Top 10 tips for choosing a contractor accountant

If you do a quick Google search for the term “contractor accountant”, you may be surprised to see just how many companies claim to be specialists in this sector.

With so many companies to choose from, how do you know which ones will provide you with the best service?

Here are some essential tips to help you make the right choice.

Choose a specialist accountant for contractors

There are plenty of accountants to choose from in the UK. Many specialise in different fields, such as small limited companies, CIS, landlords, and SMEs.

As a contractor, you will be pleased to know that there are hundreds of specialist contractor accountants, and your best bet is to search for a provider that specialises in the precise services you require to run your personal service company (PSC). Specialist contractor accountants will provide tailored services that can help contractors succeed while saving themselves money.

For example, Lamborghini and Kia both sell motor vehicles. However, if you are looking for a cheap city run-around, you’re probably better off seeking the product on offer from the provider that specialises in lower-powered, highly efficient cars.

Identify the perfect accountancy package

Specialist contractor accountants usually offer multiple accountancy packages to clients. It is essential accountants cater to all contractors because everybody has different requirements. Therefore, it’s an excellent idea to conduct some research and to determine what services you require.

For example, are you seeking a comprehensive service that covers most administrative aspects of running a business? Or, are you looking for a more hands-on arrangement and possibly access to accountancy software? Once you know what you are after, you can identify which accountancy packages provide you with the best value for money.

Assess your software options

Plenty of contractors hate the idea of using software to support them with the running of their business. On the other hand, some are dependent on time-saving software! It’s down to the individual’s preference.

You may be interested to know that accountancy software has improved dramatically over the last few years. There are some genuinely innovative companies offering market-leading software, including Xero, QuickBooks and FreeAgent.

If you’re new to accountancy software, you may be amazed to discover what it can assist you with. Most leading software can help you create branded documents, access live bank feeds, send automated reminders to clients, submit HMRC documentation, record receipts, manage bookkeeping, and more.

And, as more software enters the marketplace, accountancy software does not break the bank. It is also worth remembering that you can claim tax relief on the cost of accountancy software because it’s a business-related expense.

A relatively new phenomenon that has entered the contractor marketplace is accountancy combined with software. Many contractor accountants claim to offer a ‘hybrid accountancy service’ (or ‘online accountancy service’) for contractors and freelancers that includes a popular software but comes with the ongoing support of an expert accountant.

Combining the two could prove a winning combination. Not only will it help keep your costs down because the software requires you to manage various aspects of your business, but you’ll always have an accountant you can ask questions to – as and when they arise.

Read Bytestart’s guide to choosing the best online accounting software here.

Ask your friends and colleagues for recommendations

Word of mouth is a big deal. Ask around and see if any friends or colleagues are currently using a contractor accountant that they would recommend. In a study conducted by Nielsen, 92% of consumers suggested they believed recommendations from family members and friends more than any other form of advertising. With that said, positive experiences are worth their weight in gold from a business’s perspective.

Not only is word of mouth a great way to gauge how good a contractor accountant is, but you might be able to take advantage of referral rewards. Many companies rely on referrals as an effective business development tool. Consequently, it’s likely you and the person that’s referred you could be rewarded.

Make sure umbrella PAYE payroll support is available

In the new world of contracting, IR35 is proving more troublesome than ever before. Changes to off-payroll working rules in the public sector (2017) resulted in thousands of contractors being deemed inside IR35.

And, with the similar changes in the private sector rolling out in April this year (2021), the same has happened to contractors working for some of the biggest private sector firms in the UK.

When inside IR35, it’s no secret that using an umbrella company is probably the best option for a majority of contractors and freelancers. Read more about the pros and cons of working via an umbrella in this dedicated guide.

Whether fair or not, the chances are that more contractors will find themselves inside IR35 at some point in the future. As a result, it’s crucial to take this into account when choosing a contractor accountant.

Many accountancy firms have amended their accountancy packages to include free umbrella payroll – should you require PAYE down the line. And, many contractor accountants can help with IR35 matters, including IR35 status reviews and insurance.

Before you commit to the services of an accountant, find out how they will support you if you decide to take a role inside IR35.

Your best option is probably to keep your limited company operational – so you can return to it at a later date.

However, some contractor accountants will offer unrivalled support and advice to ensure your contracting career runs smoothly and cost-effectively.

Choose a provider that offers an inactive service

Following on from the point above, you may find yourself without a contract. Whether your time between assignments is a few weeks or six months, you don’t want to pay full-price for a contractor accountancy service if you’re not putting anything through your company.

Our advice is simple – speak with the providers you’re interested in and see if they offer an inactive service. In many cases, keeping a limited company open and ticking over in the background is a good idea and a cost-effective way to operate. It’s also advantageous if you decide to take a role inside IR35 – as you can return to your company later when working outside IR35.

Make sure the service you choose is black and white

Nobody likes hidden costs and discovering something you thought was included costs extra.

Trustworthy contractor accountants will not only confirm what is included in the package you’ve chosen, but they should also make it obvious what is not. Do not be afraid to challenge them or to ask for something to be added to your package.

Tailoring an accountancy service to your specific requirements (if you don’t think an existing package is perfect as it is) should not be a problem and may provide you with added value.

Research a contractor accountant’s reputation and experience

Choosing an accountant with a good reputation is a no-brainer. With so much choice, focus on the businesses that have been around for a long time.

The most established businesses will have built a reputation worth shouting about. Some of the most established contractor accountants in the UK have been around for over 20 years. They have set the standards for the industry since they launched.

Reviews are also another element that you should be monitoring. When choosing a contractor accountant, research each company you’re interested in and see what contractors are saying about them on Google and Trustpilot. It will soon become clear whether or not you can trust a company!

Compliance and accreditations

It is crucial that you only consider using a compliant contractor accountant. HMRC is always stepping up its efforts to catch the criminals behind tax avoidance schemes and those who engage with them. While pocketing a few extra pennies may sound tempting, it could land you in serious trouble, and you might face life-changing fine in years to come.

To ensure you pick a trustworthy and ethical contractor accountant, you should only consider using a company that has obtained accreditation from the FCSA or Professional Passport. These two professional bodies are the most recognised and respected in the temporary staffing sector. They are both dedicated to ensuring the supply chain of temporary workers is compliant and ethical and that service providers always operate in the best interests of their clients and employees.

Never be afraid to switch contractor accountants

Life is too short to put up with a substandard and overpriced service. If you’re not happy with your current contractor accountant, let them know by requesting to leave. Either you move to a better provider, or your underperforming accountant will take your desire to move as a severe wake-up call.

When you identify a contractor accountant you would like to transfer to, they will help make the switching process as streamlined as possible.

Switching will require you to carry out some administration, but once it’s complete, you will never look back! It’s worth adding that in many cases, switching to a new contractor accountant is free of charge. However, make sure you’ve read the terms and conditions of your existing arrangement, and ask the relevant questions to your preferred new accountant before signing on the dotted line.

Conclusion

When choosing an accountant, it’s essential to conduct thorough due diligence to ensure you use a compliant company that will provide you with excellent value for money.

Opting for a compliant accountancy provider should be priority number one. When you’ve found a selection of compliant accountants, you should prioritise service, value for money, and their reputation.

Specialist contractor accountants are not necessarily for everyone. However, they could save you significant time, reduce administration and help your business run smoothly. It’s well worth looking into the services available before deciding whether or not to use one.

Our top 10 tips for choosing a contractor accountant have been written to provide you with a benchmark when conducting your own research, and we wish you the best of luck!

Last updated: 8th September, 2021

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