If you’ve decided to make the big leap into contracting, then there are likely a host of reasons you’ve done so. Higher take home pay, greater flexibility and a more independent working life are just a few of the benefits contractors enjoy, and the decision to become one yourself opens up a host of opportunities.
But to fully capitalise on the positive side of being a contractor, there are a few slightly less glamourous – but very important – factors you must consider.
One major element is finance and accounting. If you’ve come from a ‘traditional’ job, there’s a fair chance many things you should certainly be clued up on as a contractor have barely come into your periphery before.
But contractors who work through their own limited company are exactly that – companies. And though only run by one person, they have to deal with the same things as a company with multiple employees does when operating.
Now for any new contractor, this has likely been a part of the weighing up process. This level of autonomy and responsibility when it comes to dealing with things like Companies House or the tax authorities is, I’d have thought, more frequently placed in the ‘cons’ list, rather than the ‘pros’.
The good news is there are plenty of specialist accountants out there that are more than familiar with what is required when working as a contractor, and can easily assist you.
Plenty of accountancy firms specialise in this type of work, and their expertise can be a lifesaver for contractors who may feel such tasks are not in their skillset.
Accountants can liaise with tax authorities on your behalf, run your company payroll, complete end of year account reports and deal with Companies House. They provide a service that ultimately saves a contractor a huge amount of stress, time and potential problems due to a lack of knowledge of the area.
Of course, as with any service provider, there is a spectrum of quality.
There are a few key things to consider when selecting yours, but perhaps above all others is the extent to which they specialise in the specific demands of contracting. A good contractor accountant will know the annual ‘cycle’ of contracting payments like the back of their hand, and will appreciate how important it is for contractors to consider IR35.
This, by an inexperienced or inadequate accountant, could be overlooked and thus place you in a position of jeopardy.
Something any contractor will naturally look at when considering accountants is their fees. A ball park figure would be anywhere between £80 and £150 each month, and as with anything, cost doesn’t necessarily equate to quality. Be sure to speak with the accountancy firm and gain a real feel for what they offer and how they can benefit you as a contractor before making any decision. You’re paying them for a service, so make sure that service will be to the standard you require.
Finding out how many other contractors the firm represents is always a good idea and as you will often have to work with the accountancy firm using technology, it’s worth getting an idea of how simple or laborious that process will be.
Perhaps most important of all though is the feel you get. Trust your instincts and try to find an accountancy firm that works for you and what you require as a contractor.
If you know any other contractors, it’s worth asking them who they use, and we at Larsen Howie are always willing to discuss your professional needs and help you find the best way to make the most of working as a contractor.