A good accountant will help get your house in order and free up time for business development - is it time you commissioned one?
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If you have a limited company, or you are a sole trader, there is no legal requirement to appoint an accountant. Additionally, there is no requirement to be audited if your company is ‘small’.
Generally, for accounting periods beginning on or after 1 January 2016, this means where it meets two out of three of the following criteria: a turnover less than £10.2 million, total assets less than £5.1 million or fewer than 50 employees.
However, you may wish to employ an accountant for various reasons as they can do so much more than simply take care of your end of year tax return. Small businesses, entrepreneurs and start-up companies alike can all benefit from having an accountant on board.
Who needs an accountant?
Starting a new company comes with all manner of duties that require your attention.
There are so many obligations, including registering with all the various tax departments, setting up payroll or dealing with company-related correspondence such as registering with Companies House and keeping up with the associated dialogue. Accountancy is one area that can be reliably handed over to someone else.
You can assess your company’s accounting needs and, therefore, the likely budget that may be required. It is worth bearing in mind that your own time costs you if you decide to undertake your own accounts.
Without the training and experience an accountant has, you could wind up spending a lot of time researching the right way to do things – time that could be better spent on building your business.
Getting help will free up time to work on your business
As with so many things, it is best to spend as much as you can comfortably afford on your accounting needs. If you have a budget in mind, a good accountancy firm will be able to set up a plan according to your requirements. Make the most of their knowledge especially if your handle on accounting is less than perfect.
In 2014 the Association of Chartered Certified Accountants (ACCA) launched a campaign to raise awareness amongst SMEs of the value of employing the services of an accountant. They deem accountants as central to great performance and the true value creators in organisations.
ACCA’s report focuses on the ‘critical role professional accountants play in economies at all stages of development and in diverse organisations. According to ACCA, in fast growing businesses the role is even broader – entrepreneurs need to hire professionals to take them from small to large businesses, providing support along the way.
Why would you need an accountant?
Ultimately, the advice you receive from your accountant can be invaluable, even if you have filled out your own tax returns in the past. A good accountant will be able to advise you on anything from tax planning and dividend administration to offsetting expenses and dividend declaration.
Accountants will deal with each of these items on a daily basis and are happy to recommend ways to budget or register for VAT or PAYE. They also have the knowledge to answer common questions, like what is IFRS 16?
As your business grows, so will your accounting needs – you and your accountant can look at ways to finance that growth. If you are the type of person who tends to leave things to the last minute, keeping up-to-date with your accounts is vital. You can incur serious penalties for filing your tax return late.
An accountant will ensure that you are on time with the information you are required to submit, giving you the peace of mind that an important deadline hasn’t been missed.
An accountant can deal with most financial questions
If you’re unsure about any aspect of the finances of your company, an accountant is a must. Before you embark on any new venture, an accountant will be able to make sure that everything is set in place before you dive in – especially if you tend to be a little too enthusiastic with your ideas!
Accountants will advise you objectively and ensure the venture is viable with the proper structures in place beforehand.
What an accountant can offer
Having an accountant on board gives you the confidence you need when running your own business. Furthermore, it will help you to develop and grow your business.
If you do opt to do the accounts yourself, note that you will be obliged to maintain them in accordance with Generally Accepted Accounting Practice (GAAP UK). However, this should not be undertaken lightly as it can be a minefield for the uninitiated.
Accountants are professionally trained to understand the paperwork and the fine distinctions required within the tax departments, ultimately saving you costly mistakes further down the line.
By involving an accountancy firm in your business, you can leave them to undertake the bookkeeping, deal with the HMRC and submit the relevant paperwork to meet deadlines, leaving you time to grow your business and do what you do best.