While the limited liability and reduced tax burden appeal to many contractors, the truth is that there is a significant amount of paperwork involved with providing contractor services through limited companies.
Unless you are cognisant with UK tax laws and are happy handling the administration involved with having your own limited company, you will more than likely engage the services of an accountancy service provider to manage the day-to-day running of your business.
Many contractors do this, as it allows them to focus their attention on the contracts they have entered and complete them to the highest standard.
If you intend to do the same, it is important that you speak to various providers about what they can offer you.
Below, we explore some of the questions you could ask accountancy services providers.
What services do they provide?
If you are familiar with some of the administrative tasks involved with running a company, it can be a good idea to list these. Following this, you can speak to different accountancy services providers to see what they offer and whether they can provide the services you want.
How much do they charge?
Most companies charge fixed fees and prices will vary between providers. When looking at cost, it is important to adopt a value-for-money mindset, weighing up costs against the services provided.
There are some providers that undercut the rest on price but it is likely that the services they provide are very basic and any additional services could cost you more on top.
Are they specialists in the contracting market?
It is important to choose an accountancy services provider that has experience of helping limited company contractors and is aware of exactly what is required.
You should look to engage a company that is established and has the necessary experience to help you.
Do they emphasise IR35 compliance?
Complying with IR35 legislation is of the utmost importance and it is essential that the provider you ultimately choose is explicit about the need for you to comply with the legislation.
Which professional bodies are they regulated by?
It is imperative that you choose an accountancy services provider that is regulated by the relevant authorities such as the Institute of Chartered Accountants in England and Wales (ICAEW) or an industry approved auditor such as Professional Passport.
In addition, you should enquire into the accreditations and qualifications they boast to give you an idea of their level of expertise and to establish credibility.
Can they help you set up your limited company?
Accountancy services providers should be able to guide you through or even carry out the registration process on your behalf. Whether you need this service is up to you, however, given the amount of paperwork involved and the need to get it right, many contractors feel more comfortable entrusting it to experts.
Will you have your own dedicated accountant?
Having your own accountant as opposed to an account manager or other setup is something you should give serious consideration to.
By having a dedicated accountant, you have a point of contact with whom you can discuss your business plans and contact should you have any issues you wish to discuss.
How and when will you pay your fees?
Being aware of this is important for your own financial management plans. Different providers will have different systems in place, so you must enquire about this subject.
As well as asking these and other relevant questions, it may be a good idea to speak to other limited company contractors to find out about the services they use and whether they can recommend a particular company.