Choosing a Limited Company Accountant

Running a limited company can require a large amount of administration and you will likely need a good accountant to manage this work on your behalf, in order to save you time and money.

Not only will a limited company accountant give you peace of mind that your business’s tax affairs are in proper order, but they can also advise on legislation affecting your company such as IR35 and Income Shifting. This latter set of rules relate to dividends paid to spouses and civil partners.

Some of the typical services your limited company accountant will perform for you include payroll administration; processing of PAYE/NI payments to HMRC, preparation of company year-end accounts, tax planning advice, completing your self-assessment forms, VAT forms, P11D, P35, P60 and any other forms on your behalf.

What makes a good limited company accountant?

A good limited company accountant will understand why you are in business, advise you and charge you appropriately. They will also act as your agent with HMRC, field any awkward queries and be at your side if a tax inspector visits you for an inspection.

However you will also need to take the following into consideration when choosing the right limited company accountant for you:

What kind of fees do they charge?

It’s often recommended to look for an accountant who charges fixed fees, rather than charging by the hour, so you aren’t at risk of receiving some unexpectedly large bills. You should be careful though to check what is included in the fixed fee, for example does it include the use of bookkeeping software? Or are there any extras they will expect you to pay on top of their fees, such as self-assessment returns? You may also want to consider how and when you are expected to pay your accountancy fees.

What kind of service do they provide?

You need to think about what kind of service suits your business needs. Do you wish to meet with your accountant regularly or will telephone/email support suffice? Are you just starting out? If so you may need more support than someone who has 20 years’ experience running a limited company. So, will you receive 'unlimited' support? What are their average response times to queries? Who will look after you on a day-to-day basis? What other business knowledge and services can they assist you with? 

Are they modern?

Finding a forward-thinking accountant whose website is kept up-to-date with tax tips and advice is something else that you should be looking for. Most modern limited company accountants now use social media too, tweeting all the need-to-know information, sometimes even as it happens. This is an effective way of keeping clients in the loop with industry news and updates that may affect their business. Can they also offer you the use of a real-time, accounting software which provides you with the very latest financial information? Or are they well-versed in relevant new technology and software which you require them to work alongside?

Answering these questions, with your business needs in mind, will help you decide which of these factors are really important to you, and will ultimately help you pick your accountant.

Why not just use a high-street accountant?

If you are using a limited company for contracting, it may be beneficial to use a specialist contractor accountant.

“Often a high-street accountant will not have the expertise on tax legislation changes that can affect a contractor,” explains Jaime Thorpe at Dolan Accountancy. “For example, the public sector's changes to IR35 that took effect this year went unnoticed by many generalist accountants on the high street.”

According to Thorpe, “this often results in a contractor’s tax affairs wrongly being deemed as inside IR35.” It’s also happened where the accountant has treated the contractor as outside IR35 but, wrongly, paid them a high salary.”

It’s not just IR35. There are a number of other areas that limited company accountants are far better at dealing with than most generalist accountants you can find on your local high street. Not only will a specialist know the rules relevant to incorporated businesses, but they will be able to interpret them and advise you on how you can continue to run your business efficiently despite them.

Response times are a differentiator too. “Another complaint that switchers have is the difference in speed between high-street and limited company accountants,” Thorpe says. “With high-street accountants, it can take days or even weeks to get a response to a question and an even longer wait for accounts to be completed.”

And don’t underestimate the importance -- to many limited company owners -- of having an accountant who charges a fixed fee, rather than an hourly one as generalist accountants in your locality will likely favour, says Thorpe, explaining: “Even the smallest piece of work could cost you an entire hour’s fee. You really have no certainty as to what your annual fee will come to. If an accountant has to research IR35, R&D grants or overseas work, this could all be charged to you.”

Final considerations

If you are switching from a high-street accountant to a limited company accountant -- or just need an accountant for your limited company for the very first time -- you will also need to consider the best time to engage one. When it comes to switching, just after the end of your company’s financial year is ideal, as moving halfway through the year may involve trying to work out what you have paid for and what you will have pre-paid. The company’s year-end also provides and a clear and natural break for what your old accountant is responsible for and where your new one picks up from.

Either way, moving to a new accountant is not quite as daunting as limited company contractors often fear. Procedurally, the move should be quite straightforward. But deciding which accountant is right for you is not easy and so don’t rush it. Take your time and make the right choice for you and your business.

Want further guidance? If you have a specific query use our Contractors' Questions form, or to get in touch with accountants who specialise in dealing with limited companies, visit ContractorUK’s Contractor Accountants Directory.

Friday 6th Oct 2017

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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