Been thinking I should look into this more seriously now I have had my contract extended. At the moment I am sorting it all myself. I have just gone flat rate VAT and my accounts are quite simple:
I bill around 40-45hrs per week to the agency who send it to the company I contract at.
I have very few expenses and bill them to the company I am working at as an individual.
Mileage is 60 miles per day.
I need to get round to paying myself via the online app on HMRC site, was going to do this myself via PAYE and dividends.
What do I actually need an accountant to do (company accounts etc) and what else can they do for me to save me money and what is a good level to be paying considering I am happy to do some stuff myself but want them to take care of the big stuff and make sure I am being efficient with my income?
Pensions is one thing on my list for them to advise on/set up.
[I]What do I actually need an accountant to do (company accounts etc) [/I]
What mine does:
Personal Tax Return
Company Tax Return
VAT Calcs
Payroll (inc reporting to HMRC)
NI Calcs
General advice when I need it
for about £130 a month, from the company. I could do it all myself, but I'd rather pay someone else and have my time back.
[I]Pensions is one thing on my list for them to advise on/set up. [/I]
Other than telling you "yes, a pension is a good idea" and that you can pay the premiums from the company, they will unlikely be able to give any more advice than that. They will probably have an IFA they can refer you to.
Sounds like you want peace of mind rather than need services?
Mine referred me to an IFA for pensions. If you are flat rate VAT your books should be pretty simple?
Can they advise you on IR35?
I have just gone flat rate VAT
If you had an accountant he would probably be advising you to submit notice to remove yourself from this around about now.
[I]If you had an accountant he would probably be advising you to submit notice to remove yourself from this around about now. [/I]
Why's that?
[url= http://www.contractoruk.com/vat/it_contractors_flat_rate_vat_guide_april_2017.html ]here.[/url]
I'm not an IT contractor. My work comes under the 9.5% (8.5% for the first 12 months).
In terms of pension - yes will probably need and IFA to advise on which but would like an accountant to oversee everything as well as doing my accounts.
IR35 is a concern but that's not for here. I am saving as much as I can for my exit plan (building my own office and R&D lab on the plot of the farmhouse we are building).
[i]I'm not an IT contractor. My work comes under the 9.5% (8.5% for the first 12 months).[/I]
What you do is irrelevant, it's what you spend (percentage of turnover) and what on that is important.
"[i]I'm not an IT contractor[/i]"
That doesn't matter.
"[i]I have very few expenses[/i]"
This does. If you have no costs other than travel & subsistence you'll be in the 16.5% band.
As Sundayjumper implies 'very few expenses' is the crux.
If you spend less than 2% of your turnover on 'goods' then you're in at 16.5%.
Oh, and capital expenditure (i.e. computers, furniture, phones etc), and spending on vehicles don't count as goods. Or anything that's shared between business and private usage.
...and the 16.5% band makes the flat-rate scheme pretty much pointless. You make 20p per £100 of turnover.
Nor travel or subsistence. Only goods.
I'll be hit by the 16.5% band but currently on 14.5% and get several hundred savings per quarter by being flat rate. 2% difference, even if that halves the savings it's still savings and a lot less faff.
Anyway, on the original question, this and other points of tax and legal matters is what a decent accountant is for. They know what's going on, can keep track of the frequent changes and advise you. Plus may do your tax return (mine always seems to find something to claim back that I'd never know doing it myself), does the company returns and accounts, maybe VAT returns also, and you have someone you can talk to for advice instead of hitting forums for opinions and probably wrong advice (on that note, don't take my advice 😉 IANAL/IANAA).
p.s. 2% increase on self employed now scrapped. Though I meant to ask my accountant whether that would have been relevant to a Ltd Co self employed. However it was being offset with a decrease in corp tax anyway.
I've been contract for years through a LTD company and always used [url= http://fre.ag/35z9eovl ]FreeAgent[/url] for managing my books.
It does all the stuff @IHN mentioned, except the advice bit.
I still use an accountant on top of that though for the advice, plus formal submission to companies house.
* the link above is a referral link, but if you use it we both get 10% off the price so it's a win/win
"[i]I'll be hit by the 16.5% band but currently on 14.5% and get several hundred savings per quarter by being flat rate. 2% difference, [b]even if that halves the savings[/b] it's still savings and a lot less faff.[/i]"
You might be in for a surprise 🙂
The change from 14.5% to 16.5% almost completely wipes out the benefit - as I said above, @ 16.5% you gain 20p per £100 of turnover.
Currently:
£100 turnover x 20% = £20 of VAT collected from client.
£120 gross invoice x 14.5% = £17.40 VAT due to HMRC.
£20.00 - £17.40 = £2.60 profit.
From April:
£100 turnover x 20% = £20 of VAT collected from client.
£120 gross invoice x 16.5% = £19.80 VAT due to HMRC.
£20.00 - £19.80 = £0.20 profit.
So you see, it's a long way from halving it.
Still a saving. Okay a lot less then, but scaled up I work it out on my typical invoices I'd still save around £150 a year.
Plus you can apply the test per quarter and if you manage to get £250 of qualifying goods then you can apply 14.5% that quarter.
^^^ think it's >£250 and >2%.
