Working as a contractor or consultant gives you freedom, but it also means taking responsibility for your own tax affairs. Having the right support can save time, reduce uncertainty and help you avoid unexpected tax bills.
A contractor accountant?
A contractor accountant does more than prepare figures at the end of the year. They help you understand what needs to be filed, how much tax to put aside and what business expenses can be claimed.
Depending on how your business is structured, support may include:
- Annual accounts and Corporation Tax returns
- Self Assessment tax returns
- Payroll for company directors
- VAT registration and VAT returns
- Bookkeeping and accounting software
- Advice on allowable business expenses
- Tax planning before the company year end
Keeping your records up to date throughout the year makes it easier to see how the business is performing.
Accounting for limited company contractors
Many contractors and consultants operate through a limited company. The company is legally separate from you, so its money and transactions must be kept separate from your personal finances.
A limited company accountant for contractors can prepare the company accounts and Corporation Tax return, run payroll and explain how salary, dividends and expenses affect the money you take from the business. They can also help you monitor cash flow and make sure sufficient funds are retained for future tax liabilities.
IR35 should also be considered when taking on contract work. A written contract is important, but the actual working relationship matters as well. If the arrangement looks more like employment than a genuine business-to-business engagement, the tax treatment could be different. This is best reviewed before a new contract begins, particularly if there is any uncertainty.
An accountant for consultants
Consultancy businesses often have straightforward income but a mixture of costs, such as software, professional subscriptions, insurance, travel, equipment and working from home. Not every cost is automatically tax-deductible, so it is important to keep invoices and receipts and check anything unusual before claiming it.
An accountant for consultants can also help when income varies from month to month, when turnover is approaching the VAT registration threshold, or when you are deciding whether to remain a sole trader or form a limited company. The right answer depends on your profits, plans and personal circumstances; a limited company is not automatically the best choice for everyone.
Local, straightforward support
If you are looking for an accountant in Cambridge, GMS Accountants offers a personal service with clear explanations and no unnecessary jargon.
Whether you are starting your first contract, moving from employment into consultancy or looking for a more responsive accountant, get in touch to discuss the support you need.
