There’s a lot of contractor accounting software these days that provides an ‘easy’ way for contractors and freelancers to manage their books, log their expenses and prepare their own accounts.
There’s a lot of contractor accounting software these days that aim to provide an ‘easy’ way for contractors and freelancers to manage their books, log their expenses, track their cash flow and profits or losses, and prepare their own accounts.
The fact is, however, that contractor accounting software does not provide the same value or level of service that a contractor accountant can. Therefore, it’s important that you consider the true cost of using DIY accounting software. At some point, you will likely need an extra helping hand with your accounts to ensure you are minimising your tax liability and managing your finances correctly.
You may be able to save a bit of money by using contractor accounting software that costs as little as £35 per month, but if you make an error using the software it could end up costing you hundreds or thousands of pounds. Let’s face it, everyone would like to think that the latest high-tech online software makes it easy to complete your own accounting, but if you’re not an accountant there’s still a risk of making an error. A lot of software providers even advise you to hire an accountant for specific tasks such as checking your Personal Tax Return before you submit it to HMRC.
Even with the rise of technology and cleverness of algorithms to complete accountancy jobs that humans used to do, there’s still services that accountants offer which contractor accounting software can’t, such as:
- Tax planning: contractor accountants, even if you don’t meet them face to face, are real people, and when you ask an accountant for tax planning advice, they will be able to look at your unique situation and work with you to help you legally minimise your tax liability and, in doing so, increase your take home pay.Another thing contractor accounting software can’t do is have a conversation with you regarding your future plans, such as saving for retirement or a mortgage, or help you understand what it is you’re actually doing when you are crunching numbers on your own. If you want any of those services it will cost extra if you have to hire an accountant to support your software. In these cases hiring an accountant from the get-go will save you more in reduced tax liability than the sum of the accountancy service fees.Another point to consider is your company’s Personal Tax Returns. These are best left to the experts as any mistake can result in a penalty and a fine, especially if you were to underestimate your company’s tax liability or your own personal tax liability. We can complete all of this for you to the highest degree of accuracy and compliance and take the stress and hassle off your hands.
- Compliance: contractors and freelancers are busy either working or searching for their next role, and usually don’t have the time, energy or desire to keep up to date on the ever-changing tax legislation for the contracting industry. Furthermore, you certainly don’t want to spend hours reading all of the HMRC updates and Finance Bills and trying to decode what they mean; it’s an accountant’s job to know these things for you so you don’t have to. A good contractor accountant does all of this and also makes sure your business stays compliant and ensures you are not overpaying or underpaying on any tax.Online accounting software might give you the ability to do your own accounting instead of using an accountancy firm, but it doesn’t give you the know-how. If you categorise expenses incorrectly or do something that goes against legislation that you don’t know about or haven’t heard of – it could cost you. Having a good, compliant contractor accountant ensures that this won’t happen.
- Endless support: a good contractor accountant can support you during the entire lifespan of your limited company and contracting career. They can help take care of administrative tasks that would otherwise take you hours to complete on your own using contractor accounting software, and they can provide you with helpful advice and tips as and when you need it. This reduces the stress and burden of completing accounting for your business.An accountant can also be there to support you should you ever wish to grow your limited company by taking on employees or seeking investment. We can guide you through the necessary steps of taking your business to the next level, and we also offer accounting services for SMEs, so you will always have a service that’s tailored to your needs.
This is not to say that software online accountant never works – it can be a good option for some contractors and freelancers depending on the amount of accounting knowledge, computer skills and free time they have. However, if you are considering buying software to do your own accounting, it’s a good idea to do your research and look at your options to find out what is best for you.
Getting the best advice possible from an accountant is priceless and will, in fact, save you money in the long run. Hiring a contractor accountant will give you more value than using contractor accounting software; you can even seek advice from a contractor accountant to determine the type of business set-up that suits you best – whether it’s limited company, umbrella company or sole trader.