The High Price of Low Cost Accountancy…

If you’re looking to setup your own Limited Company for contracting and you need the help of a good accountant, then we strongly recommend you read the brief, but very valuable advice below.

You’ve probably got a lot of questions about going Limited;

• How do I setup my Limited Company properly?
• What will my responsibilities be as a director of my company?
• What’s IR35 and am I affected by it?
• How do I get paid through a Limited Company?
• Are there lots of pitfalls I need to be aware of?
• How will I know if I’m doing something wrong?

Unless these questions are answered correctly and you understand exactly how to setup and run your Limited Company within the confines of the law, then you can become unstuck.

We have seen lots of cases where contractors have come to us in a mess, simply because they didn’t receive the right advice and ongoing support from their accountant.

Provided you choose the right accountant then all your important questions will be answered and you can concentrate on your contract work, safe in the knowledge that your accountant will stop you straying too close to the edge, or doing anything that attracts the interest of HMRC (who might then conduct an enquiry).

The right accountant will also be knowledgeable about all the tax saving opportunities available to contractors to ensure you remain as tax efficient as legally possible.

So, when you’re choosing an accountancy firm to look after your contracting affairs, you MUST ask these 3 questions...

Asking these simple 3 questions could literally save you thousands of pounds.

Are they a qualified firm of Chartered Accountants who are regulated by a Professional Body (i.e. ACCA, ICAEW)

A high percentage of accountancy firms that provide services to contractors are not regulated by any professional body. This means they are not answerable to anyone. Should the situation arise where they make a mistake with your accounts and you get hit with a hefty tax bill then you will have no one to complain to, and you’re on your own!

On the other hand, if you choose an accountancy firm that is regulated by a professional body, then you can complain to the ACCA (Association of Certified Chartered Accountants) or ICAEW (Institute of Chartered Accountants in England and Wales) and the firm in question will risk losing their Chartered status if they fail to rectify the situation.

Do they have sufficient knowledge and experience in dealing with Contractors or Freelancers?

It can be tempting to look for a local accountant to look after your Limited Company, but before you go ahead, consider whether they have sufficient knowledge and experience of the contracting market? There are many specialist areas of contractor accountancy that a general accountant may not be aware of, and missing these tax breaks or specific rules can prove very costly.

Here’s a prime example. We recently signed up a new client, Mr W, who already had his company set up and was looking for a new accountant to take over his affairs. When we reviewed his situation, in particular his VAT liability, we discovered his existing accountant had missed a significant tax savings opportunity.

In short, we saved Mr W £8000 per year in VAT in the first few days of him joining.

Does a qualified accountant check everything or are they relying solely on automated accountancy software?

There has been a recent influx of cheap accountancy providers entering the market, many of whom are overly reliant on automated accountancy systems.

Online accountancy software needs to be carefully managed to ensure the advice remains accurate. We cannot stress the importance of having a qualified accountant check your accounts, VAT Returns, tax returns etc. before they are submitted; otherwise your mistakes may go unnoticed until HMRC come calling.....

That’s why, unlike other providers, our online portal includes monthly reconciliations by a qualified, experienced accountant so you know it’s correct. Having this ‘human’ fail safe means that if you’re over spending and getting into difficulties, we’ll alert you straight away, not at the end of the year when you can’t afford to pay your tax bill!

What’s Important to You?

If you’re happy choosing an accountancy firm that’s not qualified (or regulated), doesn’t have specialist knowledge of the contracting market and provides a standard online accountancy service for £60 per month then unfortunately Freestyle is not for you. We’d like to wish you every success and finish by saying one thing... our door is always open for you should you need to contact us in the future.

On the other hand, if you understand the value, security and peace of mind a professional accountancy service can bring, then we’d love to hear from you.