An accountant can take care of most of the additional work and responsibility associated with running a limited company and should also be able to advise you on tax and legal matters and help you manage your personal and company tax liabilities.

When choosing an accountant, you should look for:

1. Evidence that the accountant understands freelancing

Don’t be afraid to ask about the firm’s experience of freelancing and if possible ask to speak to other freelance clients who are currently on their books. Also, question the accountant’s knowledge about specific freelance regulation, such as IR35 as it is important that you feel confident in the service they provide.

2. An accountant that suits your individual business requirements

Consider how you prefer to work and then ask relevant questions in order to make sure the service is suited to your specific needs. You may wish to enquire about typical response times, how contact will be maintained, who will manage your account and act as your main contact. It is important that you feel comfortable and at ease talking to the accountant about the business and any problems you may have.

3. Ask friends or other freelancers for recommendations

Other freelancers can provide vital information and experience that will help you avoid potential pitfalls when choosing an accountant. Visit online forums or freelance networks to get up to date opinions and best practice.

4. Membership of a professional body such as one of the Chartered Institutes*

This will offer you more protection against malpractice. Remember that anybody can call themselves an accountant but the main professional bodies all insist that their members carry adequate Professional Indemnity insurance, as well as running their own strict disciplinary schemes (including dispute resolution). All IPSE Accredited Acountancy Scheme participants are members of a professional body (please see the notes at the bottom of the page for accreditation details).

5. Whether they change monthly or hourly?

It is vital that you understand what charges you will be accruing in order to avoid being caught by hidden extras. Make sure you are clear about what is included in your package and any additional charges that you might incur.

6. Set up an initial consultation to discuss your needs

It is important to run through your business plan and detail any areas in which you would like the accountant to be involved, such as business advice, financial reporting, tax and auditing work.

7. An accountant that understands how freelancers operate

It helps to engage an accountant who understands freelancing. IPSE’s Accredited Accountant Scheme* is designed to help members choose their accountant by identifying and promoting those who have been given additional and specialist training in freelance-specific issues, such as IR35, and have undertaken and passed our exacting training and assessment programme. See IPSE's list of Accredited Accountant practices.

8. Any specialist or additional services

In order to get maximum benefit from your accountant it is important to consider if they offer any additional services you may require, such as cash flow forecasting or inheritance tax.

Can I do it myself?

You can keep your own company accounts and there are packages (e.g. sage or QuickBooks) available to facilitate this. However, it is advisable to get a qualified accountant to draw up the end of year accounts. Your accountant will also calculate your corporation tax liability and complete the corporation tax return for you. It is your legal responsibility to ensure that your accounts are correct.

Keeping accounting records

The sort of accounting records that you keep yourself will depend on your type of business, but as a minimum you should maintain:

  • A cash book – summary and analysis of all bank account entries, cash receipts, payments and drawings
  • A petty cash book – a record of all your petty cash transactions

Other account books you should consider keeping include:

  • Accounts receivable ledger
  • Accounts payable ledger
  • Fixed asset register
  • Project/job costing ledger
  • Timesheet/time recording system
  • Billing system

Useful resources

* Important Note: Accountancy practices or accountancy service providers are only eligible for the IPSE Accredited Accountant Scheme where one or more practitioners have the following qualifications: Chartered Accountant, Chartered Certified Accountant, Chartered Management Accountant, Chartered Tax Adviser or Member of the Association Taxation Technicians.

Managing your money, Starting Out