Picking an accountant.

I wanted to write a few articles around becoming an IT/Technology/Digital contractor. These articles will be detailing practical advice YOU can execute with plenty of instructions you can follow word for word. I have written these guides not only as an aide memoire for me, but as the whole sector is a minefield, from IR35 regulations to Tax, Accountancy and business best practice I could find nothing online which was either relevant or not massively complex.

If you have personal questions relating to you, feel free to reach out to me on Twitter (@mariodc) and I’ll be happy to give you any advice.

Picking an accountant

The importance of a good accountant I cannot emphasise enough. When I started my business, an accountant was someone who I knew I’d need straight from the off. What I learnt is there are many different types of accountant, and you should think very carefully to whether it’s just accountancy you need, or financial consultation.

For me, at the start of my journey, I wanted as much hand holding as possible. The term I remember using when selecting my accountants were ‘a Financial Concierge’ as I literally did not know what I was doing at all and plus, I was moving from a FT PAYE employee, to a self-employed contractor so I didn’t want to fall foul of HMRC before I’d even begun.

To help with selecting accountants I did lots of research. I also (to help the accountant I ultimately chose) I made sure I was an ‘organised’ client. What does this mean? It means that I had my financial affairs in order BEFORE I appointed an accountant. This involved collecting up the last two years of pay slips, EOY (End of Year) P60, P45s from job to job, any previous Tax and Self-Assessment documentation and I stored all this on a Google Drive ready to share. I knew that the more organised I was, the easier it would be for the Accountant to onboard me. You should do this too before considering any Accountant. Please don’t give them a shoebox full of receipts, invoices, and vague out of date bank account statements. Take some time to audit yourself & get everything prepared. The other thing I did was give HMRC a ring, to check for things such as my UTR (Unique Tax Payer Reference) and ensure I knew my NI (National Insurance) number, and other similar details.

I ended up with a Google Drive with;

  • Pay slips for 24 months
  • X 2 P60s (from 2016/2017)
  • X 1 P45 (from my most recent employer)
  • Any initial incurred business expenses for my new venture (hosting costs, initial travel, equipment purchase)
  • 3 years of personal bank statements

A note on all these different document types, as you are going to get very good at knowing which is which and wading your way through the minefield of HMRC’s crazy labelling of docs. In a nutshell, your P60 is a summary of EOY contributions & earnings. Your P45 summarises your financial tax position at the end of a FT role. You can read more about these documents here from HMRCs helpful website.

HMRCs Portal

Having worked for various outsourced tech teams who helped build these things for HMRC, I know how bad the various platforms are. Due to the UK Government going through huge transformational change (still ongoing at the time of this blog post), their existing portal is split into two or three different systems including ‘the new one’ and the ‘legacy one’ notable by their stark User interface difference as you traverse the platform itself. Ensure you know the URLs, and can log in and you’ve set up a two-step authentication factor, such as your mobile phone.

If you have a historic mobile phone registered against your account you can’t access, go ahead & phone their Online help team and arrange to have your details updated. Getting anything from HMRC can take weeks so it’s here you should ensure you can access both your personal and your business entities from your HMRC portal. Get used to navigating around the platform and ensure you enrol on all the correct services which for anyone in my position would have been at-least;

  • VAT Registration
  • Self-Assessment

You should do this too – ensure you can navigate the platform, your account details are up to date and you’ve made a note of all your passwords. Get all this in top shape now, for when you must go in every five minutes in the future! You’ll save yourself considerable headache.

Your financial services you probably need.

You’ll learn the way financial services are labelled, aren’t always what you think they are. Despite all of the below, which I recommend you have too at minimum, I realised I needed a much closer hand-holding as I actually needed emotional support from transitioning from FT to Self Employed, and the cold hard reality is an Accountant, no matter how much you pay them, won’t provide this. Your accountancy service will most usually be an ad-hoc affair, with your accountant trueing everything up by the end of the year. Whilst that’s normal practice I’ve learnt, if you like to know where you are, month-to-month, then unless you’re paying a lot of money you need to take responsibility for that for yourself. Pick an accountant with an online portal, and ensure they will file your monthly expenses and income and such like, this will help you. My biggest challenge was trying to calculate my liability at the end of the year, and not being able to predict. That fear hung over me for months – not good when you’re trying to focus on your business.

Services you will need include;

  • Preparation and filing of CT600 corp. Tax return
  • Preparation and filing of statutory accounts with companies’ house
  • Submission of Annual return
  • For operation of Payroll
  • For use of an office address for admin purposes
  • For preparation of self-assessment personal tax return
  • For submission of quarterly VAT returns and monthly book keeping
  • For unlimited Ad-hoc advice & necessary liason with HMRC

Top Tips for picking an Accountant

Decide whether you are ok whilst in your infancy with a large sprawling impersonal Accountant which thousands of clients, or whether you want a local high street Accountant who may give you more personal service in that first couple of years. I transitioned from one accountant to another half way through the year, and whilst I’m still not happy I’ve certainly learned what I do and don’t want, from an accountant.

Ensure you can build a relationship with them. Larger companies this can be difficult, but you want them to be fluent enough with your business to provide reassurance and safeguarding for you. Also be prepared to spend time with HMRC yourself, or ensure you highlight to your accountant you want them to do.

Be prepared, the easier you can make it for your accountant with information in one place, the easier time they will have. If you expect them to be fluent in your business, you need to make it easy for them.

Compromise on the fact they won’t just look after your business. They do this job day in and day out, so they do not succumb to the same pressure as you nor are they as fearful about falling foul of HMRC. You have to take responsibility ultimately for your business & your financial position. Make bad financial positions & your Accountant can NOT magic these issues away. Well, if they can, they probably aren’t the accountants you want in the first place!

Xero, a fantastic billing and invoicing platform which you may want to consider, have written an excellent article on picking the right accountant, you can check this out here

If you’re interested in learning more about running your own business, there’s plenty of help & support out there. Become a member of the IOD (Institute of Directors) and reach out to HMRC who will give plenty of support. Any questions, drop me a line on Twitter (@mariodc)

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