Avoiding Accountancy Hell: Two steps to Accounting Heaven! Crunch chief Darren Fell explains why choosing an all in one accounting solution can save you a lot of time and hassle when it comes to your year-end.
Picture the scenario... You’ve got 1 month left to get your year-end to Companies House and you haven’t even picked the accountant yet! Accounting Hell! There’s honestly no panic quite like it and if you’ve had that familiar nagging feeling inside to get this sorted all year it’s even more frustrating. And now the deadline is upon you. And you’ve got more work on than ever before… Do you think you can concentrate on the customer’s projects you’ve got on your plate? Not likely! Typical it would have to be at the busiest time of year, but the magpie in you simply couldn’t turn that new business away could it? Other than those lovely accountants, there are not many of us that enjoy doing our accounts and that’s precisely why some of us leave it right until the last minute.
Look at your options... Ask anyone to be honest about his or her accounting: • Do they feel they are doing everything correctly? • Do they know when their year-end is? • Have they actually picked an accountant that suited them and their business? • Did they pick the best software or just the one with the flashiest features and pretty graphs? • Or worse still, did they take the first recommendation from the nice person at the agency who suggested an Umbrella firm*? * Note that Umbrella firms often offer great service levels but pay you via PAYE resulting in only 62-64% of your take home pay instead of 8285% if you run your business via your own Limited Company. The purpose of this guide is simple. It’s an easy step-by-step approach to getting your accounting set up perfectly! Once you do you never know, you may even feel really good about it!
STEP 1 - Find a good accountant Accountants offer far more that you might think.... People often make the mistake thinking accountants are simply just for preparing the year-end to Companies House and doing the Corporation Tax. However they happen to be excellent Business Advisors and can give advice on all-important decisions like: • Should I stay being a sole-trader or should I go Limited? • Should I go VAT registered and what scheme should I pick? • Should I partner with another Director and what are the benefits/ downsides?
If you get the best possible advice at the beginning, or make a resolution to do it now, you’ll get every question off your chest and get the perfect approach to doing your book keeping underway. That nagging doubt will then disappear and you’ll be safe in the knowledge that when it gets to the year-end you know everything is all sorted and there’ll be no last minute panics! Ok, so now you’re sold on getting the accountant in place as soon as possible, the next thing is to find one that fits the bill perfectly…
Now, how do I find a
Unbelievably there are many so-called accountants that are not qualified at all. Hard to believe, I know, but the mate of the mate you know may be able to do the books and knock up the annual accounts but does he really know the latest HMRC tax rules? Although he’s submitted the last 2 years without bother are you aware that the HMRC can retrospectively come back and challenge them in an investigation? And how do I find a qualified accountant? The best thing to do is pick an accountancy firm that is chartered. This means the firm will be headed by a Chartered Accountant who’s done the rigorous exams set by the Institute in additions to his existing accountancy qualifications. As per the Institute’s rules that will mean that every Accountant under him is qualified and a ‘reviewing’ process exists to ensure all accounts go to Companies House without errors. The best place to search is the Institute of Chartered Accountants England and Wales (ICAEW) website. Just visit www.freelanceadvisor.co.uk/charteredaccountants and search by Country, county and town.
The thing to point out here is that you don’t have to pick a local firm as many freelancing and contracting specific accountants can operate over the phone and use online systems. In all honesty this is far easier than having to go down for those boring face-to-face meetings! Finally a good shopping-around technique is pick three accountants, check out their websites, talk to them on the phone and really get the feeling of the quality of their service. You should get at least 20-30 minutes of good advice and you’ll instantly be able to judge great advice from merely average. You’ll also get a quote for the service. For a freelancer or contractor operating as a sole director of a limited company, £1,200 is an average annual cost and this should include payroll, annual return and corporation tax return. Help with your VAT returns is often charged additionally - so watch out for this. To avoid spending a fortune on book keeping services (often £25 per hour) then using software, software you actually enjoy using, is absolutely key. The accountant you’ve picked, or the one you identified as being the best, will have their own preferences for which software they recommend. Most will offer Microsoft Excel spreadsheets to complete on a monthly basis or they may offer an ordinary PC or Mac-based book keeping package. Some of the more modern, forward-thinking firms, may promote an online book keeping service.
Check the software they recommend Now, if you hate the Excel spreadsheet system they offer or can’t fathom the book keeping language in the software they’ve given you, here’s a list of the best systems out there. Online Accountancy & Book keeping systems: • KashFlow – online system only, need to use KashFlow-ready accountants • Blinksale – US online invoicing system • Freshbooks – US online invoicing system • FreeAgent Central (FAC) – online system only, need to use FAC-ready accountants • Crunch – the first combined accountancy service and online accountancy system*. (*Crunch sponsor FreelanceAdvisor so we kinda have to recommend them... but fortunately we really do think it’s a great product and service.) PC and Mac software: • SAGE – numerous versions (PC only) • Quickbooks – (PC only) • MYOB (Mind Your Own Business) – (PC and Mac)
Then what? So once you have picked your favourite online system or software, then make sure the accountant at the top of your list will actually use it. If not find the next best accountant who will use it! It’s an all too common mistake for Freelancers to pick the flashiest piece of software only to find out at year-end that their chosen accountant refuses to use it. They then find, to their horror, that they have to replicate the whole year in Excel – and feel a little annoyed that they’ve wasted £25 per month on a software subscription! Ready? So there you have it, you’ve now got the perfect recipe to getting your accounts in working order and the best possible advice, right from the beginning. Feeling good about your accounts now?
• Find an accountant for your freelance or contracting business http://tinyurl.com/find-accountants • Podcast 16: Two Steps to Accountancy Heaven http://tinyurl.com/accountancy-heaven
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Freelance Advisor is sponsored by Crunch - Ridiculously Easy Accounting for Freelancers, Contractors and Independent Consultants. www.crunch.co.uk
Author: Darren Fell Crunch.co.uk
Produced by the team at FreelanceAdvisor.co.uk Sponsored by Crunch
Published on Jul 9, 2009
Crunch chief Darren Fell explains why choosing an all in one accounting solution can save you a lot of time and hassle when it comes to your...