A contractor accountant is an accountancy firm who specialise in dealing with the accounting of contractors. Generally, contractor accountants only deal with contractors, and will not deal with larger organisations. They have specialist knowledge of the way that contractors work, and tailor their accountancy service to suit the needs of contractors.
What is the contractor accountant’s role?
If you are a freelance contractor who has set up a limited company, your requirements will differ from other types of businesses. Many contractors work alone and do not have anybody to take care of bookkeeping and so on. The contractor accountant can deal with this for you in most instances, and will also deal with the calculation of corporation and income tax, setting up payroll and paying income via dividends, producing year end accounts, VAT returns if this is required, and filing records with Companies House.
Most of the time, the majority of these tasks can be done yourself, however they can be very time consuming and there are various contractor accountants out there who offer low cost accounting packages to do all of this for you, freeing up your time and allowing you to spend that time on becoming a more profitable business.
Do I need a contractor accountant?
If you are a contractor, you really should consider getting an accountant. If you want to apply for a mortgage or other financial product in the future, your accounts are what will validate your income. It also means that if HMRC require information, it is all available via your accountant, and your HMRC tax returns can be filed for you on time to avoid fines.
You are still able to do the bookkeeping yourself so that you know where you are, and the best way if often to keep a spreadsheet with details of all invoices that you have issued. This will also help you when chasing up payments from your clients, as you will clearly be able to see which invoices are still outstanding.
How do I choose a contractor accountant?
Choosing the right contractor accountant is an important business move. You will want to ensure that your contractor accountant is experienced, and can deal with more complex issues such as IR35, and the best way to decrease your tax bill.
You should set aside a decent amount of time to do your research. Shortlist a few that you find on the internet, and then call and speak to them to get a feel for whether they offer exactly the kind of assistance you’ll need. If you want to be paid by dividends from your limited company to reduce your tax bill for example, you may wish to find a contractor accountant who has experience in dealing with this, and who keeps on top of new legislation as rules on this kind of thing can change regularly. The last thing you want is to end up with a huge tax bill, or to be investigated because your tax or accounts are incorrect.