Over your entire career as a limited company contractor, you’re likely to change accountants at some stage.
From our experience, the decision to switch accountants is often due to poor service, particularly lax communication.
Overpricing too, such as a sudden unjustified price rise, rarely fits well with a typical contractor.
What happens when you change accountants?
When you change firms, your new accountant needs to make contact with your old accountant to arrange a handover of your accounts. The process is known as seeking ‘professional clearance’.
Most contractor accountants use FreeAgent these days, which means that your data is secure and can easily be transferred to a new provider. Other spreadsheets and records – such as partially compiled annual accounts – are also included.
You will need to authorise your new accountant to deal with HMRC on your behalf. This can mainly be done online these days, although postal delays to receive authorisation codes are not unusual!
You can read about what to expect during the switching process in our guide to changing accountants.
The process is usually (but not always) simple
The contracting industry is relatively small and there is a regular ‘churn’ of clients between accountants.
As a result, it is in no one’s interest to delay the handover process or make things difficult for the new accountant.
For new contractors or contractors who have up-to-date (and correct) accounts in tow, the process of moving over new a new accountant is often a simple one.
However, this is often not the case, especially if you want to get rid of an accountant due to poor service and communication.
If you have had a bad experience, you may want to move accountants before your previous year’s company annual accounts have been completed.
They say that the best time to move is after your annual accounts have been submitted, but this is in an ideal world.
After all, why trust this task to an accountant you have lost faith in?
How much will a new accountant charge to complete your accounts?
Many small business accountants charge over £500 just to complete a client’s annual accounts. It is the most time-consuming element of the accounting lifecycle.
After all, around half of a typical monthly fee contributes to the preparation of your limited company’s annual accounts.
However, the cost is spread across the year into manageable payments.
As a result, accountants often need to charge an initial fee to complete any outstanding accounting work.
It is unfair to expect a new accountant to accommodate a new client’s needs regardless of the amount of work involved.
In our experience, an accountant will quote for any catch-up work in three ways:
A one-off fee – to complete the previous company year’s accounts, plus to bring the current year’s accounts up-to-date
An hourly rate to cover the time taken to complete the above. The rate will often depend on the seniority of the staff involved.
For free – the contractor accounting market has never been more competitive, with some offering ‘no catch-up fees’ at all if you become a client.
Take your time in your quest to find a new accountant.
A firm with a good reputation among other contractors is always a good bet.
If you can find a firm with minimal catch-up fees too, this represents the ideal scenario for a switcher!
