Do I need an accountant? | Small business accounting

“Do I need an accountant?” is a question commonly asked by most small business owners at some point in their entrepreneurship journey. To answer this requires evaluation of your business growth, your goals and your willingness to give up free time to develop a new skillset.

DirectLine states that:

If you have a low volume of transactions, you may choose to undertake your own bookkeeping as the related activity shouldn’t take up a lot of time.

There is no definitive answer to this question and every business is different, so let’s take a deep dive and see whether you need an accountant.

What do accountants do?

Accountants are trained to help you reduce your tax liability, saving you money by knowing which deductions you can claim for in relation to your business expenses – such as claiming a personal car as a company vehicle.

They’re also well-versed in business operations and will often be able to provide insight into various other financial aspects of your business.

An accountant can:

  • Keep you updated with the latest tax laws
  • File all legal documents
  • Prepare your annual tax statement
  • Maintain records
  • Handle payroll issues
  • Apply for business loans
  • Explain difficult legal jargon
  • Manage your finances as you grow
  • Assist with any tax audits or investigations

Accountants know the tax system – they essentially pay for themselves by helping your business save money. Sometimes your accountant’s understanding of UK tax law will seem like sorcery. Trust us, it is.

“[An accountant] can spot things in the numbers that on their own might not be problematic, but which could suggest deeper issues with potentially far-reaching implications for your business.”

Remember that anyone can legally claim to be an accountant or tax adviser, even though they might not be accredited to one of UK’s three certified chartered accountant institutions (ICAS/ACCA/ICAEW) – so do your research.

When you sign an agreement with an accountant, you are agreeing to let them be your “tax agent”, which means that they act as a buffer between you and HMRC. 

Even if you rely on an accountant to oversee your taxes, you are ultimately liable for their actions in the eyes of HMRC.

Before you hire one, consider these 15 Questions to Ask When Hiring an Accountant.

Why should you hire an accountant?

Using an accountant will give you peace of mind and make your life easier – it’s that simple.

Navigating your way through the maze-like UK tax system can be confusing to newcomers, especially if numbers are not your strong suit.

Employing a professional will ensure that your business doesn’t take any wrong turns, thereby securing your finances from any accidental tax reporting errors and frees you to focus on the growth and development of your business.

Regardless of the cost, there are times during your business life that you should strongly consider hiring a professional accountant.

How much is an accountant? 

A well experienced and qualified accountant is going to cost you money at a time when you also know a tax bill is heading your way. However, employing a chartered accountant doesn’t mean that you must give them a full-time contract or have them on retainer. 

It is often enough to hire them for one job and then ease your financial anxieties by estimating how many hours it would have taken you to do the same job and then multiply that by your own hourly rate. Don’t forget to add in your mistakes.

You can hire an accountant:

  • by the hour
  • by the job
  • on a monthly retainer

There’s also mix-and-match options that allow you to, for instance, pay for bespoke services by the hour and other services via a monthly fee.

According to Unbiased.co.uk, a platform that connects of consumers to financial and legal advisers, the monthly fee is approximately £60 to £250. The rate will be higher for larger businesses and will depend on your turnover, depth of accounting service and where you are based.

Depending on the difficulty and scale of your finances, accountants typically charge a one-off fee ranging from £150 to £250 for an annual self-assessment tax return.

Note: these figures are only a guide and will differ depending on a number of factors including where you live and the complexity of your requirements.

Cloud invoicing can reduce your accountancy costs

Since accountancy fees are calculated by the amount of work involved, you can reduce your outlay by undertaking some of the necessary tasks beforehand. Lighten the load for your accountant with technology.

Zervant allows you to send and manage your invoices and export financial data simply and accurately to your accountant in either Excel or PDF format.

Through cloud-based invoicing you will save time and money – plus, there is the added advantage of digital record-keeping which is essential to your company’s future development and means lower-impact, more efficient business processes. 


Can you handle your own accounts?

  • Are you proficient with handling numbers?
  • Do you have the time?
  • Do you have the confidence?
  • Is an accountant too expensive?

If you answered ‘yes’ then you can perform your own tax return in the form of self-assessment at the end of the financial year. But take note – an accountant will help you save money on your tax bill – maybe even more than they charge. If your tax situation is complicated, it’s best to consult a chartered accountant before making potentially costly mistakes.

On the flipside, full control of your finances means that you can quickly move forward without negotiating with a third party and you will enjoy an unparalleled insight into your business. As you learn more about the tax system, you can adapt and use it to further grow and develop your business. 

Where do you start though? Find out more about how the tax system works.


How to handle your own accounts

Doing your own books will demand staying up to date with all the latest tax rules and regulations. You will have to fully understand their application and relevance, so you don’t miss out on any helpful tax reliefs and incentives.

Don’t forget that the HMRC website offers a range of help and support products, including webinars, YouTube videos and online guides that cover topics like ‘How to complete your online tax return’ and ‘How do I pay my Self Assessment tax bill?’

In addition, you can give permission to a friend or family member (a ‘trusted helper’) to deal with HMRC on your behalf, plus you might be eligible for free accounting advice.


How to make handling your accounts easier

As mentioned earlier, the rise of dynamic cloud accounting software not only makes life easier for accountants but can also pave the way for you to become completely independent. Online bookkeeping is becoming increasingly user-friendly and is refreshingly jargon-free.

Zervant are rolling out bank integration as of writing this article – when you send an invoice through Zervant, it will automatically be marked as paid when your client finally pays. Your financial records will remain up to date and the automation will save you time and labour.

Pros and cons of hiring an accountant

To summarise, here are some of the advantages and disadvantages of hiring a professional accountant:

Pros:

  • Give you peace of mind and saves you time
  • Can protect your business from accounting errors
  • Can handle many different financial issues
  • Can save you money and reduce your tax liability

Cons:

  • Cost can be expensive for a new business
  • Might not be trustworthy/competent
  • You can lose touch with your finances
  • Cloud-based services can help manage your accounts

Accountants may appear expensive in the early days of your business, but they can save you time, money and stress. It’s in your entrepreneurial hands to decide whether you can afford that expense or not.

Good luck and please get in touch if we can help you!