The fact is, you aren’t legally required to have an accountant, which means running your small business without one is entirely possible – and legal.
Some business owners choose to embrace this and absorb the responsibility of bookkeeping and accounting themselves. Others choose to hire an accountant from day one, before their business is even set up and registered.
Basically, all businesses and the internal skillsets are different. Not every business will need an accountant, while others simply couldn’t run without one.
We’re here to help you determine your particular needs and what you can expect an accountant to do for you if you decide to hire one.
The benefits of being your own accountant
If you’re an accounting aficionado and feel you’re up to the task yourself, you can run your small business without a professional accountant. As long as you’re confident that you know your stuff, it’s a great way to avoid additional outsourcing costs.
Plus, when you’re that close to your books, you’ll get to know all the numbers like the back of your hand. This means you can make better-informed business decisions and quickly spot if any problems are about to arise (although regularly reviewing your financial reports will help too!).
Doing it yourself also means you don’t have to wait for an accountant to be available for meetings or tasks – you can simply crack on at your own pace and on your own timeline.
When to hire a professional accountant
If you’re not clued up on bookkeeping and accounting, that’s perfectly okay. Your specialist area is growing a business in your niche. However, it does mean you’ll need to hire a professional to take care of your accounting for you.
Even for those who have extensive financial experience, accounting can be complicated and almost always extremely time-consuming. Hiring an expert to take the weight off is often the preferred option.
The main benefits of hiring an accountant
The three overarching advantages that working with a qualified accountant brings to the table are:
- Money-saving: They will ensure you are as tax-efficient as possible, i.e. keeping your tax bill as low as it can be by claiming allowable expenses and applying for tax relief. They’ll also help you avoid costly financial penalties for incorrect accounts or missed deadlines.
- Timesaving: Leaving things like your bookkeeping, tax returns and funding applications in an accountant’s hands means you have more time to focus on running and growing your business.
- Stress-saving: Saving you time and money and ensuring you meet deadlines and avoid errors will give you more peace of mind.
All in all, an accountant is there to make your life easier and help safeguard your business from as many financial problems as possible.
Plus, you don’t have to hire them for any specific amount of time. If you only want to hire them to file your tax return for you, you can. That way, it doesn’t have to be as much of a cost commitment.
What does an accountant do?
As we touched on above, an accountant is there to make sure you’re tax-compliant but also tax-efficient. This means making sure you’re abiding by all of HMRC’s obligations and that you’re running your business in the most tax-effective way possible.
Below are some of the things an accountant can offer your business.
Help manage your cash flow
When running a small business, cash flow can be unpredictable at times. Some months you’re flying and others you’re in the red or barely breaking even. That’s the reality—but what an accountant can do is help you find ways to keep your cash flow stable.
Support your spending strategy
When you’re as close to your business as you are, it can be hard to see the wood for the trees. An accountant offers an outside perspective that will let you know when and where you can spend versus when and where you need to cut back.
Create financial reports and forecasts for you
Generating things like profit and loss statements and cash flow forecasts—just to name two—takes time, effort and skill. An accountant can do this for you while you carry on doing what you do best. You can then use this data and information to inform your business strategy.
Liaise with HMRC on your behalf
Communicating with HMRC is daunting, we get it. That’s why it’s such a relief to know your accountant is allowed to liaise with HMRC on your behalf if need be. They know all the correct terminology and the right things to say.
Help with your business plan
An accountant will be able to help you build your business plan and stand it in good stead when it comes to things like funding, investment and loan applications.
Top tip: look for an accountant who specialises in small businesses in your sector as they will understand the landscape in your area of expertise more comprehensively.
What does an accountant charge?
Accountancy fees vary depending on who you go with, where they’re based, and what services you need from them. The answer really is “it depends”!
Check out our separate article about accounting fees for self-employed businesses.
But I already use bookkeeping software…
Great! Using bookkeeping software is the perfect way to keep all of your financial information up-to-date and accurate.
However, it isn’t a direct replacement for an accountant – accounting and bookkeeping are two different things, despite going hand-in-hand.
Joining the forces of your bookkeeping software and a skilled accountant is one of the best things you can do to set your small business up for success.
On the hunt for a new accountant? Compare accountancy packages to get started.
