Q. Do I need an accountant?
A. This obviously depends on your individual situation. You will have an increased responsibility to adequately organise your own financial affairs and complete your self-assessment in order to pay the appropriate taxes. This may be something you are happy to do yourself or you may wish for it to be completed by a specialist contractor accountant. This could give you peace of mind and ensure everything is completed correctly. If you decide to operate through a limited company then your legal obligations will further increase and your accounting will inevitably become more complex so you may need an accountant to help you stay compliant and provide advice.
Q. What will an accountant do for me?
A. Accountants can provide advice, review your bookkeeping, and prepare and submit your financial documents on your behalf. This means you could significantly reduce your administrative tasks related to this increased burden when you become self-employed. Further to this, an accountant could also provide tax advice to help maximise your income. An accountant can also ensure you stay compliant and remind you of any crucial submission dates.
Q. How much does it cost?
A. Accountancy fees can vary depending on the services you require and the type of accountancy firm you approach. This can make it a bit of a minefield when initially seeking out someone to help with your financial obligations. IT contractors can benefit from contractor accounting companies that specialise in understanding the needs of IT contractors and the ways in which to manage their finances efficiently. Many of these providers offer transparent package pricing, which incorporates the main duties required by IT contractors for a monthly fee. This can help you compare the services and associated costs, although it is still important to ensure you choose the right company to best serve your needs. Packages can range from £60 – £150+ for small contracting needs.
Q. Should I be a sole trader, work under an umbrella company or set up a limited company?
A. A major benefit of working with a dedicated accountant is that they can advise on the best way financially for you to carry out your work. This may mean that operating under a PAYE umbrella company, or setting up a limited company, may be more tax efficient for your particular contracts. As to whether it is best to operate as a sole trader, work under an umbrella company or a limited company, it is best to discuss this with a contractor accountant who understands your specific situation, as it can be contract dependent.
Q. What else do I need to know about?
A. Although you may already know about IR35, which is legislation to prevent employees being disguised under the use of intermediaries for tax avoidance, this is something that will now need to be taken into consideration. If you plan to work in the public sector then there is an increased chance that you will fall into IR35 legislation, so having an accountant that understands this could be very important. Changes to IR35 may also be implemented in the future so regardless of whether your work in the public or private sectors, it may be best to seek professional advice about your individual circumstances.
Give us a call on 0330 024 0406 or email info@gorillaaaccounting.com and a member of our team will be able to help determine your next step into IT Contracting.
