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For the vast majority of contractors, their accountants fulfil a necessary but often misunderstood and underappreciated function. It may appear that all you get from your accountant is a few forms filed with HMRC/Companies House and a set of accounts (which are pretty useless if you wish gain insight into how your business is currently performing). But the reality is that those forms and your “statutory” accounts are probably what is keeping the authorities at bay, allowing you to sleep well at night, comforted in the knowledge that your financial affairs are up-to-date and in accordance with statutory requirements.
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Contractors, do you know how to Choose an accountant?
If you are having thoughts about changing your accountant, then you need to ask yourself why. It may be because you think that that you are: Getting poor advice Getting advice too late Not getting ANY advice Paying fees that are too expensive Paying hidden extras Not getting as good a service as your fellow contractors Paying more than your colleagues, or other companies you know No longer in need of an accountant As you can see, the reasons to switch your accountant can be varied. But in our experience, such a list can be distilled into three areas of concern; service, price and needs. For the vast majority of contractors, their accountants fulfil a necessary but often misunderstood and underappreciated function. It may appear that all you get from your accountant is a few forms filed with HMRC/Companies House and a set of accounts (which are pretty useless if you wish gain insight into how your business is currently performing). But the reality is that those forms and your “statutory” accounts are probably what is keeping the authorities at bay, allowing you to sleep well at night, comforted in the knowledge that your financial affairs are up-to-date and in accordance with statutory requirements. What you also need to understand is that a statutory form or a set of accounts may appear to be simple, but the information that goes into these documents and the timing and presentation of them is down to experience and expertise. To make an analogy, you may think that you know what’s wrong with your car, but that would not stop you from asking a mechanic to fix it. And if in the (unlikely) event that HMRC does start asking questions, there should be no doubt in your mind that the answers are best presented by your accountant who knows what to say, but more importantly, what NOT to say. Another common complaint is that contractors sometimes feel that they are not getting proactive advice from their accountants (reason 2; above). The reality is that all the tax planning and advice takes place when you first set up your business and any legislative changes that occur since then will be dealt with by your accountant as and when those
changes become law. It may be nice to get regular updates, but most contractors only want to know about changes that directly affect them, and only when they actually do. But should you feel that it is time to move accountant, how do you go about it? What do you need to know before you choose an accountant as a limited company contractor? Or when picking out an accountant from the crowd; what should you look for or consider? Firstly, some pointers on timing. The best time to move accountant is just after the end of your company’s financial year. The reason for this is that most contractors pay for their annual accountancy service on a monthly basis. This being the case, to move half way through your financial year will involve trying to untangle exactly what you have paid for and what you will have pre-paid. The company’s year-end also provides a clear and natural break for what your old accountant is responsible for and where your new one picks up from. Procedurally, actually making a move to a new accountant should be quite straight forward. Having chosen your replacement accountant, a simple letter to your old accountant informing them of your decision (wording usually supplied by your new accountant) will then allow both accountants to liaise and formally hand over your financial affairs. The only blocker might be outstanding fees, but this can easily be resolved. Your new accountant will inform all the authorities that they are now acting for you and organize any necessary paperwork to make the change as smooth and simple as possible. But which accountant is right for you? Firstly, price should not be the determining factor. You can always find an accountant who will undercut your present fees, but does that accountant have the experience and expertise to properly deal with you, as your affairs as a niche business with specific requirements, characteristics and obligations? There are a number of topics that contractor tax ‘specialists’ are far better dealing with than most high street generalist accountants, for example IR35. And remember, knowing the rules is one thing; interpreting them in a commercial manner is quite another. Then consider what you are going to pay for. You may have enjoyed the benefit of ‘unlimited’ helpdesk support when you first starting out as a limited company contractor. But how much of this unlimited support do you actually need now? By contrast, if you
are new in business, a low headline fee which includes only the bear minimum required, but comes with a vast menu of extras, may not work out to be that cost-effective in the end. Also ask yourself — how will your accounts be administered? An Excel Spreadsheet is offered by some contractor accountants, but there are also many real-time, online platforms offered which can provide you with up-to-date financial information. They are not always glitch-free, but then again nor are spreadsheets. Lastly, do a mental run-through of how your accounting system and procedures are going to work, in practical terms. For example, some clients value the physical proximity of their accountant. But in my experience of contractors, most PSCs neither have the time nor the inclination for face-to-face meetings with their accountants, and so I would avoid placing too much emphasis on the location of your accountant’s office as a deciding factor. Final thought Moving to a new accountant is not quite as daunting as contractors often imagine. But deciding which accountant is right for you is not easy and so shouldn’t be rushed. As a guide, look again at the list of why contractors often say ‘no’ to staying with their tax adviser; if you can tot up half as many reasons to say ‘yes’ to a new number-cruncher; then you might well have figured out who’s right for you. This blog featured on contractoruk.com See more at: http://www.anytime.uk.com/blog/choose-an- accountant/#sthash.MpyGK27Q.dpuf