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Why Should a Contractor in the UK Hire a Contractor Accountant?

Becoming an independent contractor makes you your boss. And that’s not just freedom from a 9-5 routine. You can determine the quality of your service and make your mark in your niche skill set.

But running your own company also means tedious day-to-day operations, like accounting, and that can be overwhelmingAnd it may be a good idea to hire an accountant to handle it. But you may well ask – does a small business warrant a full-time accountant? 

No, you don’t have to hire a full-time employee accountant. Today online accounting services are available for contractors and freelancers. These are ‘hybrid accountancy services’ that combine popular accounting software with the support of an expert contractor accountant. It is the best business decision you can make as a contractor. Ask any seasoned business leader. 

A Contractor Accountant’s Value-add

A contractor accountant firm does more than bookkeeping and filing your tax return. It helps you manage your finances, and run your company in a legally compliant way and advises you on your tax planning. 

Here are six solid reasons why a contractor accountant can help you.


  1. Stay updated on tax legislation: Tax laws can be complicated and keep changing.  With your irregular work hours, it will not be easy to track deadlines and submit documents for VAT, corporation tax, income tax, etc. And then of course there is the IR35, the rules and regulations for contractors. Contractor accounting can help you read the fine print so that you don’t inadvertently violate it and end up paying hefty fines.

  2. Budget your finances: When you’re thinking about the big picture, it’s easy to overlook costs. The average UK startup spends  £22,756 in their first year, according to a study commissioned by Geniac. However, the Business Demography 2018 report says only 42.8% of start-ups survived beyond 5 years. And of course, you don’t want to be one of them. The best contractor accountant can show you how to bring your expenses down in the initial years and organise your small business finances for the long haul.

  3. Plug cash drains into your system: When planning your costs, don’t underestimate them; remember that they can rise as the business grows. As Sir Richard Branson famously said, “Never take your eyes off the cash flow because it’s the lifeblood of business.” And contractor accountants have an x-ray vision that spots the leaks. So that you don’t run out of cash at the wrong time and are unable to pay your suppliers.

  4. Maximise tax efficiency and returns: Your dedicated contractor accountants are experts in taxes and know the rules. Did you know you can claim a mileage allowance towards the cost of your commute to work by bicycle? And so with some intelligent tax planning, they can help boost your bottom line. 


5, Track your invoices and documents:  Preparing invoices, receipts, and HMRC documents can be time-consuming. It’s amazing how you can simplify your day-to-day paperwork with leading accounting software like Xero, QuickBooks, and FreeAgent. You can also access your accounts in real-time and be on top of things.


  1. Manage your HMRC queries: As a contractor, be prepared to receive inquiries from HMRC. It could be about some missing data in your return or even relating to your tax code. Irrespective, it can be stressful to handle tax authorities. When it comes to ease of paying taxes, according to the World Bank DBR, the UK had a world ranking of 27, despite its overall ranking of 8 for ease of doing business. So it would be wiser to let a contractor accountant takes charge.


With a secure, online platform, you can drastically reduce your workload of repetitive tasks like bookkeeping, payroll, reporting, and taxes. And having all information on a single platform with a one-point contact, you can make timely business decisions. So you have fewer tax errors, a good cash flow, and lesser worries.


And what’s more, the best contractor accountants can help in critical areas like mortgages. More often than not in a small business, personal assets are at stake. And expert advice on how to segregate your personal and professional finances is invaluable. 

Contractor vs employee in UK, which should you hire? If you’re having the same dilemma, read our article “Payroll dilemmas: Should you hire employees or contractors?“.

The right contractor accountant supports the growth of  your business

Your goal is to grow your business. But in this exciting journey, you can sometimes lose your way in a maze of rules and regulations or numbers on the balance sheet. But the right contractor accountant can steer you back on track. As in a bowling alley, the bumpers in the gutters guide the ball back toward the pins at the end of the lane.

The right contractor accountant can be all of these:

  • A multitasking genie: The one who can do your bookkeeping, year-end accounts, corporation tax returns, payroll, and pension filing. Thanks to the accounting software available today
  • An expert tax advisor: Someone who can do your quarterly VAT filing, corporation tax, returns, and director’s tax return and answer HMRC queries. Want to know more about corporate tax? Click that link to learn more. 
  • A  friendly guide: The one who will warn you if your cash flow is depleting or business expenses rising and help you decide which costs to keep and which to cut. This is only possible because a dedicated accountant is assigned to your business.
  • A trusted ally and partner: The one who advises on your mortgages and professional references when required.

Want to hire an accountant for your small business? Check out our article “What to look for in your Small Business Accountant in the UK: Your Guide to Finding the Perfect Match“. 

Speak to the Experts

Finding the right accountant is crucial, so make sure to hire a firm that understands the self-employment market and your specific industry in particular. Also, they should understand your busy schedule and be ready for your urgent queries, as we are at Sleek.

If you’re unsure about any aspect of your taxes or need assistance with financial tax planning, consulting tax advisors at Sleek will save you time, money, and potential headaches. At Sleek, we provide accounting services to aid you with an efficient and seamless tax process.

If you have a question, reach out to our team of experts for advice.  

We have custom-built accounting solutions for small businesses and have provided specialist accountancy services to over 20,000 contractors and freelancers all over the UK. For more information on our accounting packages please don’t hesitate to get in touch with us today on 0330 024 0406.

FAQ

No, there is no legal obligation for a limited company’s directors to hire an accountant to manage their tax affairs. Your company has an audit exemption if the turnover is under £10.2 million, and you have 50 or fewer employees.

When you work through an umbrella company, they will look after all of the admin-type such as tax, and pension contributions for a fee. Alternatively, you can form a limited company and handle all these tasks yourself. Of course, you may need an independent contractor accountant to help you.

If you have a VAT-registered business, you are now required to keep digital records and file your tax returns using compatible software When you hire an independent contractor accountant, you often benefit from an MTD-compliant tool

It indicates a contractor’s status for tax purposes. When you are working as an employee of a firm, you are deemed Inside IR 35. When you are operating as an independent contractor, you are working off-payroll and a different set of taxation rules apply.

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