10 Tips To Choose The Best Accountants for IT Contractors

After you’ve decided that a limited company is the best option for your current contracting career, the next step is to find a specialist contractor accountant.

It is also an extremely important decision. A good accountant can help you save many times your accounting costs by effectively managing your tax affairs.

Here are 10 tips to help you choose a great contractor accountant.

1. Select a specialist accountant for IT contractors who understands the needs

It is important that the accountant is a specialist on contractor affairs and knows key issues like IR35. This knowledge is lacking in most general high-street based accountants, so they should be avoided, even if they are cheaper.

2. Check accountant’s qualification

Accountants that offer accounting or auditing services are recognised under a professional body. It is advisable to be registered with one of the RSBs (Recognised Supervisory Bodies) or RQBs(Recognised Qualifying Bodies) for statutory auditors and accountants in the UK. These bodies are regulated by Financial Reporting Council (FRC) You can find the list of RQBs and RSBs here. To be a Chartered Accountant, one must have either an AAT qualification or an ACA, AIA, ACA or CIMA qualification. Read more: 5 Questions To Be Asked Before Appointing An Accountant

3. Compare the differences between large and small accounting firms

There are many sizes of accounting firms, so you need to choose the one that is right for your needs. One practice may have many IT contractors or none at all. It does not matter how big is accounting practice but it matters whether accountants have been previously dealing with IT Contractors before with existing client portfolio.

This is a good indicator that they are familiar with IR35 and other issues. They will likely have a lot of contract and document templates. However, they might deliver an impersonal service that may not be appropriate if your client has a unique set of skills.

Although a smaller firm may offer a better service, it might be more expensive. One-person practices might be able to provide all the accountancy services for IT contractors with the right skills you need, but may not be able focus on your needs during busy times such as weeks before tax returns deadlines.

4. Refer to other contractors for accountant references

Talk to other contractors before you make a decision about which accountant you want to hire. Ask them about their experience with different accounting firms. Referrals are often the best way to determine if an accountant is right for you.

5. Check the price to confirm what is included

For accountancy services, IT contractors should expect to pay between GBP 85 and GBP100 + VAT per calendar month. They should expect to receive:

• Annual accounts
• Returns on corporation taxes
• Payroll – including auto-enrolment, EPS/FPS, P45, P60 and P11D
• VAT returns
• Self-assessment
• References (eg for mortgages and Bank introduction).

Check with your contractor accountant to make sure you understand what you require and if it is included in the cost.

6. Check what’s NOT included

Sometimes, accountants forget to mention that not all costs are included in the price. Contractors may be charged an unexpected bill for personal tax returns, or other ancillary services. Contractors should verify that the price includes all necessary items and then negotiate to include them.

7. Ensure that the accountant is familiar with IR35

Specialist contractor accountants will have a deep understanding of IR35, how to tax plan and budget for IR35 tax legislation. It is important to ensure that the accountant has a thorough understanding of IR35 and not just adding it to their services list in order to attract more business.

Although some accountants offer contract reviews, contractors should consult a lawyer to determine their IR35 status.

8. Confirm that they are familiarized with the Managed Services Company legislation (MSC).

Many contractors will allow their accountants to perform tasks that they are not responsible for. This is contrary to the Managed Services Companies legislation. The Contractors must ensure that contractor accountants are only performing legitimate tasks and avoiding the MSC rules.

9. As the contractor, it is your responsibility to properly manage your accountant

Accountants are professionals, not co-workers or employees. They can only offer their services if they have accurate and timely information. Contractors need to know exactly who does what and when.

HMRC and other relevant agencies, such as Companies House will not accept an excuse for something being filed incorrectly or late. It is the contractor’s obligation to make sure everything is done on time and correctly.

10. When it is best to change your accountant

Good contractor accountants will save you time and money by correctly tax planning and managing legislation risks like IR35. You should not feel that they are doing a satisfactory job and you should look for another accountant. Contractors who are moving to another accountant must inform their current accountant. It can be difficult to change contractor accountants. However, if the contractor moves from a poor performing accountant to one that is highly recommended, it may save them time and money.