Self-employed contractors have a freedom that is not readily available to full-time employees. However, this freedom comes with a unique set of tax challenges. This article shares some of the many benefits of outsourcing your accounting requirements.
What is a contractor?
A contractor works for different employers for fixed periods of time, under fixed contracts. The contractor sells their skills on an hourly basis to complete project-based work.
Why do contractors need accountants?
Abandoning your accountant and going DIY may be tempting, but it could end up costing you more in the long term.
The UK’s tax laws are complicated and it can be a struggle to navigate them. Doing your own accounting can also be an incredibly time-consuming process. There is endless fine print for VAT and tax rules, and you could waste hours on the phone to HMRC. Despite your best efforts, it’s possible that your submitted return will be incorrect.
If you complete the documents yourself, it’s recommended that an accountant reviews your work before it is submitted – an avoidable extra cost. You also may struggle to get approval for a mortgage if you complete your own return.
An experienced accountant will help you abide by and apply all the necessary rules with which you need must comply and ensure that they are correctly applied to your finances. They can help you foresee and plan for potential future tax bills.
Without expert advice you could pay yourself incorrectly – resulting in a large tax bill. Once submitted, these bills cannot be reversed.
If you have decided to use an accountant, make sure that there is an open flow of communication and a constant review process. You should be able to call and email them when needed without being charged exorbitant additional fees.