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The importance of choosing the right accountant for contractors

If you work as a contractor, you will know that doing your accounts and dealing with the tax authorities can be both time consuming and difficult.

While many service providers have tried to do their own finances, usually they end up hiring an accountant to take care of this aspect of their business life, especially as there are several reasons for employing such a specialist. Here are the main ones:

To avoid errors

Contractor accounts can be quite complicated, so you really need to know what you are doing to get them right.

Which taxes you pay and how much you owe depends on the type of firm that you have formed. If you run a limited enterprise, you will be governed by different regulations than you would if you were to choose to work as an umbrella company contractor.

On a regular basis, the UK Government changes regulations surrounding how contractors are taxed. These alterations have far-reaching effects, so keeping track of and understanding them is essential. However, this is very difficult for someone without the proper time and training.

You only have to make one error on your tax return to end up with long-term issues with HMRC. When you bear in mind that you need to be fully conversant with the regulations surrounding VAT, income tax, National Insurance contributions, dividend tax, and corporation tax, you can see how easy it is to make a mistake.

Add in the fact that you need to keep track of all expenses, as well as juggle your day job, and it is easy to see how important things are missed. However, if you employ a quality accountant with experience of contractor taxes, you do not need to worry about any of this. As such, you can focus all of your time and energies on doing a good job, earning more money, and securing your next contract.

So you don’t pay too much

Doing your own taxes, or letting an accountant without the relevant experience do your contractor tax, can end up costing you money. It is all too easy to end up paying too much tax when you do not understand the rules.

Remember, if you do your own taxes and make a mistake, this can also end up costing you money. Normally, the tax authorities respond by fining you, and these penalties can be hefty. This way, it is easy to end up paying thousands in fines, which makes doing your own accounts a false economy.

Posted by Louise
March 3, 2015

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