My accountant

I found, when I started consulting, that there are a lot more associated costs. My accountant is fabulous at adding things like the cost of heating the house when I’m working from home, and the cost of the internet. As a locum, I always thought it didn’t really matter, but it does – it all adds up.

Invaluable advice

During the first contact I had with my accountant, he wanted to know the nature of my business, what sort of clients I would be working with, what my estimated earnings would be, and what I would want him to do for me. It was very much a discovery call.

Whether you’re locuming or consulting, your costs and earnings vary over the year. On your own, you would never really know whether it would be worth staying as a sole trader. With my accountant, I have had conversations about whether I set up as a limited company instead, and whether that could be more tax efficient.

He is relatively good in what he charges me, and even though I get that fee back within my tax, I pay for the advice that he gives me. With my car, for example, he is able to advise on whether it is better to go by the mile and claim it back, or put it down as an asset of the business.

Also, things like getting a fuel card. It’s the little extras, where you think, ‘that’s only going to save me £10 a month.’ But all these things add up.

The number one benefit is that it takes the contact between myself and HMRC out of the equation. I think of it as an insurance policy – if there is an issue, my accountant has got all my records. It’s much easier, from that perspective.

The number one benefit is that it takes the contact between myself and HMRC out of the equation

Planning ahead

On a yearly basis, I create a spreadsheet and add numbered receipts. Everything is very organised. I will give my accountant a breakdown of what I think my tax is going to be for the year, and he will confirm that with me.

We then have a meeting to discuss what has changed since the previous year, whether I need to make any changes to the business setup, and whether there are any tax breaks that I could be looking at.

He can advise that, if I earn X amount more next year, I might need to be a little bit wary. It might not be worth my while, or it might be worth investing that money in something else. It’s not just a case of, ‘you’ve done my taxes.’ It’s more, ‘let’s think of what the implications are going to be for next year, if it continues, or if it gets better or worse.’

My accountant has also given me advice on what fees I should be charging. Based on what people in similar jobs and industries are doing, he will advise me not to work with a particular client again, unless they pay a better fee.

A good accountant knows the system far better than we do

Outsourcing admin

I’ve learned lessons over the past couple of years. I used to collate everything monthly, and spend one or two days a month getting everything together. I’ve since moved on to more automated systems. I use QuickBooks, so when I’m out, I can track every receipt. I photograph my mileage and QuickBooks uploads it.

At the end of the tax year, I literally press a button to download and email it to my accountant, and it’s done. All the evidence is there and tracked. In the first couple of years, I would spend two days a month sitting trawling through receipts. But if you do it as you go, you barely have to spend any time on it.

I had anticipated my earnings in my first and second year, and thought my tax was going to be a nightmare. When I got my tax bill, I realised I had put aside a few thousand pounds more than I had needed to. Had I done it myself, there is no way I would have made any of those savings. A good accountant knows the system far better than we do.