Top things to consider when choosing a contractor accountant

Home/New to contracting/Top things to consider when choosing a contractor accountant

Top things to consider when choosing a contractor accountant

If you’ve chosen to become a contractor, firstly, congratulations as you’re joining a growing club of skilled specialists.

If you’re on the fence and aren’t 100% sure if contracting is right for you, download our free guide to contracting and see what it involves.

Contracting opens up opportunities for you to work on different projects for differing clients here in the UK and potentially overseas. As well as having greater control over what you work on, you can also choose when you work, giving you greater flexibility if you have carer or parental responsibilities or if you like to take extended time off for holidays or to spend on your hobbies.

There are different options when it comes to contracting. You can either choose to work through an umbrella company and effectively become an employee of that company, or, if you want to maximise your take-home pay, working through your own limited company is the way to go.

It may seem daunting setting up a limited company and managing the responsibilities that come with being a company director. This is where a contractor accountant can be a valuable partner, helping you to register the company with Companies House, handling communication for the business from Companies House and HMRC, helping to set-up and run the company’s payroll and advising you how to work tax efficiently as possible amongst other things.

It’s worth taking the time to find an accountant who is experienced in working with contractors, instead of a generalist accountant. A contractor accountant will understand the specific (and sometimes complex) rules and regulations that pertain to contractors i.e. IR35.

To help you narrow down your options, here are the top things to consider when choosing a contractor accountant:

    1. Will the accountant meet me?

      Advancements in technology has meant that nearly everything can be done over the phone, by email or through a cloud accounting system. However, there may be times when it is necessary for you to meet with your accountant, like if you considering adding shareholders or making someone else a director in the company. Or, it maybe that you are not comfortable conducting your accounting affairs over email or the phone.Accountant meeting client

      If you do need to meet your accountant in person, firstly it advisable to find someone who is not too far away as you don’t want to spend hours travelling.  Secondly check that they are happy to meet you and finally ask if they will charge you for the meeting.

    2. Are they qualified?

      Hiring an accountant is one of the most important decisions you’ll make for your business, so you want to be sure that whoever you choose is qualified to do the job. If the accountant does not state who they are regulated by, don’t be embarrassed to ask.In the UK there are several accounting bodies, these are:

      • The Institute of Chartered Accountants, which is split into; ICAEW for England and Wales, ICAS for Scotland and ICAI for Ireland
      • The Association of Chartered Certified Accountants (ACCA)
      • The Chartered Institute of Public Finance and Accounting (CIPFA)
      • The Chartered Institute of Management Accounting (CIMA)
      • Association of Accounting Technicians (AAT)

      These bodies cover different sectors, but each has its own set of regulations that the accountant must abide by.

    3. Will I have one point of contact?

      Even if the accountancy firm is relatively small, double-check that you will have one point of contact who will be responsible for managing your accountants, offering advice and who will support you in achieving your business goals. Consistency is key in business and this can easily be lost if your accounts are managed by various people.

    4. What systems do they use?

      A modern business needs a modern accountant and cloud accounting software enables accountants to do more than calculate your income and outgoings. Systems like Xero and FreeAgent are incredibly sophisticated and make time-consuming functions like tracking how much hours you have spent on a client’s project, invoicing, recording business expenses and running payroll, that much easier and quicker to perform.

      Hands on a computer keyboard.

      Plus, with the rollout of Making Tax Digital (MTD) in April 2019, all business who are VAT registered with a taxable income over the VAT threshold (£85,000 for 2019/20 tax year) must now keep digital VAT records and file these records using an MTD compatible software. Further information can be found in our article ‘Making tax digital from April 2019’.

      If you find the accountant is still working offline with excel spreadsheets maybe you should consider finding someone who is more comfortable with technology.

    5. What do their reviews say?

      IT contractors holding up speech bubbles.

      Before agreeing to engage with an accountant, it’s a good idea to hear what other contractors have to say about working with them. You can either ask the firm to provide you with a couple of references – clients who are happy to be contacted to discuss the level of service they have received. Or, as most accountants now have websites, client testimonials or references may be listed on their site somewhere (you can read some of our testimonials here).

      Alternatively, you may find reviews on their social media channels, particularly Facebook and their Google business page, or you can scan review sites such as feefo or Trustpilot.

    6. What’s included in their fees?

      Most accountants offer monthly accounting packages, with rates ranging from £99 and increasing to two or three hundred pounds plus, depending on what it is included. As this shows, hiring an accountant is a big financial commitment. While choosing a contractor accountant shouldn’t come down to fees alone, it’s important that you are aware of what is included in their fee, so you aren’t sprung with an unexpected invoice for additional services.

      Ask the accountant to provide you a clear breakdown of what is included in their fee and what is extra. For example, some accountants charge extra for completing personal self-assessment tax returns.

      Invoices on a table alongside a calculator.

      You should also query if there is an exit fee (in case you aren’t happy with the service or you change your employment status) if you want to get out of the contract early.

      Common services a contractor will need and should be considered when choosing a package are:

      • Annual accounts
      • Tax returns
      • Payroll
      • Self assessment
      • P11D
      • VAT returns
      • References (eg for mortgages).
    7. Are they IR35 experts?

      If you’re not aware, IR35 is a piece of legislation that was brought in to cut-back on what HMRC deems as ‘disguised employment’. This is where an employee leaves their job on a Friday only to return to the same role on a Monday as a contractor working through their own limited company and benefiting from the tax advantages this gives them. IR35 is a little more complicated than this and our article ‘What is IR35’ covers it in more detail.

      With new IR35 legislation due to be introduced to the private sector in 2020, it’s important that you find an accountant who fully understands it and who can advise you on whether your contract places you inside or outside of the legislation.

    8. Do they offer an Umbrella option?

      An Umbrella company gives you the flexibility to swap between your existing limited company and umbrella depending on the contract in place. As well as saving you an additional cost elsewhere, you will also benefit from having all of your financial affairs under ‘one roof’.

    9. Pension Contributions

      It’s important to consider putting money away for the future. Whether you’re setup under an umbrella arrangement or Limited Company you’ll want to consider paying into your pension pot. There are also benefits of paying which can help reduce your tax bill. Your accountant should be able to advise and support you with the best options dependent on your circumstances.

Brief overview of what to consider

In summary, when choosing a contractor accountant, look for some who is:

  1. Close-by (if you want to regularly meet your accountant in person)
  2. Happy to meet you and who will also handle queries via email or over the phone
  3. Regulated by an accounting body
  4. A contractor specialist and who is up to date on regulations pertaining to contractors
  5. Able to provide one point of contact
  6. Proficient using cloud accounting software
  7. Regularly getting good reviews
  8. Umbrella options available
  9. Your pension payments

For further information on our accounting packages click here, or to hear how we can support you as a contractor, speak to one of our Directors on 01962 867550, or send or us a message via our website and we’ll call you back shortly.

6 months half price when you join before 30th September

  • Half price contractor accounting for 6 months
  • No switching or catch up fees
  • Join SG Accounting before 30th September

New to contracting?

  • Complete business set-up
  • Help choosing between Limited and Umbrella
  • IR35 explained
  • Feel confident about your finances

Switching Accountant?

  • Switch fast and for free
  • Get expert face to face advice
  • Survive IR35
  • Help with your other business interests