IT Contractor Accountants - Accounting - Accounts

Due to the nature of their business contractors know exactly what their time is worth, not to mention how precious it is. So when it comes to keeping financial records, finding a service that offers speed, usability and accessibility is the key for many independent professionals.

Due to the fact that their accounting needs and operational practices differ significantly from other businesses, the contracting community is something of a niche area from an accounting perspective. That's why a number of accountancy firms have realised that in order to win over contracting clients, they need to provide a specially tailored service.

Over the past few years a growing number of accountancy providers have sprung up to cater specifically for contractors and freelancers, and in many cases they are focusing on online accounting as a way to differentiate between themselves and those companies offering more 'traditional' methods of accounting.

These newly emerging online providers are positioning themselves as an efficient, cost effective solution for busy professionals who want to remove the hassle from their day-to-day financial management - while established practices for balancing the books lead to dozens of excel spreadsheets and reams of paperwork, online accounting programs allow users to quickly and easily keep track of their finances at a cost that's proportionate to the service.

What are the options?

In order to understand exactly how online accounting differs from other methods, it's first worth looking at an overview of the different options contractors have when it comes to handling their accounts:

• The traditional accountancy approach, where the contractor keeps all paper records and receipts and the accountant organises them into something legible at year end. In recent years this method has evolved to become paper-free; the contractor uses Excel spreadsheets to manually record expenses and transactions, then they are e-mailed to the accountant on a monthly or quarterly basis.


• Software-based accounting, using a commercial software package like Sage, which allows the contractor to input all data and send the file to an accountant who generally uses the same software.


• Software-only online accounting, where the user can record all transactions online and grant their accountant access. Such services are generally tailored towards small businesses rather than contractors, as are their offline counterparts.


• Comprehensive online accounting services, which offer an end-to-end service, combining an online software package with a qualified team of accountants. Tailored to the freelance and contractor niche, these services enable the user to track time and expenses, create invoices, pay themselves via payroll and dividends and get a real-time view of their accounts, whilst their accountants take care of the more challenging aspects such as annual tax returns and the production of year end accounts.

From this overview it starts to become clear how online accounting services can remove duplication of effort (between the contractor and the accountant), save time and effort on the part of the contractor and, above all, offer a more comprehensive service offering than has previously been available.

A Comprehensive Service Offering

Many online accounting programs now include an impressive array of features: users can track their billable time, record their expenses, create (and chase) invoices, create pay slips and dividend vouchers and even prepare important documents such as PAYE and VAT returns. In addition to their online service offering, (often referred to as SaaS - software as a service), many accounting providers also include the services of an accountant as part of their packages, and most include comprehensive user support, both on and offline.

This means that before they sign up for online accounting, contractors have the flexibility to decide whether they wish to retain their current accountant. If they do, they can simply sign up for a SaaS package to reduce the time spent managing their finances, but if they want a full, end to end service they can opt for a package that includes full support from an accountant. As always, it's good practice to ensure that the selected online accounting partner includes all the required services as part of one monthly fee to avoid any unexpected charges at year end.

Continual Development

Over the past few years more and more contractors have become aware of the benefits of online accountancy, and consequently they are becoming more demanding (and discerning) when it comes to selecting an accounting partner. Online accountancy providers have quickly caught onto this and are constantly working to develop more sophisticated software and better value packages.

For instance, here at inniAccounts, we've recently announced a series of updates to our service designed to provide customers with a jargon-free view of their finances that is even accessible via mobile phones. We've worked alongside contractors to develop two new features, LiveCash and inniAccounts Mobile, that both take the concept of real-time, hassle free online accounting one step further:

LiveCash is a new online feature that provides contractors with a real-time view of their finances, such as live forecasts of upcoming tax bills, presented in a jargon-free interface. Instead of talking in accounting terms (such as 'profit and loss' or 'trial balances') LiveCash communicates financial information using familiar terms such as 'what I have', 'what I owe' and 'cash available', so you'll always know exactly where you stand. inniAccounts Mobile is a mobile phone application that securely brings your finances to your iPhone or Android mobile and also allows you to enter billable time, expenses and mileage on the go using a familiar interface.

Both of these features are designed to increase accessibility, which is another key differentiator for online accounting versus traditional methods: provided they have an internet connection, contractors can log on wherever they want and view their financial information in real time - no need to wait for an accountant's quarterly report to check on current cash flow. As a further benefit, all data is stored securely online, rendering computer theft or malfunction far less of a threat when it comes to the safety of sensitive financial data.

Simpler, Faster and More Accessible

There's no better way to gain peace of mind than by ensuring you know exactly where you stand financially - it's a crucial aspect of running a successful business - which is why contractors increasingly want to stay in total control of their finances. But few people wish to spend valuable time managing their accounts, which is why they choose to hire an accountant.

Using an online accounting service gives you the best of both worlds: the software lets you take control by removing the hassle associated with financial management, and you also have the support of a professional accountant whenever you need it. Online accounting services provide a secure, understandable, accurate and accessible way of maintaining financial control; it's no surprise that more and more contractors are making the switch.

About the Author

James Poyser is Product Director at inniAccounts, an industry leading online accountancy service for contractors.

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