Are you searching for an accountant to look after your finances whilst you are contracting? Just like any important purchase, it’s essential that you do your due diligence and research providers thoroughly before coming to a decision.
Here are 10 questions you should ask your potential new accountant before you hire them:
1. What type of clients do you typically deal with?
This question will help you learn how well-equipped the accountant is to meet your needs. A firm that typically deals with contractors and freelancers will have more knowledge and experience that is relevant to you than, say, an accountant who usually deals with shop owners or big companies.
2. How much experience does your firm have with people in my industry?
All professions operate differently, so the advice you would receive if you were a freelance construction worker should be different than if you were an IT contractor. As such, you should ask the accountants on your short-list whether they have experience working with contractors in your profession or industry. Receiving tailored accounting advice as a contractor is essential. Find out who we can help.
3. What services do you offer?
You must fully understand the accounting service being offered to you in order to make an informed decision; this is especially true if you are speaking to a few accountancy firms who are in direct competition with each other. Many will offer similar services but they could vary in small detail.
Look for an accountant who offers a range of services, included limited company, umbrella company and self-employed accountancy. This way, if you choose to hire the accountant, you can switch to a different service within the same firm if you find that your original choice isn’t working for you. Read more about the various accountancy options available to you as a contractor.
4. Which of your services is the best option for me and why?
Once you know your options, you need to decide which business set up is best for your circumstances. The person on the other end of the phone should go through your situation with you with regards to your working practices, your rate, and your requirements. With this information in-hand, they should be able to tell you in an unbiased way which accountancy service is best for you, and more importantly, why.
You’re more likely to get an unbiased professional opinion if the contractor accountant can actually offer you more than one service option – so look for these providers.
5. Can you help me legally minimise my tax bill?
A contractor accountancy firm worth their salt should include tax planning advice in their service offering. Through strategic one-on-one tax planning, your accountant should be able to offer you ways you can legally minimise your tax bill and maximise your take home pay. There are various ways that contractors and freelancers can take advantage of tax savings measures, and your accountant will know what these are and can advise you on the options available to you.
6. What type of support can I expect and how much can I expect?
Some accountants, especially high street firms, will charge a low retainer but will charge extra when you need advice or an answer to a query over the phone. This can turn a seemingly low fee into a huge accountancy bill, so be sure to ask if there are any hidden fees. If possible, you should look for unlimited support included within your quoted service – many specialist contractor accountancy firms, such as Churchill Knight & Associates Ltd, offer this.
Also be sure to ask who will be giving you the support. Will it be a team of individuals or a single dedicated point of contact? Having a main point of contact is ideal as they will get to know you and your requirements very well. So, look for a provider who can offer you the best of both – a dedicated point of contact and backup support should your main contact be out of the office.
7. What services are not included in the quoted service?
As mentioned above, there are some additional services that may not be included in the quoted service that you were given. Find out what these may be and whether it’s normal for these to be charged extra by an accountant. Ideally, everything you need from an accountancy service should be included in the service you are quoted and offered. Avoiding paying for services you don’t need will save you money in the long run.
8. Can you explain IR35 to me?
Every contractor accountant you consider hiring must be aware of IR35 and must be able to explain to you what it is and how it may affect you. If they do not, there is a chance that, if you are subject to the legislation, you could end up being liable for underpaid taxes. IR35 was created by HMRC to ensure that contractors who are working in similar circumstances to their permanently employed counterparts pay the same tax and National Insurance contributions. With IR35 being such a complicated piece of legislation, you should only hire an accountant who is familiar with it.
9. If I want to complete some of the work myself, can I pay a lower fee?
Some contractors are confident enough and have the free time to complete some of their own accounting work – such as bookkeeping. If this is you, many contractor accountants offer more basic accountancy services at a lower fee so you can complete some of the work yourself. However, keep in mind that as someone who’s not an accountant, you’re more likely to make a mistake or overlook certain details.
10. Do you or have you ever used a tax avoidance scheme?
A few accountancy providers, whether they offer limited company or umbrella company accountancy, claim to offer a take home pay well over what’s considered the norm. This is by and large due to the fact that some are using or promoting tax avoidance schemes as a way of looking more attractive to potential clients. It’s important to be wary of and to avoid these providers, as you could potentially be liable for backdated taxes if you’re caught, intentionally or unintentionally, avoiding tax.
Look for contractor accountants who are proud to say they are 100% compliant. Churchill Knight is one of these providers; we have never offered or promoted a tax avoidance scheme and have a perfect compliance record with HMRC.
There’s one factor you may have noticed that we haven’t included in the list of questions to ask – and that is the price of the service. Whilst it is important, it’s not as important as what you are receiving for the price you pay. Good advice and customer service is priceless, and whether you pay £50 or £250 per month for your accountant, they could save you thousands in the long run if they’re good at what they do.
The key thing you must remember is receiving value for money rather than paying the lowest fee possible for an accountant. Furthermore, if you decide to set up your own limited company, accountancy fees are an allowable business expense on which you can claim and recoup a Corporation Tax savings of 19%. Find out more about contracting through a limited company.