Online accountancy for non-umbrella contractors
Those members of the professional contracting community who choose not to work through umbrella companies are faced with frankly onerous administrative obligations. Not the least of those is keeping abreast of all the paperwork connected with the payment of tax and NICs, but they may be wise to approach the apparent allure of new accountancy software products with a degree of caution.
The rise of a mobile internet culture and the concomitant advent of new online technologies may tempt contractors to dispense with accountancy fees by investing in one of the new accountancy software packages currently on offer. In addition, of course, there is the availability of the well-established service, HMRC online. Taken together, these products and services are encouraging a risky belief among business owners such as limited company directors that they can carry out most of the functions of a professional accountant themselves, and dispense with accountancy fees altogether.
These issues are completely avoided by the many contractors who have adopted umbrella company self-employment payroll solutions. For these independent pros, there are no accountancy fees and admin headaches; for a modest fee, the umbrella automatically settles all tax and NICs due on the contractor’s income with HMRC on a PAYE basis.
But contrary to the belief that software and online services are all it takes to handle complex tax calculations, there are multiple pitfalls associated with self-administered online accounting. The fees charged by accountants may seem costly, but expert knowledge in the commercial world doesn’t come free (and it’s generally wise to be cautious about apparent free meals).
Association of Accounting Technicians member Darsha Bajaria, for example, believes that accountancy bodies have a pressing duty to take a lead in educating small and medium-sized businesses in 2016 and thereafter about the dangers of do-it-yourself accountancy.
Perhaps the only safe way for professional contractors to dispense with the services of an accountant is to work through the security of an umbrella company, which will similarly ensure that avoidable errors are not made in the payment of tax and NICs.