On this page, we cover:
Let’s address a myth of running a Limited Company from the start. You don’t actually need an accountant.
So why does almost everyone choose to have an accountant? Accountants help you stay compliant with HMRC, understand your business cash flow, profitability and how much you can withdraw, file accounts, process your payroll and complete yourself assessments.
As the director of a contractor limited company, you’re legally responsible for all those tasks, but by finding a good accountant you can in effect just sign on the dotted line and let the rest get taken care of without the hassle.
There are hundreds of specialist limited company contractor accountants in the UK. A contractor should choose an accountant they feel comfortable with and not necessarily a firm from a top 10 contractor accountants list. When selecting an accountant, a contractor should ensure that:
They’re a contractor specialist– accounting for contractor limited companies is generally less labour intensive than for limited companies with more complex internal structures. However, most contractor specialist accountants are specifically set up to deal with high volumes of business offering a quick turnaround to clients.
Although some contractor limited companies still use a traditional accountancy practice, most now use specialist contractor accountants to deal with their financial and taxation affairs.
There’s contractor focused pricing – contractor specialists generally offer their services at much reduced rates compared to standard accountants because there’s not a huge array of variables involved in contractor accounting like stock.
At best, a specialist accountant will be able to reduce the tax a contractor and a contractor limited company pays by a few thousand pounds. Contractors should satisfy themselves that the fee for any accountant’s services does not take up too large a proportion of the savings on tax they promise for a client.
You get a service level agreement– a contractor should make a list of what it is that they want from an accountant and, when deciding on one, use that list for comparison purposes. Benchmarks to consider may include time taken to receive a response, whether there is a dedicated account manager, regular account reviews, and so on.
They have technological capability– a specialist accountant will be able to recommend an online contractor bookkeeping package from which the accountant will regularly download their clients’ latest financial records. This greatly streamlines the process and cuts down the amount of time needed by the accountant to compile and submit tax returns, resulting in a significant saving in professional fees to a contractor.
Most self-employed contractors and limited company directors do not deal directly with HMRC on many taxation issues. Instead, they appoint their accountant or “agent” as their nominated first points of contact. Anyone appointed as an agent must meet HMRC’s standards for agents. To appoint an agent, use form 64-8 or the online authorisation service.
If an agent is not appointed, then HMRC will send personal and corporate communications on tax to the managing director of a contractor limited company and they will only accept a reply from that director. If you want to get the most out of your accountant and reduce your workload then appointing them as your agent is a good idea.
It’s not just on a personal or corporation tax level that an agent can be appointed. If a contractor decides to register their limited company for VAT, its director can also appoint an agent specifically for VAT.
Directors of contractor limited companies must be aware of their responsibilities to HMRC and Companies House. In this guide, we cover everything from what is IR35, a Director's role and also Contractor VAT.
It is important to know about the broad range of limited company contractor expenses that can be claimed back. This section covers Capital allowances for contractors, types of expenses you can claim back and Contractor expenses when working away from home.
Bookkeeping software is essential for providing estimates to clients, invoicing, chasing payment, accepting payment, receipt storage, and more. We look at the importance of keeping money aside for tax and slower trading periods, how to separate personal and business finances and keeping business records safe & accessible for inspection by HMRC.
There is a wide variety of ways in which a contractor limited company can market itself including a well-written CV, using a recruitment agency, online job boards, LinkedIn, networking, websites, and email marketing. Marketing gets a contractor in to see an interviewer who will eventually award the job. We look at the mindset of an interviewer, phone interviews, what’s expected at face-to-face interviews, and the increasing frequency of Skype interviews.
Contractor interviews are one of the most important aspects to winning business as a contractor. This resource will inform you for what you need to know about The mind-set of the interviewer, phone and face to face interviews and Skype interviews for contractors.
Insurance is a necessary business expense for contractor limited companies providing protection against a variety of different threats to the business. We discuss employer’s liability insurance, and director’s liability insurance. Also included are if contractor income security insurance and contractor personal accident insurance policies offer value for money.
A contractor limited company pays its own taxes including corporation tax, Employer National Insurance, IS and VAT. There are schemes available from HMRC which allow contractors extra time to pay what they owe when money is tight. In this post we look at the tax burden faced by contractor limited companies.
Contractor limited company directors are required by law to complete a Self Assessment every year. In this post, we look at how to register and when the self assessment submission needs to be made by. We also examine tax bands for contractors, income tax, National Insurance and dividends.
Directors of contractor limited companies have multiple opportunities to efficiently structure how they pay tax. In this post, we consider salary and dividend splits, appointing family members, claiming back expenses from previous years, capital expenditure allowances, tax free savings accounts, special investment schemes, single premium investment bonds, and Members’ Voluntary Liquidations.
