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Choosing the best contractor accountant

Things to consider when making your decision

Searching for a "contractor accountant" can be quite overwhelming. There are so many different companies out there all claiming to be specialists. So how on earth are you supposed to narrow it down to just one? And how do you know you’ve chosen the right one for you?

Here are some things to consider to help you make the right choice.

1. Consider a specialist accountant for contractors

There are many different types of accountants to choose from in the UK. Depending on your individual circumstances, perhaps you’d like one which specialises in limited company accountancy? Or one which provides either a CIS or SME service?

Whatever their area of expertise, you can take comfort in the fact that there is almost certainly an accountant out there which will meet your requirements. However if you’re a one man limited company or Personal Service Company (PSC) contractor, we recommend that you search specifically for an accountancy service provider that specialises in this area. In doing this, you’re more likely to find a company that has the specialist industry and tax knowledge you need, is able to provide you with a tailored service that not only meets your budget requirements, but also allows you to get on with what you do best - contracting.

2. Look for an accountancy package that suits your requirements

When you decide to set up your own limited company, you can take on as little or as much of the limited company administration as you like. Some contractors prefer to have a more comprehensive accountancy service, whereby a dedicated team of accountants are on hand to help you with your company returns and bookkeeping. Others prefer to have a lighter touch accountancy service where they handle most of the company administration and paperwork themselves.

Ask yourself what is important to you? Would you benefit from having a dedicated accounts team who provide a safe pair of hands to help with limited company admin along with advice on pay and tax related issues? Or are you happy with having a light-touch limited company accountancy service where you manage most of the limited company admin yourself? Once you’ve answered those questions, you can begin to narrow your search and identify the ideal accountancy package for you. At PayStream, we offer a range of accountancy services which could be of real benefit to you. To compare these please view our limited company page.

3. Ask your colleagues for recommendations

A recommendation from someone you trust can be invaluable. If any of your colleagues are operating through a PSC, ask them who their accountant is and whether or not they are happy with the service they receive. You’re more likely to receive an honest and unbiased review by doing this. According to a Nielsen study, 92% of consumers believe suggestions from friends and family more than they do any paid advertising.

As well as that, sometimes getting a recommendation from a friend can be financially rewarding. Many accountants offer incentives for referring people to their services, whether that be in the form of a voucher or cash bonus. Here at PayStream, you can earn a member referral bonus each time you recommend a colleague to our services. Click here for more info and T&Cs.

4. Choose a provider that has a range of services so that they can support you no matter what direction your career takes

You may have heard of IR35 or the Off-Payroll working legislation. Both pieces of legislation refer to recent changes whereby the responsibility for determining a contractor's IR35 status has moved from the contractor to the end client, with the person paying the PSC (usually the agency) being responsible for deducting the necessary tax, if IR35 applies.

The impact of this shift in responsibility is that agencies and end clients are now more cautious of working with contractors on outside IR35 roles. So you may find yourself working on a contract that falls inside IR35. If that does happen then choosing to work through an umbrella company is probably the best option for you. That’s because it’s one of the most hassle free ways to work. You can be set up in a matter of minutes and there are no unexpected tax bills as the umbrella company takes care of all of the necessary PAYE and NI deductions for HMRC. They also provide you with a record of continuous employment which can be great for mortgage or loan applications. For a full list of pros and cons, click here to view our benefits of working through an umbrella company guide.

Choosing a provider that offers both accountancy and umbrella company services means that they’ll be able to support you regardless of your IR35 status.

5. Look for accountants that offer an inactive service

At some point in time you may find yourself in-between contracts, where you have periods of at least 3 months where you aren’t operating through your limited company. That might be because you’ve decided to take a career break, or you’ve decided to take an inside IR35 contract. During this time of inactivity, you certainly don’t want to be paying full price for a contractor accountancy service if you’re not receiving income through your limited company.
Therefore, it’s important to identify if your chosen provider can accommodate this scenario for you. There are benefits to keeping your limited company open, especially if you plan to return to working through your limited company in the future, so an accountancy service provider that offers a dormancy or inactive service would be beneficial in this scenario.

6. Make sure there are no hidden costs

Before you decide to officially choose a contractor accountant, make sure that there are no hidden costs to any of the services you assumed would be included with your accountancy package. A trustworthy accountant will always be able to provide you with a breakdown of costs. We suggest that you’re upfront with your specific requirements, doing so may result in a package that’s tailored to you, which ultimately adds value to the service you’ll be receiving.

7. Does the contractor accountant have a good reputation? Are they experienced?

There are so many ways you can research the background of an accountant. Usually a quick Google search will tell you how long the company has been trading. Many of the leading accountancy practices have been operating in the UK for over 20 years, setting the standard for the industry as a whole during that time.

As well as that, you can usually get a good idea of the level of service a provider offers based on their Google and Trustpilot reviews. Anything above 4 stars is usually a good indication that the service they provide is good. It’s always worthwhile reading what customers are saying in their negative reviews, and more importantly looking at how the company responds to those negative reviews.

8. Compliance and accreditations

It may be tempting to choose the cheapest provider, or one that is promising substantially higher take home pay than another. However, there is usually a reason why this is the case. Over recent years HMRC have been cracking down on tax avoidance schemes and those who engage with them, so we can’t recommend enough that you only consider contractor accountants that operate compliantly. As appealing as it sounds to save a extra few pounds here and there, it’s really not worth the potential risk of an HMRC investigation and any subsequent fines.

In order to pick a reputable accountant look out for those who are run by chartered accountants, we also recommend that you look at the company’s professional accreditations, such as the FCSA. They are the UK's leading professional membership body dedicated to raising standards and promoting supply chain compliance for the temporary labour market. In order to obtain FCSA membership, the provider needs to be independently audited by top industry experts in order to demonstrate the highest standard of compliance.

9. If you’re unhappy, don’t be afraid to switch contractor accountants

You don’t have to put up with a mediocre service. If you’re receiving slow responses or are worried that your accountant is giving you inaccurate advice, then request to leave them and search for a new provider. Some contractors are under the impression that it’s time consuming and difficult to switch accountants but here at PayStream, changing accountants is easy and more often than not… free. We'll facilitate the transfer and ensure that all of your company records are kept up to date.

So in summary, it’s really important that you do your research before deciding which contractor accountant to use. Once you’ve narrowed down your list, remember that compliance is key, as well as excellent customer service, value for money and their reputation within the industry. Good luck!

How to set up a limited company?

Working through your own limited company is one of the most tax efficient ways to work. You will have the ability to dictate when, where and how you work. You’ll have the opportunity to build your own brand and will also be able to pitch for work that would be unavailable to a sole trader or an umbrella contractor. In this guide, we'll talk you through how to set up your own limited company.

Read our guide

Estimate your take home pay using our contractor calculator.

We'll break down the calculation based on your hourly or daily rate. You can even input any expenses you may have.

Try our calculator

Get your free limited company quote.

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