Becoming a contractor can seem daunting. Freelancing and contracting can be a fantastic idea, helping you deliver your skills in a way that is beneficial for your own work/life balance.
Being freelance can allow you to spend more time with your family and even earn more money than if you were employed by someone else. However, if becoming a contractor is a new experience, you need to ensure you have the correct support around you.
The world of finances can be the main headache when it comes to becoming self-employed. To ensure all your tax paperwork is correct and you keep on top of your outgoings and incomings, you need to make sure you have a good accountant that specialises in working with contractors.
The right contractor accountant will make sure your paperwork is up to date, your tax assessments are completed on time and will help you make sure you’re not paying more than you have to – and that you’re paying enough! They’ll also advise on the complicated rules around things like IR35.
If you have the knowledge to do it yourself, that’s great. But wouldn’t you prefer to focus on what you’re good at, rather than wasting time and getting bogged down in numbers or worrying about HMRC investigations?
Of course, hiring a contractor accountant is a big decision to make. Your accountant will be someone you work alongside for years to come, and someone who you learn to trust with your income. Making the right choice when deciding on an accountant is incredibly important.
Finding someone you can trust to deliver the best contractor accounting services is paramount. But when should you hire a contractor accountant and what should you consider when making the decision?
Let’s take a look.
What should I look for in an accountant?
If your accountant is working for a well-known, established firm, they will be qualified to advise you. At bare minimum, if accountants are still training, they will have an AAT foundation certificate that qualifies them in bookkeeping, costing and financial administration.
More experienced accountants will typically:
– Have an accountancy degree, a more advanced AAT qualification, or an ATT, ACCA, or CIMA qualification
– Be affiliated with a professional body
– ICAEW (Institute of Chartered Accountants in England and Wales)
– ICAS (Institute of Chartered Accountants in Scotland)
– ACCA (the Association of Certified Chartered Accountants)
– CIMA (the Chartered Institute of Management Accountants)
At Account-Ease, all our accountants are professionally trained experts who continuously develop skills to deliver only the highest standards of service.
The beauty of using Account-Ease is that you will have your own dedicated accountant that can learn everything there is to know about you and your limited company, and you can build a lasting relationship.
Being a contractor means you have to comply with complex legislation including IR35.
The off-payroll working rules can apply if a contractor provides their services through their own limited company or another type of intermediary to the client. An intermediary will usually be the worker’s own personal service company, but could also be:
– a partnership
– a personal service company
– an individual
The IR35 rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay the same income tax and National Insurance contributions as employees.
The rules around IR35 and other expenses can be confusing and can have dire financial consequences if you do not follow them. Having an accountant who is an expert in the field can help you follow the legislation and keep your tax bill as low as possible.
Many contractors pay themselves a small salary and take home the rest of their income as dividends. However, if your salary puts you under the primary threshold, you may lose out on the benefits of NI contributions. You also must declare dividends under HMRC’s rules.
At Account-Ease we will set up your finances in the best way for you, whilst still ensuring everything follows HMRC rules. We pride ourselves on being up-to-date with the latest tax laws that apply to contractors and freelancers, so that you can be confident that you won’t run into any issues down the line.
Submitting your tax records and financial information is so much easier now accountants use the best software. In a digital world, if your accountant is still asking for paper copies of receipts in the post, mailing paperwork to sign and keeping physical copies of your records, they’re probably not as up to scratch as they should be.
Some accountants are old school, which makes everything slower, harder and more time consuming. Others will ask you to upload everything to an online portal.
HMRC asks for financial records to be complete, accurate and readable, and the best way to do this is digitally. Since 2015 the government has been working on the initiative ‘Making Tax Digital’. All VAT-registered businesses are required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.
All businesses including contractors will need to file their taxes online using accounting software that has been approved by HMRC.
It’s important to find an accountant that has a good reputation and has excellent reviews from their current clients. You can only ever sense how trustworthy a service is by hearing first hand accounts from people who have used them. An accountancy firm might have a great website, huge presence on social media and affiliations from professional bodies, but you will only know how good they are from fellow contractors’ experiences.
When you’re working for yourself and constantly on the go, you need someone who is efficient and will quickly respond to your queries. You don’t have time to be chasing your accountant about important matters for days, when all you need is a simple answer.
It can be incredibly frustrating to deal with, and it can often lead to you missing deadlines, getting incorrect advice elsewhere and even getting in trouble with HMRC.
Until you start working with an accountant, you’ll never get the full experience of just how efficient they are, but first impressions certainly count. You can tell a lot by how helpful an accountant is just by enquiring about their services.
At Account-Ease, we offer a client service guarantee. If you contact us before 3pm, you’re guaranteed to be contacted by your accountant the very same day. If your relationship with your current accountant doesn’t offer you the flexibility and responsiveness that you require, it’s time to switch.
Switching accountants couldn’t be easier. We make the process quick, efficient, and hassle-free so that you have peace of mind that your tax affairs are in order.
Accountants’ fees can vary a lot. Some may charge as little as £25 a month, others up to £200 a month depending on your turnover. An open and honest accountant will let you know their fees and packages up front so that you know where you stand month on month.
At Account-Ease, you get the same package at the same price, regardless of your profession, sector or turnover. Our all-inclusive limited company accountancy package is just £95 + vat per month. If you pay 12 months upfront, beginning at the start of your company year, we’ll even give you 10% off your total fees.
If you have any questions about the price of a service, all of our accountants can answer your queries to make sure you’re 100% comfortable with the level of support you are receiving. Our customers’ happiness is the most important thing for us!
Whilst you may think that an accountant is an unnecessary expense – especially if you’ve not made any money from contracting yet – it is worth having an accountant in place before you begin.
Working with specialist contractor accountants like Account-Ease will make the process of setting up as a contractor much easier and smoother, and you’ll know exactly what your tax obligations are from the get-go.
A lot of recruiters or clients will only hire if you are set up as a limited company, so you’ll need to register in advance. A good accountant will help you set up your own limited company and make sure it meets the legal requirements. They can also help you register as an employer, so that you are able to pay your salary.
A contractor accountant can also advise you about how and when to deduct business expenses, how to record your finances and how to make sure you stay compliant with legislation from the very beginning.
If you choose your accountant wisely, you’ll make the fees back in tax savings and by staying on HMRC’s right side.