Pros And Cons To Using A Contractors Accountant

There are several reasons why you may decide to become a self-employed freelancer

or contractor; you are responsible for your own hours, earnings and have the flexibility of working for different clients. It gives you more control over your work pattern and work-life balance. It also presents new challenges that may not have been as issue in a salaried position however - understanding and paying tax, organising or going without benefits and getting paid on time, to name a few.

Because of this many self-employed individuals engage contractors accountant, who will take responsibility for your earnings by invoicing the client themselves, paying tax and NI, and then paying you. There are many advantages to this system, not least of which is potentially getting the most of your income. Accountants are tax specialists and will know what tax status will better suit you (be it self-employed status or as a limited company, for example), they will also know how to work out additional benefits for you that you may otherwise be unaware of.

Contractor accountants will also make sure that you are paid in a timely and consistent manner, a part of self-employment that you may be less comfortable with dealing with, or simply not have the legal know-how to set and maintain payment terms. In addition to that they will ensure that all of your tax and NI is paid so that you aren't with a hefty tax bill at the end of the tax year. Ultimately, by being responsible for your paperwork they remove the time and the hassle that would be spent on doing this.

Some may feel however that this is not the right route for them. It does incur fees, although that needs to be weighed against how much money can be saved both from optimising earnings and through time saved. You would also have less control on your finances and therefore miss out on acquiring additional business knowledge that may prove useful further in to your career. Using a chartered accountant s opposed to a contractor accountant, to work alongside you, will incur higher initial fees but will allow you to control and see your own finances.

by: jessica thomson

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