To use an accountant or do it myself? To use an accountant or do it myself?
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  1. #1

    Nervous Newbie


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    Default To use an accountant or do it myself?

    Hi Folks,

    I started my own company a year ago but i've only just taken on a contract which I start next week.

    I have sent the forms into HMRC to declare the company active (i had declared it dormant) and i've sent in the forms to register for flat rate VAT.

    At this point though I'm starting to worry if I need an accountant or if I can do it myself. I really want to fully understand it all myself so learning about accounting and doing it myself seems enticing, also the Mrs has shown a strong interest in learning about it in order to help me out.

    Due to this i'm considering using Freeagent and doing it all myself, especially since my contract is fairly low paying compared to others so paying £100 a month for an accountant would seem rediculous.

    The problem is I have questions about things and I'm starting to think an accountant might be a wise choice as there is a lot of conflicting information online.

    So my question is, do I need an accountant or will I be ok going it alone? If you think I should get an accountant do you know of any that work with Freeagent that you'd recommend?

    Somebody might ask what my "questions" would be to an accountant so i'll outline the kind of stuff i'm worrying about.

    1. I don't know how to structure it so that I pay the least tax possible, I think if I pay myself minimum wage and the rest in dividends it would work out fine, but i've heard that paying more in salary can reduce tax due to CT relief?

    2. I've paid thousands in server hosting fees over the last year and a half while the company has been dormant, and I bought a server, all out of my own money. Can I claim all these costs back now? Even though the company was inactive and I assume the payments would be in a previous year?

    3. I have also bought equipment that I only use for work (such as a macbook pro), can I simply sell this to the company in order to get money out of it tax free in the beginning?

    Thanks for your time reading this.

  2. #2

    Should post faster

    Sally@InTouch's Avatar
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    Hi there

    We would always advocate using an accountant for at least your first year!
    However, if you're keen to go alone, then FreeAgent is a great piece of software, BUT only if your contract falls outside of IR35 as it cannot handle deemed payments.

    They have a list of FreeAgent friendly accountants on their website and I'm sure an enquiry phone call to an accountant would probably answer some of your initial questions.

    Good luck

  3. #3

    Umbrella Queen

    LisaContractorUmbrella's Avatar
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    Totally agree with Sally - there is an awful lot to learn. You will definitely need to consider your position re IR35 as well and you should definitely have specialist advice for that
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  4. #4

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    1. The best option is normally low salary and high dividends. A higher salary would result in saving 20% CT but paying 20% income tax, so you're not gaining (and that's ignoring the extra NI too).

    2. Yes, as long as they are necessary for the business.

    3. Yes - transfer it at market value, just check the second hand prices on somewhere like Ebay.

  5. #5

    My post count is Majestic

    northernladuk's Avatar
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    If you are so unsure then £1200 or so a year is a pretty cheap peace of mind IMO. It's not going to break the bank and you can sleep soundly so no brainer for me. I would bet a reasonable amount they will save you that much in a year on top of keeping you safe.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  6. #6

    Contractor Among Contractors

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    Quote Originally Posted by Sally@InTouch View Post
    FreeAgent is a great piece of software, BUT only if your contract falls outside of IR35 as it cannot handle deemed payments.
    Hmmm, you're right. I just double checked as the option to treat an invoice as inside-IR35 was there last year (although i never used it).

    It's gone now though.

  7. #7

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    It never ever ceases to amaze me that people, especially first time contractors, want to save money on what is one of the most important aspects concerning the running of their company.

    A good accountant is worth paying for. Remember, if you pay peanuts, you get monkeys.

    DIY accounts? No way and I've been contracting 15 years.
    I couldn't give two fornicators! Yes, really!

  8. #8

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    Quote Originally Posted by BolshieBastard View Post
    It never ever ceases to amaze me that people, especially first time contractors, want to save money on what is one of the most important aspects concerning the running of their company.

    A good accountant is worth paying for. Remember, if you pay peanuts, you get monkeys.

    DIY accounts? No way and I've been contracting 15 years.
    WBBS. If your accountant costs money, he's doing it wrong.
    Blog? What blog...?

  9. #9

    My post count is Majestic

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    Quote Originally Posted by BolshieBastard View Post
    It never ever ceases to amaze me that people, especially first time contractors, want to save money on what is one of the most important aspects concerning the running of their company.

    A good accountant is worth paying for. Remember, if you pay peanuts, you get monkeys.

    DIY accounts? No way and I've been contracting 15 years.
    This and what Mal says (I like that saying)!

    It has the added value of being able to drop the term 'my accountant' in when chatting to your mates and random birds on a night out. Worth it just for that
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  10. #10

    Contractor Among Contractors


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    Take a look at this thread and then decide!

    http://forums.contractoruk.com/accou...-question.html

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