So, you have decided to start a limited company for contracting. Well, as with any other business, getting the finances right is a core aspect and for this, it is usually best to hire a reputable accountant. In this read, we are going to give you a few tips to keep in mind when choosing an accounting company to help you out as you run your business.
Do you really need an accountant?
There are business owners who try and do every task on their own, but this is not the field to try and do so. In fact, most companies out there that have a solid stand use an accounting firm.
There are numerous things you can do on your own such as servicing your car rather than using a dealership or conveying your own home rather than using a solicitor. However, the time you spend in such tasks is probably not worth it compared to the amount of money you will save. When it comes to contracting, time is money.
For a reasonable amount per month, you can be confident that all your financial issues, tax, accountancy, etc will be handled in a professional manner by qualified and comprehensive accounting service providers. An accountant specializing in the contracting field already knows what you need and ideally comprehends the specific areas of tax law and accounting that are specific in your industry or your area.
That being said, here are 6 tips for picking an ideal accountant:
Pick a specialist
Even though most accountants out there will be able to provide a service to your company, there are specialist firms across different niches, particularly those that just deal with freelancers and contractors. These accounting firms provide a more superior level of service that what you would get from a generalist, who typically serves all trades and works on a costly hourly basis.
Specialist accountancy firms offer fixed monthly packages which include accounts preparation, tax return, telephone support, statutory matters and payroll. Some packages have more services than others and it is up to you to compare and decide on what you really need based on your business.
A specialist accountant will have more knowledge of the areas that specifically concern your business or industry like the IR35.
Also, reputable accounting companies nowadays offer cloud-based accounting solutions. They either utilize independent platforms such as Xero or FreeAgent, or are designed by them and thus bespoke to them. Picking one of these is important as it will expose you to better services and save you money in the long haul, compared to using traditional spreadsheet-based accounting companies.
According to Fusion Accountants, a small business accountants in London, the contractor accountant industry along with the selection has grown immensely over the last two decades. Some focus on low earning contractors, while others work for the high earning end of the market, by offering comprehensive packages that include all the essential tax planning advice. Some, on the other hand, offer low-support based accounting packages for contractors that are good at bookkeeping themselves.
Most of the specialist accounting firms offering services to contractors are operated by chartered accountants who have opted to specialize, but ideally, have a code of ethics and professional qualification. These are the kind of accountants to look for, as this gives you some degree of comfort and thus enabling you to focus on key aspects of your business.
The firm’s size
The number of clients a specialist accounting firm handles varies greatly, from 200 to thousands of clients. The kind of service you get often depends on these numbers and so, you need to consider whether you would like an institutional kind of service (offered by a big accounting firm), or a personalized one (offered by a smaller company).
For example, if you need telephone support with the same individual every time you call, then it is best to pick a smaller accounting firm. Also, small firms tend to offer generally better service as they do not have a lot of clients to deal with and can focus more on your needs.
Cost of the service
When it comes to a specialist service, expect to pay anywhere from $70 to $150 per month. It is crucial to know exactly what’s included when comparing the prices as the costlier packages tend to be more inclusive compared to the cheaper ones, but you’ll be subjected to additional charges. Examples include registered office address, personal tax return completion, etc.
Keep in mind that you get what you pay for and going for the cheapest may not satisfy your demands.
As with any profession, it’s always advisable to seek recommendations from people that you know in your industry. Talk to other contractors who use specialist accounting firms and you’ll get to know which are worth considering and those that you should avoid.
If you pick an accounting firm that utilizes an independent accounting service, then it will be easier to switch at a later date. It may be possible that the company you pick now won’t be ideal for your financial needs in the future.
In the occasion that you make a poor decision and wish to change accountants, know that it’s possible. Of course, there will be some pain and hassle during the transition, but it will wear off in a few months.
Perhaps you outgrow your current accounting firm and move out of the demographic that their clients are suited for. This usually happens when your business starts to grow and so, your tax planning needs change and start hiring new employees.
Some accounting companies will offer varying packages to cater for such needs so that you stick to them throughout. You may want to consider such offers as the firm knows your business pretty well and you won’t have to go back to the drawing in regards to looking for a new accounting company.
With these six tips, you should be able to pick an accounting firm for your contracting business. All the best!