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Accountants for contractors - what do they do?
Posted Feb 15, 2011
If you are a limited company contractor, you will need to hire a specialist accountant to handle your affairs.
Here are some of the typical duties you can expect your contractor accountant to carry out for you over the year. You should always check what is included in your monthly fee before hiring an accountant.
Year End Accounts
As with all limited companies in the UK, you are required to submit accounts to Companies House each year.
VAT Returns
If you are registered for VAT (and most limited company contractors are), you accountant will complete your quarterly VAT returns and submit them to HMRC.
They should also be able to advise you if the Flat Rate VAT Scheme would be beneficial to your company.
Payroll
Your accountant will deal with all your PAYE and National Insurance paperwork. They should supply you with a monthly payslip which sets out your net salary following deductions for PAYE and NICs.
Corporation Tax
After each company financial year, your accountant will calculate your corporation tax liability. The current "Small Companies Tax Rate" is 21% of profits (2010/11 tax year). This will drop to 20% from April 2011.
Dividends
Your accountant can prepare dividend paperwork for you - this will include the tax voucher which accompanies a dividend declaration, as well as board meeting minutes. You can also read our guide to dividend taxation.
Self Assessment
Most accountants will also prepare your self assessment returns each year (quite possibly for an additional fee). The January 31st deadline applies for both submission of your tax return, and cleared payment for any tax you may owe.
Forms
Your accountant should take care of the key payroll forms, including:
- P35 - End of year return completed by all employers. This form details the total tax and NI deducted for each employee during the previous tax year.
- P11D - This is the expenses and benefits return. This form details the cash value of all benefits or expenses you as the employer may have provided each "relevant" employee during the last tax year (and all directors).
- P60 - This is an end of tax year certificate which you should keep. It details the total pay for each employee, together with total PAYE tax and national insurance deductions made.
Correspondence
Your accountant will deal with any correspondence between your company and Companies House and HMRC.
Specialist Advice
If your accountant is an IT contractor specialist, you should expect them to advise on relevant tax legislation, such as the notorious IR35 legislation. Some accountants also provide a 'contract review' service to ensure that you are not caught by the IR35 rules.
Your accountant may also be able to set up a limited company for you, help set up a bank account, and should register your company for VAT and PAYE.
The industry is long-established, and there are many reputable accountants out there who specialise in contractor accountancy.
A typical monthly fee for a firm providing most of the above services is around the £75 to £125 mark currently.
Also, try our general tips on choosing an IT contractor accountant. You can also look at our growing list of specialist contractor accountants.
All content ©Contract Eye Ltd. Protected by Copyscape. Please scroll down for related articles.
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