Should I get an accountant?
Well isn’t that the million pound question? Or if you play your cards right, one day it just might be!
As a small or new business owner, or fresh out-of-the- box freelancer, you obviously need to consider every aspect of your business and how you can keep the costs down, especially at the start.
So, it may surprise you to hear that we (qualified accountants) quite often suggest that an accountant isn’t always necessary for managing your bookkeeping and submitting your accounts to HMRC, but we do think it’s preferred.
When is it ok to NOT use an accountant?
When it’s simple and you are organised.
If you have a simple straightforward self-employed business, are really meticulous about maintaining your records (invoices you raise and bills you pay) and can manage the HMRC deadlines yourself, then it’s probably safe to DIY.
In this instance, you could complete your own self assessment tax return by very simply adding up all your self-employed income and then all your self-employed expenses and filling in those two boxes on the self-employment pages of your self-employment tax return and hitting submit. Boom! Job done.
When should you use an accountant?
Once your bookkeeping and accounting needs go beyond this very simple set-up, then it is almost certainly less stressful and more cost-effective to call in the professionals.
Here’s some crucial points to consider when weighing up the decision to appoint an accountant to manage your numbers!
Using an Accountant will ensure you are fully compliant with HMRC. A compliance check from HMRC is a painful and stressful process. They can go back through several years of your records and demand additional tax payments and fines if they find errors - don’t take the risk.
If you are trading as a limited company the reporting rules and process is more complex than if you are simply a small sole trader and an Accountant can advise you on the most tax efficient not to mention legal way to withdraw your money.
If you are VAT registered an accountant will ensure you are on the correct scheme and are correctly reporting VAT. Getting VAT wrong can be a really expensive mistake.
Payroll can be tricky, particularly if your payroll includes more than just one director on a low salary. So if you have employees - call in the professionals! This has been invaluable for many companies who needed our help to manage furlough claims during the Covid lock-down.
An accountant will ensure you are always paying the lowest amount of tax you legally can. This is done by understanding the allowances available, the ever-changing tax rules as well as advising if your business is structured in the most tax efficient way.
Doing your tax return yourself will of course save you an accountant’s fee, but it is actually mostly likely that you will pay too much tax or claim expenses which are not allowable, causing fines, headaches and more paperwork. That’s NOT saving you anything in the long run.
How to really save fees
The best way to save money on fees is to get organised with your bookkeeping. If you hand your accountant a large box or carrier bag full of receipts and bank statements once a year, then you will be paying a lot of money for someone to sort the paperwork out before they can even get on to the accounts (which is the number crunching and legal bit).
We recommend either keeping your records on Excel (check out the fab free bookkeeping tool at the bottom of this article for just this purpose) or invest in some snazzy bookkeeping software such as Xero, which makes it super easy to manage yourself. We offer free Xero training and support with record-keeping for our clients, so you save on the cost of filing paperwork by being on top of it electronically. That means you are only paying us to add value where it counts - on your actual accounts and tax return. Win-win!
Only use professionals!
One final ‘false economy’ that you should be wary of is hiring a cheap accountant. Not all accountants are created equally. That is to say not all accountants are actually qualified (say, what?!). Yep, seriously. A qualified accountant is held to account by their professional body, they must renew their membership every year and prove they are keeping up to date through CPD (continued professional development).
So, if you are going to make the investment to use a professional to manage and submit your accounts, make sure you are using a qualified accountant. This gives you the additional security that they are trained to a high standard, are monitored and if there’s a problem you have somewhere to go.
If you are still unsure if you need an accountant, just give us a call. Yes, we really sometimes do advise people that they can manage it alone. But often we will simply explain to you the best way to cost-effectively call in the professionals. Which is us by the way! ;-)
GET THE FREE BOOKKEEPING TOOL
To access the free bookkeeping tool mentioned in this article, simply click on the link and enter your email address. You'll get an email containing what you need!
Still unsure if you need to hire an accountant? Give us a call, we’d be happy to honestly advise you.
☎️TEL: 07841 042077