It’s that time of the year again - and no, we’re not talking about Christmas. If you’re a contractor, then the deadline to file your tax return is rapidly approaching. You have until 31st January 2020 to get your online self-assessment submitted for the tax year ending 5th April 2019; do you manage your own financial affairs, or do you get a professional accountant to check them over for you?
While there is nothing to stop you from handling your accounting yourself, many contractors choose to hire an accountant. A good one is likely to save you many times the cost of their fees, using their expertise to ensure you are tax-efficient, claim the right allowances and only pay the tax that you need to. For the time that it would take you to do your accounts yourself, it may be more cost-effective to pay an accountant to do it for you instead. Like your clients come to you for your industry-specific expertise, so too do contractors go to accountants for theirs.
What accounting services will I need?
Whether you choose local or online accounting services, you want an accountant to be on hand to answer your questions and help you keep on top of your tax responsibilities. It’s also important to choose someone who is fully compliant with HMRC. Here are the types of services you can expect, usually charged for a fixed fee:
- Year-end accounts
- Corporation tax returns including VAT services
- Directors personal tax returns
- Companies House annual returns and notifications
- Annual tax management including routine queries and dealing with HMRC
- Tailored salary and dividends calculations
- Advice on allowable expenses and related paperwork.
Some providers will also give you access to their online accounting software to help you keep on top of your accounts and bookkeeping. Instead of keeping everything on spreadsheets, you can use the software to send invoices, record expenses, see a real-time view of your contractor accounts and how much tax you owe.
How to find an accountant you can trust
Most contractors choose an accountant based on recommendations from friends and others in the industry. They also tend to prioritise how experienced the accountant is at dealing with the specific needs of the self-employed and their knowledge of important tax issues, including IR35.
There are some other factors to consider too:
Check the accountant is registered
Are they associated with a professional body and clearly state this on their website? If not, make sure you ask. Appointing a chartered accountant or regulated firm, usually registered with one of three bodies – ACCA, ICAEW or CIMA – will ensure you get someone who has the appropriate qualifications and expertise and follows strict standards and codes set by these industry bodies to protect you as a client.
Read online reviews
There are loads of great resources and reviews out there which other contractors have taken the time to write. Check out forums such as ContractorUK for tried-and-tested recommendations and reviews of some of the leading contractor accountants in the industry today.
The benefits of choosing an experienced contractor accountant
While some contractors choose to go with a local accountant who they can meet with in person, a growing number are now opting for accountants that specialise in dealing with contractors. Knowing your business and its specific needs usually outweighs the benefits of being able to meet face to face. They will have access to the latest tax legislation information and tend to have a far greater understanding of the tax rules targeted at contractors and freelancers. They will also be very aware of the nature of contracting, understanding that gaps between contracts are commonplace.
Whoever you choose, your accountant should help you to ensure that you’re compliant with all the latest tax rules, including the IR35 reforms coming to the private sector in April 2020. For added peace of mind, many contractors also choose to take out IR35 insurance. In matters like these where a tax enquiry can threaten your livelihood and cost your business thousands in legal fees, it pays to have this added protection.