With tax return season firmly upon us and the deadline for paper filing now passed,it is essential you take action now to ensure you do not miss the final tax return filing deadline of 31st January.
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Do I need an accountant as a contractor?
There is nothing to prevent you doing contractor accounting yourself if you understand the processes concerned and also the HRMC requirements. Contractors don’t need to use an accountant in the same way that clients don’t have to use contractors. However, the likelihood is that if they tried to construct a building without a building contractor they might come unstuck. It’s the same with contractor accounting and tax.
A good accountant can save the contractor many, many times over the cost of their fees in applying their tax expertise so the contractor is totally tax efficient, claiming the correct allowances and only paying the tax they have to. And for many contractors, it’s more cost effective to pay their accountants than lose one or two of day’s value of fees each month to try and do the accounts themselves.
Why choosing the right contractor accountant is important
If you’ve wisely determined against doing all your own contracting accounting then it’s vital you choose a competent accountant to take things for you.
A couple of things to keep in mind when choosing a contractor accounting service:
It is essential that contractors who opt to use an accountant choose one that specialises in contractor accounts, understands IR35 and will process accounts and tax-plan based on IR35 issues. This almost certainly excludes most local high street accountants. Specialist contracting accountants are essential.
When it involves IR35, there are legal implications, too, and even an accountant specialising in contractor accounts won’t have all the answers. Therefore, contractors ought to use a solicitor with expertise in IR35 and employment law to work out their current contract’s IR35 standing.
Managing your own contractor accounts and what you need to do
Contractors who are using their own contracting limited company need to understand how to manage:
Tax and Tax Returns
Directors of limited companies also have legal responsibilities to submit certain info concerning their limited companyat set times throughout the financial year, like accounts, annual returns, tax returns and VAT returns. A contractor’s accountant will be ready to advise on all these issues; so that’s what the contractor is paying their accountant to do for them. Having said that, the responsibility remains with the limited company’s directors. therefore accountants can advise and prompt, however they won’t make decisions – the contractor/director should do that. A good contractor accountant will be ready to advise the contractor on the most effective and economical manner for the contractor to manage their business, in line with the contractor’s personal wants and priorities.
When it comes to contractor accountancy services, investing in a good accountant is likely to pay dividends.