Choosing a contractor accountant

Why you should choose us as your accountant for your contractor business

Contractors cover a wide range of professions from consultants to builders, with all of them offering a unique service to clients. As a contractor, your job is to provide everything from materials and equipment to personnel and goods, and most importantly, to ensure that the contracted job is completed with the client’s specifications in mind.

In today’s diverse and fluctuating business world, being a contractor comes with many advantages. However, as a self-employed contractor, there are also many things that you need to consider in order to be successful, from managing your finances to potential tax issues including IR35 legislation. This is why it’s vital that you choose a contractor accountant who truly understands your needs.

Essentially, we have the qualities you’re looking for in a contractor accountant because:

  • We take time to understand your work.
  • We are chartered accountants providing comprehensive contractor accountancy services and tax advice to contractors across London.
  • We are small enough to care, but also with a robust team well-versed in areas relating to contractors.
  • We are highly recommended by our clients; don’t just take our words for it, our clients sing our praises as you can see on the testimonial page.
  • You’ll know what you’re paying for. We have several packages starting from as little as £90 + VAT a month. Our fees are fixed and with no hidden charges.
  • We are a gold partner of Xero which is built for contractors and small business owners.

Benefits of being a contractor

Being a self-employed contractor definitely has its perks as mentioned on the pros and cons of contracting page. Working for yourself gives you a sense of freedom seldom found in other types of employment and facilitates the flexibility to adapt your workday to suit you, while also allowing you to see an increase in your yearly income.

Some of the benefits of being a contractor include:

  • Increased earnings
  • Flexible working hours
  • Flexible holidays
  • More variety in your work
  • Control over your own skills development
  • A better work/life balance

As an independent business with all of these great benefits, it’s important to be mindful that your tax responsibilities differ from those who work in more conventional forms of employment. At Tax Agility, our specialist accountants for contractors can help you to ensure that your finances are kept up-to-date and that you’re aware of any taxes you’re required to pay, and the ways in which you need to pay them.

Setting up as a contractor

Legally setting up as a contractor is a necessary step to furthering your contracting career. Before doing so, however, you need to think about how you would like to go about it. There are two main ways in which you can set up as a contractor, either as a limited company or by joining an umbrella company, as highlighted on our contractor companies explained page in which we highlight both of these options and their pros and cons respectively. It’s important that you consider your options carefully before making a decision.

How to set up a limited company for contracting

A limited company is one that is legally separate from the people running it, which means that they are considered entities unto themselves for tax purposes. In a limited company, the finances of the company are kept separate from the personal finances of the company’s owners, unlike a sole trader business. The owners/ shareholders of a limited company can also keep any profits the company makes after tax, which are known as dividends.

Setting up a limited company means that all of the daily responsibilities of running a business are down to you, and you must also deal with all accountancy and tax issues that arise by yourself or seek help from a specialist contractor accountant. While this can sometimes be stressful, one of the main benefits of having your own limited company is that you are in control of all aspects of your business, which gives you a greater degree of freedom and allows you to make all business decisions.

Setting up a limited company is fairly straightforward, but there are a number of things you’ll need to sort out first. This includes:

  • A company name
  • A company address
  • A director of the company – someone who is legally responsible for running the company.
  • At least one shareholder and details of the company’s shares. You also need to ensure that all shareholders agree to create the company and that they all agree on the written rules of the company.
  • A shareholders’ agreement, a contract outlining the roles, rights and obligations of the limited company’s owners/ shareholders.
  • A Memorandum of Association, which outlines the shareholders’ agreement to form the limited company.
  • Articles of Association, which detail the agreed upon written rules of running the company to be sent to Companies House.
  • A Standard Industrial Classification (SIC) code, which describes what your company does.
  • Details of people who have voting rights or more than 25% shares of the company.

Once all of this has been arranged, you can go about registering your company. Tax Agility can work with your limited company to ensure that you are fully prepared when it comes to paying taxes and other accountancy issues. Dealing with payroll and keeping an eye on your finances can often be time-consuming, but we can take care of all of this for you, leaving you more time to focus on the day-to-day running of your business.

How to set up under a contracting umbrella company

Being a contractor under an umbrella company is much different than setting up your own limited company. By working under an umbrella company, you cannot be the director of the company and will not have any responsibilities regarding the running of the business. All accountancy and tax matters are also taken care of by the umbrella company. As a contractor, you will complete a timesheet that will be sent to the umbrella company, who will then invoice the client. Ultimately, as a contractor under an umbrella company, you will have fewer responsibilities than if you set up your own limited company, but you can work hassle free and not have to worry about dealing with taxes and the company accounts.

To set up under an umbrella company as a contractor, it is important that you first do your research regarding which contractor umbrella companies are available and how they align with your business. Once you have chosen a company to be a part of, and have been selected by that company in turn, it will be necessary to agree and sign to a contract in which both parties are clear about what they are expected to offer the other. As a contractor, you should be aware that the umbrella company you choose will act as your employer and will keep some of the money you earn to cover holiday pay, for example. Most umbrella companies should be able to set you up within 24 hours, which means that you can start working as soon as possible.

Contractor tax and compliance

As a contractor, particularly one with a limited company, there are a number of different taxes that you should be aware of and dealing with the range of tax responsibilities that come with owning a business can be difficult and time-consuming. This is where our team of accountants can help. We’re industry experts in managing taxes and can even provide tailored tax advice to help your business make the most out of your finances.

Accounting and bookkeeping for contractors

Being on top of your accounting and bookkeeping is crucial to ensuring that your business stays in the black. It’s important to know how much money you are making from the contracting jobs that you take on, as well as how much you are spending. Depending on the type of contracting service you provide, it may be necessary for you to purchase materials, equipment and goods which will help you to complete the job at hand. Additionally, you should also be aware of your payroll responsibilities.

Having control over your finances is a key part of managing your contracting business successfully. Even if you are a contractor under an umbrella company, it is still a good idea to acknowledge your finances and to be conscious of where your money is going.

Tax Agility is here to assist you with all of your accounting and financial needs. Our experts are well-versed in dealing with payroll and managing the books. We can organise your accounts and work on ways to manage your finances that are efficient and profitable for your business.

What is IR35 legislation?

IR35 is a legislative act, enforced by HMRC, which applies to businesses that work for a client through an intermediary, such as a limited company. If you enter into a working contract with a client that would normally identify you as an employee of the client without the presence of your own limited company, then IR35 rules will apply to you. If this is the case, you can expect to pay around 25% more in tax every year.

Tax Agility can help your contracting company determine whether it is at risk of coming under IR35 legislation. Any tax advantages that you might gain from being a limited company are dependent on whether or not the IR35 rules apply to you. So it is important to know if you fall within the IR35 rules before you set up your own limited company, or else you may not see any of these benefits. Getting help from Tax Agility can make all the difference when determining where your business stands. We have an excellent understanding of the IR35 legislation and can help you to make the right decisions regarding your business.

How can Tax Agility help contractors?

Tax Agility is aware that contractors have varied needs depending on the work you do, which is why we offer tailored services that are specific to you. As experts in dealing with taxes and accountancy, we can provide you with the support and advice you need to make informed decisions regarding the finances of your business.

Some of our services include:

  • Completing your self-assessment tax return and submitting it for you
  • Advising you on pension plans
  • Advising you on potential future investments
  • Helping to minimise tax liabilities with the use of strategic tax planning
  • Ensuring the future of your contracting business is financially secure

For more advice on how we can help you with your financial needs, contact Tax Agility today on 020 8108 0090.


Useful pages for contractors: