If you are a contractor working through a limited company rather than an umbrella company, then you have the responsibility to pay your own tax and handle your other financial affairs. This can be both complex and time-consuming, and it is usually advisable to engage an accountant to help you with the process.
Hiring a contractor accountant not only saves you time in following your legal obligations, but it can also save you more money than your accountant’s fees as you deal with your tax affairs efficiently.
It’s important to choose the right person or company, so here are ten tips to help you find a contractor accountant.
Contractors’ tax and financial affairs often involve elements that generalist accountants might not be familiar with, including issues having to do with IR35. It can be helpful to find someone with specialist knowledge and experience, even if this costs a little more.
Make sure that your accountant of choice is fully qualified and registered with a professional body such as the Association of Chartered Certified Accountants (ACCA) or the Institute of Chartered Accountants in England and Wales (ICAEW).
Personal references are a great way to gauge accountants as well as many other professionals. Chat to fellow contractors about their experiences, either in person or online.
There’s no such thing as a one-size-fits-all accountancy business, and companies of different types and sizes each offer their own benefits. Large national or international companies might have thousands of clients who are contractors, a huge pool of knowledge and access to resources such as contract templates.
On the other hand, the service from large accountancy businesses might be a little impersonal, and you may feel that you are not a priority. Small or one-person practices offer a more tailored service and a genuine ongoing relationship. One drawback is that they might not be able to dedicate people to your needs at busy times such as tax deadlines, when they will have to see to all their clients with limited resources.
The amount that you pay will depend on several factors, including the complexity of your affairs and what you want your accountant to do. Typically, you can expect to pay between £60 and £100 (plus VAT) per month.
Some typical tasks and areas may include:
Before entering into any agreement, ensure that you know what you need and what you will get for the price.
You don’t want to suddenly receive a bill for added services. The flipside of knowing what your accountant includes in your regular payments is to identify needs that the price does not cover. If your contract leaves out something that you feel is essential, then negotiate or move on to an accountant who does offer that service.
Contractors must carry some tasks out themselves, according to Managed Services Companies rules. This is a good example of why you need an accountant familiar with the special circumstances of contracting.
IR35 tax legislation is highly important, and it’s essential that your accountant knows their way around this complex issue. He or she should be able to tax plan and budget in relation to IR35, but you should still consult a legal specialist when it comes to setting up your status.
Accountants are there to offer advice, but they still need you to do your bit by keeping exact records and offering them in a prompt fashion as and when needed. You are also responsible for keeping on top of your obligations and ensuring their discharge. HMRC, Companies House and other relevant bodies will not accept an accountant not filing or paying on time as an excuse.
If your accountant is doing everything that you need at a price that you are happy with, then you will probably find it beneficial to keep a relationship that you are familiar with and trust. If you are unhappy with either the service that you receive or the price that you are paying for it, however, then you should be prepared to change your accountant.
When switching services in this manner, your existing accountant must transfer the relevant records to your new one. This might present a bit of an upheaval, but if you receive better service and potentially save money, then it is usually worth the hassle.
Follow these steps to ensure that you find the right person for the job.