“Do I really need an accountant?” is a question that’s asked quite often by small business owners. The simple answer is no – you can do your own accounts for as long as you like until your business grows to the point you can no longer manage it.
However, there are distinct advantages to engaging an accountant and here we discuss the 3 main benefits to your business…
You really don’t have the time
Chances are you already spend plenty of time in and on your business – there are 101 things to juggle when you’re a small business owner. Unless you have a team behind you, everything relies on you – marketing, sales, ordering, manufacturing, service delivery, compliance, networking, invoicing, chasing payments – the list goes on.
How can you do them all effectively? Something tends to give and you’re into the realms of compromise and the feeling that you’re not achieving what you need to.
Therefore it makes sense to hand off your tax and accounts burden (and anything else that restricts your ability to operate at your desired level). In short, your time could be better spent on activities that help your business grow and you need to just dispassionately hand certain things off to experts.
You don’t have the expertise yourself
You’re in business because you are passionate about delivering your product or service. You’ve got the skills and expertise in your chosen area but it’s OK not to be great at absolutely everything.
It might sound obvious but it’s worth reiterating – your accountant is the expert in their field. They’ll offer a range of services to support businesses including bookkeeping, payroll, pension processing and VAT returns right through to preparing management accounts, financial statements, corporation tax computations and HMRC filing.
When it comes to budgeting, cash flow and forecasting, your accountant can offer valuable advice and help you get a clear picture of your financial health.
Understanding UK tax law and HMRC’s requirements they will also make sure you benefit from any reliefs and provisions that may be available to legitimately reduce your tax liability.
An accountant’s value can’t be underestimated therefore. And because they are experts this compounds the time-saving – just picture yourself trying to work out what goes in each box on your Self-Assessment Tax Return and then gathering the information needed to generate the figure and evidence it.
It’s cost-effective or even cost neutral
If you’re self-employed, your business will have various running costs. You can deduct some of these costs to work out your taxable profit as long as they’re allowable expenses.
HMRC uses this basic example: Your turnover is £40,000, and you claim £10,000 in allowable expenses. You only pay tax on the remaining £30,000 – known as your taxable profit.
Your Accountant’s fees can be included as Allowable Expenses. That’s not to suggest your Accountants fees will be anywhere near £10,000!
If you operate as a limited company, you need to follow different rules but you can deduct any business costs from your profits before tax.
As we’ve already suggested – by applying their knowledge and expertise to ensure you take advantage of any legitimate reliefs or provisions, you may find that your accountant saves you money you wouldn’t have realised you could save otherwise. Factor in the time you would have had to allocate and put a price on that and you’ll see that engaging an accountant is cost-effective and therefore could be a good business decision.