Do I Need an Accountant as a Contractor?
Self-employment implies doing everything yourself for many contractors, as this offers them complete control over their firm. However, just because you became a contractor so you could be your own boss doesn’t mean you have to devote time and effort to account management.
When you’re self-employed, hiring an accountant might be useful to your business because UK taxes and rules are complicated, change regularly, and are updated constantly. When you’re already busy establishing your business, staying on top of everything can be difficult, so hiring an accountant to handle all of the paperwork for you is usually the best option.
In this post, we’ll discuss why you should hire a contractor accountant and how your organisation might profit from it.
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What exactly does a contractor accountant do?
Your accountant will take care of a variety of important responsibilities on your behalf. These are some of them:
- Creating and maintaining a payroll system for your business.
- Creating your limited liability company (assuming your are new to contracting).
- Registering your business for VAT and filing your VAT returns on a quarterly basis.
- Completing and filing your company’s annual accounts with Companies House and HMRC.
- Confirmation Statements must be filed.
- Dealing with on-going paperwork for the company.
- Providing assistance with tax planning.
- Filling out your individual tax return.
- If you wish to apply for a mortgage, for example, you’ll need to provide professional references.
There are also dozens more lesser chores that aren’t included in this list.
Maintain your composure.
One of the most important advantages of hiring an accountant is that you’ll always be up to date on the latest legislation. This is due to the fact that accountants are specialists who keep up with not only news but also government and tax legislation changes. It’s easy to make mistakes or file a late return when there’s so much to keep track of, such as VAT, corporate tax, and income tax.
Your accountant will be aware of any crucial dates, as well as all the precise paperwork you’ll need to submit, and will double-check that you’ve filled them out correctly.
Make Time for Yourself
Accountancy is time-consuming because it is a complex subject, especially when you’re operating your day-to-day operations at the same time. To be compliant, you’ll need a thorough understanding of accounting and legislation – as well as the ability to keep up with reforms – which might eat up a lot of your time.
One of the most significant advantages of hiring a professional to handle your tax allowances and returns is that you will have more time to focus on your business.
Obtain Reliable Guidance
For many people, starting a business is a dream come true, but it also brings with it a whole new world of taxes and paperwork to consider. Getting proper tax guidance is always vital, but it’s especially important for start-ups who are still laying the groundwork.
You won’t have to worry about keeping track of your finances or being worried of making mistakes if you hire an accountant. From which costs to claim to any tax allowances you may be eligible for, a certified, competent accountant can give you with all the information you require.
Boost Your Tax Savings
Another advantage of hiring an accountant is that they may assist you in maximising your company’s tax efficiency. Contractor accountants have a lot of experience managing accounts, and they can analyse your small business’s expenses and incomings and provide you advice on how to increase earnings.
Your accountant will be able to find something you overlooked because they will have access to all of your company’s financial information. Overall, when you hire an accountant, you gain a partner who can advise you on the most tax-efficient way to pay yourself, assist you with advising on the share structure of your business, and assist you with advising on relevant expenses that you may be eligible to claim, which are usually tax deductible. All of this data will assist you in making better business decisions.
An accountant will also save you money in the long term by ensuring that all documents are submitted accurately and on time, avoiding late fees and penalties.
Make contact with HMRC.
Dealing with HMRC can be a time-consuming and frustrating process, but your accountant can assist you. HMRC may call you to request further information on a return you submitted or to inquire about your tax code, for example. This can be especially aggravating if an error is made on a return or if data is missing and HMRC is investigating.
Since its enactment in 2000, IR35, or intermediaries’ regulation, has been a source of frustration for many contractors. Because of the coronavirus epidemic, the private sector rules will not be implemented until 2021. Businesses, on the other hand, must be prepared when the new tax year arrives.
You must pay the relevant amount of income tax and National Insurance contributions if your contracts fall inside IR35. You risk having to pay an expensive amount in back taxes if this is not calculated correctly and lodged with HMRC.
As a result, ensuring that you’re complying is vital, and an accountant may assist you with this.
Keep track of all important dates.
As a contractor, you have a lot of annual tax deadlines to remember, which can be difficult to remember when you already have a lot of information to keep track of. Again, here is where an accountant can assist you: we can help you avoid fines and penalties by ensuring that all of your paperwork is submitted on time.
- The first payment on account is due by the 31st of January and pertains to the amount of income tax and NI contributions you owe.
- P60s – You have until May 31 to give your employees their annual P60s.
- P11Ds – You have until July 6 to send these forms to HMRC and your employees, if appropriate.
Advice that is specific to your industry and tailored to your company
You can even skip out on things like capital gains tax when selling a home. As a result, an accountant unfamiliar with your industry may be unaware of special legislation that can minimise the amount of tax you pay or key dates that must be met.
Expand Your Business
Another incentive to engage an accountant is that they may assist you in expanding your company. An accountant can help you reduce your tax liabilities, but they can also help you set up your business for future growth. This includes assisting you in growing your company and hiring new employees, as well as providing tax advice on loans and overdrafts. Saving is also a critical component of business success, and accountants can assist you in identifying all of the small ways in which you may save money and enhance your cash flow.
FURTHER READING: How to find the best contractor accountants