some time that your new accountants do not fit the bill, you will need to perform the above process again!
Link to Contractor Advice UK group on