Is it worth hiring an accountant on a monthly basis?

[deserted]

I am new as an IT contractor and have been contacted by several companies asserting they can arrange my tax affairs so that I am paying 15% (or less) in tax on my earnings.

They are asking for a monthly fee - typically around £100 / month. I'm just wondering if this is worth it?

- There seems to be good software out there: I am looking at Freeagent which manages all your expenses, corporation taxes, etc. - even self assessment. This software costs around £30 / month.
- My contract ends in three months (though it will probably renew).

Is it worth paying a monthly fee when there's a chance my contract will end soon?

Would it not be better to manage my expenses, etc. with Freeagent and then, at the end of the year, hand the accounts over to the accountants who can optimise my taxes and sign off for HMRC?

Thanks for any help!

[ASB]

Yes. But it will cost somewhat more than 3 x monthly fees. Basically there are 2 elements to an accountants costings.

- End of year stuff. This is not really dependant upon transaction volume
- Monthly transactions

[SueEllen]

Is it worth paying a monthly fee when there's a chance my contract will end soon?

Yes.

I've had a few contracts over the years plus made a mortgage application where they need to seek either a reference or evidence from my accountant that I'm a director of my limited company.

If the accountant only did my books at the end of the year they would not be able to confirm they were my accountant as we wouldn't have an ongoing professional relationship.

Would it not be better to manage my expenses, etc. with Freeagent and then, at the end of the year, hand the accounts over to the accountants who can optimise my taxes and sign off for HMRC?

No.

Depending on when your company year ends it could cross to tax years with different regulations and allowances. While we can inform you on this board, you can get news from HMRC and other places, if you are in any doubt you can contact your accountant to discuss it.

Finally it's not cheaper to get an accountant just to do your year end. What accountants who deal with contractors do is divide their yearly fee into 12 monthly payments. You should look at for an accountant that does your self-assessment return and gives you free references as well as the normal company stuff in the package.

[stek]

I am new as an IT contractor and have been contacted by several companies asserting they can arrange my tax affairs so that I am paying 15% (or less) in tax on my earnings.

They are asking for a monthly fee - typically around £100 / month. I'm just wondering if this is worth it?

Don't go there.

[Alan @ BroomeAffinity]

I am new as an IT contractor and have been contacted by several companies asserting they can arrange my tax affairs so that I am paying 15% (or less) in tax on my earnings.!

As a general rule, avoid anyone who quotes you a take home rate. Except all those offering dodgy (IMO) offshore/loan schemes, all accountants should be in a position where your tax is roughly similar.

I might be biased here but I'd say get Freeagent, and a Freeagent accountant. Most offer monthly fees which include your software for around £90 to £129 PCM. You'll need to pay more than 3 months if you expect them to take care of your year end but it might not work out to be a full year's fee.

Lastly, having an accountant throughout the year means you can benefit from in-year tax planning. You can't do that after your year end has passed.

[WordIsBond]

I might be biased here but I'd say get Freeagent, and a Freeagent accountant.

"Might be biased"?

Of course, sometimes biased people are right.

[Alan @ BroomeAffinity]

"Might be biased"?

Of course, sometimes biased people are right.

It's a fair cop, guv.

[LisaContractorUmbrella]

I am new as an IT contractor and have been contacted by several companies asserting they can arrange my tax affairs so that I am paying 15% (or less) in tax on my earnings.

They are asking for a monthly fee - typically around £100 / month. I'm just wondering if this is worth it?

- There seems to be good software out there: I am looking at Freeagent which manages all your expenses, corporation taxes, etc. - even self assessment. This software costs around £30 / month.
- My contract ends in three months (though it will probably renew).

Is it worth paying a monthly fee when there's a chance my contract will end soon?

Would it not be better to manage my expenses, etc. with Freeagent and then, at the end of the year, hand the accounts over to the accountants who can optimise my taxes and sign off for HMRC?

Thanks for any help!

If the companies are promising 85%-90% tax home pay they are not accountants - they are purveyors of tax avoidance schemes - snake oil salesmen basically.

There are plenty of reputable accountants out there (many of whom post on here) who will give you proper advice. It's really not worth doing what you suggested for the reasons that others have given but if you are only contracting short term why not just use an umbrella company? They will only deduct their margin during the months that you work, so if you only work for 3 months, you only pay for 3 months.

[deserted]

Thanks for your help guys.

Either way I think it's worth using a good software service, I am going to have a look for a good accountant!