There really has never been a more positive time to start working as a contractor; the self-employed are continuing to thrive, despite the current economic climate, while permanent employee salaries are being cut and benefits reduced.
There are many advantages to working as a contractor, such as the chance to earn more money than a permanent worker and have increased freedom and control. And, with the right guidance and advice from a good contractor accountant, you can rest assure that the financial side of your business will all be taken care of properly.
Why do I need a contractor accountant?
A good accountant will be able to:
• Ensure you understand what taxes you will need to pay
• Provide proactive tax advice throughout the year
• Help you maximise your tax allowances
• Make sure you run your business as tax efficient as possible
• See that you don’t miss a tax deadline and that your submissions are accurate
• Advise you on how to manage your business.
They will also be able to keep you informed on areas such as:
• Performance ratios
• Customer activity
• Credit control
• Budget comparisons
Fixed fee contractor accountant
It’s really important that as a contractor, you appoint an accountant who specialises in working with the self-employed. This way you will know that they are knowledgeable in the specific taxes that affect you and your working practices.
Another point to take into account is how much they will be charging you for their services. Most accountants charge fixed rate fees but it is worth checking that their fees are not linked to how much you earn and that there are no entry or exit costs.
Some accountants might even have additional costs, such as being charged every time you call or email your accountant, and you should check that they will cover your personal taxation (if not find out how much they charge extra for this).
Having a fixed fee accountant essentially means that you are given free advice throughout the year, as you are able to contact them as many times as you need without being charged each time. A good fixed fee accountant will provide a service that will typically include:
• Year end accounts
• Payroll bureau
• Dividend administration
• Dealing with Inland Revenue and Companies House
• Completion of VAT returns
• Completion of Annual Return
• Personal Taxation
• Access to your dedicated contractor tax expert for all help and advice
• Free bookkeeping software.
IR35 is another topic that your accountant should specialise in, as it affects all contractors; it therefore makes sense to have an IR35 accountant who has a long history of experience with the legislation, to ensure you understand what your status is and how it can affect the running of your business.