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We sometimes hear people say that they can't afford an accountant, especially in the early days of setting up a business. Others we talk to think that an accountant is just there to ‘fill out forms to keep the tax man happy’. In reality an accountant is much more than that, and once you find the right one, they should actually save you time, money and the stress of worrying about your taxes. Let’s look at some of the key benefits:
Saving you valuable time - You have set up a business because you’re really good at what you do. As a contractor, the likelihood is that you charge an hourly/daily rate for your time, and this is how you make money. So, if you are spending that valuable time working on your accounts, it’s time that you could be using to generate more income. In effect, every hour you spend working on your accounts (and let’s face it, as a non-expert it’s going to take you quite a bit of time!) – it's actually ‘costing’ you your hourly rate or worst still eating into your quality 'time off' time.
Filling in forms correctly, and on time - If you have a very simple business model, then you could be forgiven for thinking that you can fill out your tax return, and any other documentation, by yourself. But you have to make sure that you complete them correctly – and equally importantly, that you get them in on time.
If you complete a document incorrectly then the best case scenario is that HM Revenue and Customs will send it back to you to do again, which could lead to you submitting it late. If you miss a deadline for important documents like tax returns, then you could face a fine. At worst, your forms could be sent to a tax inspector, who will then go through every single element of your finances in minute detail. Using the services of an accountant means you can be assured that the right forms will be completed, at the right time and in the right way.
Minimising your tax bill - Completing the forms correctly is one thing, but doing so in the way that is going to save you the most money is quite another! A good accountancy firm will make sure you are aware of all of the legal ways to minimise your tax bill. They will also make sure that you take full advantage of the ever-changing tax laws, so that you always pay the right amount of tax, and this ‘tax planning’ service is one of the biggest benefits.
Tax planning is more than just simple tax preparation. An accountant will work with you throughout the year to offer advice that allows you to operate the business in a way which gives you the biggest tax advantages. Rather than just looking at the figures at the end of the year and saying ‘Ah well, if you had done it like this...' having a good accountant gives you personal financial advice throughout not only the year but also throughout your life as a contractor (they will also help develop an exit plan with you).
Helping you to grow your business - As well as helping with all the paperwork and making sure that you legally minimise your tax liability, an accountant can also be a great source of advice to help you develop your business. If you want it to be a success, it's vital that you take the right financial decisions, as well as the right managerial ones, very early on. A few wrong moves at the start can put you out of business surprisingly quickly.
A good accountant wants you and your business to succeed, as it is a reflection on them as much as it is a reflection on you, it's also how they get most new clients. They can also act as a business consultant, assisting you with various business problems, and offering good solutions based on their experience. They will also act as a ‘sounding board’ because they will come to know your business almost as well as you do. In fact, they will probably know the financial side even better! Objective input from someone who is in this position, but who doesn't have the ‘emotional attachment’ to it that you do, is worth its weight in gold. An accountant’s advice and input can be as valuable, if not more so, than all of that the number-crunching and form-filling.
Also because RMI specialises in Contractors, Freelancers, Consultants, Interims and Small Businesses, it's also nice to know that your tax expert will have also been working with contractors for years and will be able to answer just about any question you may care to throw at them. This in depth, detailed experience and knowledge will prove invaluable especially when you first start out.
If your business does face problems at any point, or has needs that are beyond the scope of you, they will usually have close connections to other professionals such as bankers and lawyers, who can help you out.
Finding an accountant
If all of the above makes sense, and you can now see the benefits of appointing an accountant, then the next step is of course to find a good one. Begin your search by asking for referrals for accountants from other contractors. Call the company see how they sound, find out if you:
- Get your own dedicated accountant - calling up a call centre type environment will soon get boring especially when you have to explain who you are and what you do each time you call. Ask yourself, if you don't get your own accountant who the heck is going to take time to get to know you and find out what your business goals are? Having a good accountant is more than paying £50 for bookkeeping software you can buy in your local high street.
- Are they specialists in contractors? - contracting from a tax point may lack some of the technicalities of mergers and acquisitions of multi-billion pound organisations but it is still complex tax wise, and choosing a firm who also helps pubs, engineering companies and the local printers really doesn't make much sense. For sure your fees will be lower than their other clients, so where will the incentive be for the accountant to get to know you? Also if they don't specialise in the contractor market, how can they give you advice based on years of working within the contractor market?
- Can you meet your accountant? - would it surprise you to know that most firms who aren't able to meet you say 'well it's ok that we only have one office 400 miles away from you as you'll never need to meet your accountant'. Of course they'd say that what else can they say! What they should really say is 'no you can't meet your accountant, even if you want to'. Sure some clients never meet with their accountant, however well over 50% of our 10,000 contractor clients 'do' meet with their accountant and they always find the time useful. Now we're not saying you 'have' to meet your accountant, but it is nice to know that if you need to or even just want to - you can (it's also free to meet your accountant at RMI).
- Are they good at what they do? - of course if you ask any firm they'll say 'sure we're great', again they are hardly likely to say anything different. Check to see if they have won any external awards for customer service or accounting excellence. Also see where the awards came from, are they contractor specific? Are they just local town awards i.e. best accountant in XYZ city, great if you're in XYZ city but not much good if you live anywhere else in the UK. Some awards really don't mean that much after all how good is a 'Growth' Award for a client? It just sounds like they are growing fast which usually means growing pains for clients. Solid well known national, industry specific awards are the ones to look out for.
I'm sure you have seen that RMI excels in all of the above, but despite this looking a little one sided, all of the above are very good points that we think anybody would find hard to argue with. Sure if your Dad, Auntie or even best friend will do your accounts for free and has a good understanding of the contractor industry then sure you'd be mad not to use them. Although we do have lots of clients whose parents and friends are accountants, we even have lots of accountants mainly corporate contractor accountants who use RMI, not because they can't do the work but because they'd rather we did it for them.
As the UK’s largest Accountants for Contractors, we offer a unique low cost all inclusive package which guarantees you constant help and support whenever it's needed.
Our approach towards our clients is very simple. We remove the stress of managing your personal and business taxes, leaving you to concentrate on your contracting career.