Do I really need an accountant?
With the availability of free professional guidance on finance and taxation, and the variety and sophistication of do-it-yourself online financial management tools growing daily, it is tempting to consider the savings that could be achieved by not engaging the services of a contractor accountant.
However, like many other potential methods of pushing down the bottom line that appear to have a good headline rate or significant up-front saving, cutting back on professional contractor accountancy support is likely to have a high cost in the long run.
DIY Financial Management: A Double-edged Sword
When considering the pros and cons of engaging a contractor accountant, you need to be aware that there are two types of costs (and therefore two types of potential savings) involved. The most obvious benefit of farming out some of your financial administration to a third party is that it saves time.
Consider that a good contractor accountant might charge approximately £80/90 per month; how many hours at your standard contracting rate would it take to match this figure? Could you complete all your financial administration in that time? If not, you have a strong argument in favour of hiring an expert.
The opposite side of the coin is that a professional contractor accountant can advise you on the best way to handle your finances to extract maximum returns, using their experience and up to date knowledge of the relevant legislation and regulations to identify opportunities for you to mitigate or avoid certain charges altogether. Acquiring this sort of knowledge takes time – time during which you will probably miss some opportunities, and that you could otherwise be devoting to paying work, making DIY a doubly-expensive option.
Testing the Market
Of course, to ensure that you’re getting value for money and the maximum benefit from your investment, you need to know that your contractor accountant’s services, and experience are a good fit for your business.
Some of the essential questions to ask when considering engaging a contractor accountant include:
– Do they regularly deal with contractors and understand the particular characteristics of the contracting sector? Can they give examples of how their specialist understanding of contracting can save you money?
– What is their interpretation of the intermediaries legislation? Can they advise you on the best way to prepare your contracts so that you are not inadvertently caught by IR35?
– What services do they actually provide, and how do their charges break down? For example, will they prepare and/or advise you on your self-assessment tax return as well as on corporation tax? Are there any services they do not provide?
– What will be the nature of our relationship? Will I have access to a personal account manager? How often will we be in contact, and what will they expect of me in terms of record keeping and accounts?
– What supporting information can they supply – qualifications; accreditations; membership of professional or regulatory bodies etc – to persuade you to employ their services? Don’t be afraid to ask – if the accountant is serious about doing business with you they will be happy to justify their worth.
It may also be useful to ask one additional question – why should I hire a contractor accountant when I could use online tools and reference material to manage my finances myself?
Other Accountants Are Available
As with any business relationship, you will need to review from time to time to ensure that it continues to represent the best fit for your business and value for money. A good contractor accountant will show you that they are keeping up to date with the latest developments and opportunities that might arise as tax and finance regulation evolves. If they are not, or if your requirements have changed to the point that your current arrangements are no longer appropriate, don’t be afraid to move your business elsewhere – misplaced loyalty can cost heavily in the long run.
While the up-front costs of employing an accountant may seem high, particularly if you are starting out in business, you will need to be very realistic about the possible costs of going the DIY route. There are savings and economies that can be made without significantly impacting your ability to get on with developing your business – but for 99.9% of us, ditching the contractor accountant is not one of them.
Article written by Doug Brett-Matthewson View original article Here