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Considering going commando (no accountant) - am I insane?

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    Considering going commando (no accountant) - am I insane?

    Apologies if this is answered elsewhere, looked but I'm a noob here and couldn't find answer elsewhere. I'm IT contractor, been using umbrellas for a few years but been contracting ages, PSC before umbrellas which is now closed. I've got a new contract outside IR35 and it was all a rush to set up, they didn't want to use an umbrella so I set up a new company and will employ only myself and will only have a handful of clients. I've been really unhappy with the service I've had from both my previous accountants and the past week I've signed up for FreeAgent and gone onto HMRC to set up the company and register for VAT, corp tax and Employers tax. I tried ringing a couple of accountants but they were too busy to talk to me straight away and haven't got back to me. I've got a pretty good grasp of all the taxes I've got to pay, FreeAgent will handle my payroll and I know what I'm planning to pay myself etc. I can get my figures of what tax to pay and my P60 from FreeAgent. Do I need to fork out 1k+ per year for an accountant? Am I missing something or am I ok to be trying to do this myself?

    #2
    Originally posted by jonnaroo View Post
    I set up a new company and will employ only myself and will only have a handful of clients.
    Just to clarify that, are you going to be an employee of your new company? That's unusual for a director.

    Do I need to fork out 1k+ per year for an accountant? Am I missing something or am I ok to be trying to do this myself?
    The problem is that you don't know what you don't know. E.g. if you want to know how depreciation of capital assets works then you can Google it, but if you've never heard of depreciation then you won't even be looking.

    My approach is to use an accountant, but go through everything carefully (e.g. the year end returns) rather than just rubber-stamping them, to make sure that I understand how the figures were calculated. Eventually I might get to the point where I could generate those figures myself, but I don't think I'm there yet.

    Comment


      #3
      With the tools now available it has never been simpler to DIY. Perhaps consider at least for the first year, running everything in FreeAgent and trying to find a tame local accountant to do the year end for you? Then reappraise what you do for year two onwards.

      To trim cost further, you may wish to consider business banking with NatWest/Mettle which comes with a no cost FreeAgent account thrown in.
      Public Service Posting by the BBC - Bloggs Bulls**t Corp.
      Officially CUK certified - Thick as f**k.

      Comment


        #4
        Originally posted by Fred Bloggs View Post
        With the tools now available it has never been simpler to DIY. Perhaps consider at least for the first year, running everything in FreeAgent and trying to find a tame local accountant to do the year end for you? Then reappraise what you do for year two onwards.

        To trim cost further, you may wish to consider business banking with NatWest/Mettle which comes with a no cost FreeAgent account thrown in.
        Mettle account gives you Freeagent.

        Avoid Director loans and Freeagent can do basic CT600s for free.
        merely at clientco for the entertainment

        Comment


          #5
          If you don't want to pay for an accountant, then at least educate yourself.

          Do a basic bookkeeping course (this one is free!) and/or buy the Frank Wood books (I've mentioned them on another thread). Make sure you understand the mechanics of proper record keeping because although you can very simply and quickly use tools like FreeAgent, if you don't know the difference between balance sheet and P&L then you're going to get into a mess very quickly.

          Then, you need to make sure you're staying compliant with regards to operating a director's loan account, salary and issuing dividends. You'll most likely run a payroll of some sort so you need to know what to do at payroll year end, whether you need to issue a P11d and how to generate a P60 so you have the right figures to put on your annual SATR.

          Then there's understanding how to do your CT return, final accounts preparation and submissions to CoHo and HMRC at year end.

          You need to remember, at all times, that your LtdCo is separate legal entity and the money in the bank is not your money.
          Last edited by ladymuck; 4 June 2021, 08:01.

          Comment


            #6
            I've been without an accountant from day 1, yes it is possible. Is it for everyone no but it is doable.
            • Firstly, unless you have a very straight forward set up then don't do it. I don't invest through the company, I don't have any BTL income and I don't take directors loans. I didn't take a BBL or take any furlough but these are well catered and easy enough to take into consideration. I did take up the offer of deferring a VAT payment and that was straight forward enough.
            • Secondly get FreeAgent, when I first started it was all spreadsheets but FA is a game changer (I am sure some of the other packages out there like Xero would be just as good, I've just not used it). My FA comes "free" with my Natwest bank account, I have an Amex card, an Aldermore savings account and a paypal business account. PayPal integrates with FA seamlessly, Amex and Aldermore I have to manually upload transactions, it's PITA but both do exports in a format that FA can consume, hopefully open banking may come to these two companies at some point but I've stopped holding my breath.
            • Thirdly, dedicate some time to the admin side of your business, it is just as important as the earning part, I have got it down to no more than an hour a month to do payroll and explain transactions. End of year is another couple of hours and i've got down the SA to 42 mins.
            Why do I do it? mainly because I am cheap, why pay someone to do something I can do myself. Secondly it is not that hard (with the caveat of the first point above), it also means I do not have to worry if my agent has submitted my VAT return, or wonder why it's taking so long for them to prepare my end of year. It also means I get to see my own HMRC account so I know what is happening with that, are payments going to the right account etc. Remember even with an accountant the responsibility and liability is with you as the business owner, so even with an accountant I would recommend being as hands on as you can.

            Has it been plain sailing? No, until this year I'd say the only cockup I made was a leap year issue when I had my accounts end on the 28th Feb and start on the 1st March, one year I got a £100 fine for not having the 29th accounted for.

            This year I made a big f**k up, well I thought it was big but a quick phone call (and a new helpful people on here answering some questions before I spoke to HMRC) and it was all resolved, so be prepared to speak to HMRC on the phone and be prepared to be shocked that they are really helpful.

            Is it worth saving £600-700 a year? That is upto you, but its been worth saving nearly £10k to me over all the years I have been doing it.
            Originally posted by Stevie Wonder Boy
            I can't see any way to do it can you please advise?

            I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

            Comment


              #7
              I think SimonMac's post is a good balanced answer.

              It makes me sad to read the "...means I do not have to worry if my agent has submitted my VAT return...". Whilst accountants can hopefully add some value in a lot of places, I would certainly hope that the accountants are the ones checking whether things have been submitted for your company (whether submissions done by them or you)...not you checking on them. Occasional mistakes will of course happen, but I do wonder if comments like this arise from continued downward pressure on fees, "it's so easy", hence firms forced to try to get by with poorly trained staff to keep costs low.

              DIYing certainly is possible. There's often comments on here along the lines of "get an accountant to help in the first year, learn from them, then you can DIY second year". We've not seen much first hand experience of people doing this...but what we do sometimes see is "I've been DIYing for 5 years, but I want someone else to take it over now". On occasion this is following them making a big cock up, but often they've been doing fine, just got a bit bored with it. Perhaps the fear of something they might be missing, the comfort of having someone savvy they can ask any random queries to etc.

              But yeah, if you're gonna DIY, get something like FreeAgent, don't try to do anything fancy, and do be prepared to spend a bit of time Googling stuff, or asking on here. If you get wind of something going wrong, look into it and try to deal with it ASAP. Burying your head in the sand and hoping any problems go away is a recipe for disaster.

              Comment


                #8
                and will employ only myself
                You've got it wrong already. Get an accountant IMO.

                I'm very surprised at all the feedback so far. The number of threads we have with people not understanding basics and getting it wrong is endless. It can be done but it's not for everyone. 1k is a cheap to learn how to do it and get it right for the next decades of doing it yourself. The other option is you thrashing about struggling with every new question about expenses, 24 month rules, home office yadda yadda. You might feel OK knowing what you need to go learn on the internet or ask us but it's what you don't know you need to know that is the problem.

                Get an accountant off the recommended list, the ones we all have used happily for many years. 1k is peanuts compared to what you are earning and is false economy to think saving that much is worth it. Remember that 1k is a business expense as well so costs the company 1k.

                Also note, the five other people that have commented are five of the most respected contractors on the forum and have been at this for 100's of years between them so am pretty surprised although SMc's is pretty balanced.

                You are going to cost yourself a lot more than 1k by getting it wrong. Just pay for it for a year, watch the process very closely then go yourself year two.

                EDIT : There is the halfway house of doing it yourself but paying an accountant just to do your year end stuff but that's not going to save you much.
                Last edited by northernladuk; 4 June 2021, 09:26.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  I think my only comment on SimonMac's post is that I have an accountant and I can see my HMRC account so I can see the CT returns my accountant has submitted. I was unaware that people may think this is a closed book if you have an accountant.

                  I think the OP also needs to consider that having an accountant isn't an all or nothing scenario. In my circumstance, I do pretty much everything - day to day entries, bank reconciliations, PAYE, dividends, VAT returns etc. I prepare the accounts to Trial Balance and then hand over to my accountant at the end of the year for him to do the final submissions to CoHo/HMRC and the CT return. This, for me, is the best combination. I get someone to glance over things at the end of the year with a fresh pair of eyes but I retain full day to day visibility of what's going on.

                  I use Xero because it suits me better because it's more like the enterprise accounting systems I used to use way back when I had my first job working in an accounts department. EDIT: And Xero imports all my transactions (including those from Capital on Tap and Amex )

                  I do think it's important to educate yourself with an understanding of what double entry bookkeeping is and what the various reports mean.
                  Last edited by ladymuck; 4 June 2021, 09:43.

                  Comment


                    #10
                    Originally posted by ladymuck View Post
                    I think my only comment on SimonMac's post is that I have an accountant and I can see my HMRC account so I can see the CT returns my accountant has submitted. I was unaware that people may think this is a closed book if you have an accountant.
                    I make that point as I know a few people who do (or did not) have their own HMRC logins (mainly due to a lack of awareness that they can have one), and only find out there is an issue with their returns when they get a letter from HMRC!
                    Originally posted by Stevie Wonder Boy
                    I can't see any way to do it can you please advise?

                    I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

                    Comment

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