Comparing apples with pears – when comparing contractor accountants, make sure you are comparing like for like!

One of the things that constantly concern me about the contractor accountancy market is the lack of transparency by some service providers. This typically takes the form of a low headline monthly fee used to entice new business but which conveniently neglects to mention some of the expensive add-ons, joining/leaving fees and all the other additional costs that can sneak up on busy contractors who haven’t had the time to go through the small print in much detail.

Limited company contractors have very different characteristics to other small business and can place a specific cost value on their time, it is therefore easy for them to compare the costs of completing bookkeeping and accountancy tasks themselves in comparison to having someone else take all that hassle from them.

But without a complete understanding of what a contractor accountant really costs, when you add up all the extras, what looks like a great monthly fee can double when you include all these ‘little’ extras like personal tax returns, insurance, or something relatively minor such as changing the amount you pay as a salary mid-year.

And then there is the huge spectre of IR35 looming over contractors operating as a limited company and reviews can be expensive with many high street accountants lacking the necessary experience and expertise.

My advice to contractors looking to switch accountants is to use an independent costs checklist such as this one published on www.contractorcalculator.co.uk and do some research into what makes a good contractor accountant at a fair price.

Finally, if you are a contractor with an hourly rate that is higher than what a potential accountant will charge, you would be better off outsourcing everything and focussing on what you do best.

Attempting to save money by doing your own accounting, or jumping to an accountancy services provider advertising a low monthly fee with little or no transparency could prove to be a false economy.

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