When you’ve determined that the most effective option for trading at this point in your contracting career is to form a limited company, then selecting an expert contractor accountant is the next thing to do. It’s also a very vital one because an experienced accountant could reduce your expenses for accounting by effectively managing your tax obligations.
Here are some suggestions for selecting a good contractor accountant:
Choose a specialist accountant that understands contractors needs
Be sure that your accountant is knowledgeable in contractor matters and is aware of important issues like IR35. Many accountants in the high street don’t have this experience so they are not recommended while they may be less expensive.
Check each accountant’s qualifications carefully
Find out if the accountant is a member of an accounting body that is professional for example, the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales. If not, then you should move to the next.
Evaluate the differences between big and small accountancy firms
The size of accounting firms varies dramatically, and it is important to select one that is suitable for your requirements. The larger firms may have hundreds of contractors. It is a good indication that you are knowledgeable about IR35 as well as other regulations and will likely have plenty of contracts and document templates that are available. However, they might provide a sloppy service, and may not be the best choice when you have a special set of abilities for clients. A smaller practise could provide an individualized service but at a higher cost. A single-person firm may possess all the essential contractor accountant capabilities you need however, they may not be able to focus on your needs during busy times, for example, the weeks leading up to tax deadlines.
Get accountant references from other contractors
Before you make a decision on which accountant you want to go with, it is advisable to talk with fellow contractors and ask them about their experiences with various accountancy companies. Referrals are often the most effective method to decide whether an accountant has the best one for you.
Confirm what’s included in the price
Contractors should expect to pay between PS60 – PS100 + VAT per month for their accountancy services. Typically, they should expect to receive:
- Annual accounts
- Tax returns
- VAT returns
- References (eg for mortgages).
Make sure you know what you need from your contractor accountant, and check to see whether it is included in the price.
Check what’s NOT included
Sometimes contractor accountants do not mention that there aren’t all items included in the cost. This means that a contractor might be charged an unexpected bill like an individual tax return. Contractors should determine whether there’s anything that’s not covered in the estimate and then negotiate to get any items they believe are vital included.
Make sure the accountant understands IR35
specialist contractors accountants will be able to provide deep knowledge of IR35 and the best way to plan your tax and budget in the context of IR35 tax laws. Be sure that the accountant is aware of all the details about IR35 and isn’t just adding the tax to their existing list of offerings in hopes of attracting additional business. Certain accountants offer a review of contracts, however, contractors should consult with a lawyer to evaluate their IR35 condition.
Confirm they are familiar with the MSC legislation
Many non-contractors choose with letting their accountants handle various duties that contractor accountants are accountable to perform themselves, and that is effectively prohibited under the Managed Services Companies legislation. Contractors must ensure that their contractor accountants carry out legitimate duties and avoid the MSC regulations.
Know when it’s best to change your accountant
A competent contractor accountant will make a profit by reducing the time of you and your money through an effective tax plan and managing risks of legislation like IR35. If you feel that they’re doing a great job, be prepared to look for a different accountant.
If a contractor moves in between one accounting firm and the next their current accountant must transfer the records of the contractor to their new accountant. Changes in accountants for contractors can be difficult, but switching from a poor performing accounting firm to one which is high-quality, it may end up saving the business time and money.