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6 tips for choosing an accountant for your limited company

Have you decided to start contracting using a limited company? Then you will need to get an accountant. This guide gives the top 6 tips to consider when selecting the best accounting firm to help you throughout your contracting career.

Do you need an accountant?

Whilst a few contractors attempt to do everything themselves this is certainly not the most efficient way of doing things. The vast majority of contractors use a specialist accounting firm.

There are many things you can do yourself like convey your own house instead of using a solicitor or service your own car instead of using a qualified dealership. However, the investment in time is probably just not worth it to make a small saving. If you are contracting then time is money.

For a small monthly fee you can rely on a qualified, specialist and comprehensive service in all relevant areas of accountancy, tax and other financial issues, which will arise when you take up contracting.

An accountant who specialises in the contracting industry will already know exactly what you need and also understand in detail the specific areas of accounting and tax law that is specific to your market.

Tip 1: Choose a specialist

Although most qualified accountants would be able to provide a service to you, there are now many specialist firms of accountants across various market sectors, particularly those who only deal with the affairs of contractors and freelancers.

By their very nature, these firms generally offer a far superior level of service than you would obtain from a generalist (high street) accountant, who would typically serve all trades and charge you on an expensive hourly basis.

The specialist accountants usually offer a package for a fixed monthly fee, which includes preparation of accounts, corporation tax return, payroll matters, statutory affairs and telephone support. Some packages include more than others, so make sure you do your homework when comparing different accounting firms - use our checklist.

A specialist accountant will have a far greater degree of knowledge to the areas which will specifically concern you, for example, IR35 and other “hot topics” relevant to your industry.

Most reputable firms will now offer a cloud based accounting solution. These are either built by them and therefore bespoke to them, or they make use an independent platform like FreeAgent or Xero combined with tools like Receipt Bank. Choosing one of these is paramount as it will simply save you money and offer better service for your money compared to using the old style spreadsheet based firms.

The contractor accountant industry, and thus choice, has grown considerably over the last 20 years. Some offer low support based packages for contractors that are savvy with book keeping themselves. Some are more focused on the low earning end of the market, and others focus on the high earning contractors - and offer complete packages which include the all important tax planning advice.

Tip 2: Check for professional qualifications

The vast majority of the specialist firms offering services to consultants are run by chartered accountants who have chosen to specialise but also have a professional qualification and code of ethics, which may give you some degree of comfort.

It would simply be unwise to deal with a firm who are not qualified.

Tip 3: Size of the firm – small or large?

The number of clients handled by the specialist firms of accountants varies significantly from 200 clients up to several thousands of clients.

The style of service will usually be reflected by the numbers and you do need to consider whether you prefer an “institutional” type of service, as will be given by the larger organisations as compared with the more personal level of service, which a smaller firm would usually provide.

For example, if you require telephone support at partner level with the same person each time you call, you may be better choosing a smaller organisation, rather than a large firm.

Tip 4: Recommendations

It is always useful to get a recommendation from a colleague if you can. Chat to other contractors. You’ll soon discover the ones to avoid and the ones offering good service.

If you choose an accountant that uses an independent cloud based accounting service, then changing at a later date will be more straight forward. And it may well be that the firm you choose now won't necessarily be the right firm for you a few years later after your contracting business has grown.

Tip 5: Cost of the service

You should expect to pay fees in the range of £60 - £120 per month for a specialist package.

It is very important to consider exactly what is included when comparing costs, since the more expensive packages may be “fully inclusive”, compared with those which are marketed as cheaper but you will be subjected to extra charges, for example, completion of your personal tax return, P11D, registered office address, etc.

Remember that as with most things in life, you will generally get what you pay for and the cheapest may not meet your requirements.

Tip 6: Changing accountants

If in hindsight you make a bad choice and want to change accountants then this can certainly be done. There will be a bit of hassle and pain during the transition but should settle down after a couple of months.

It might of course be that you outgrow your current accountant and you move out of the demographic of customers they are designed to cater for. This tends to happen when you start earning more money and need tax planning advice or if you start growing your business by hiring employees and become a small business.

Some firms will offer different packages to cater for this so that you stay with them throughout your business journey. These firms are well worth considering because an accounting firm that gets to know you well will also be able to provide you with better long term support.

Steps to choosing an accountant - summary of steps:

  • Get a recommendation if you can.
  • Choose a specialist firm for your industry.
  • Check that everything is included – no hidden costs.
  • Expect the level of service to be related to what you pay.
  • If you are not happy then change.

Updated: Tuesday, 3 October 2017

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