Do I need an accountant?
Having an accountant might seem like a luxury, especially if you’re a start-up with a tight budget. But what you pay in fees is more than likely worth it for what you save in tax, time, and the inevitable stress of dealing with HMRC.
Accountants deal with business finances and HMRC forms day in, day out. They speak the language and have in-depth knowledge of the tax reliefs and allowances available to your business – knowledge that’s difficult to replicate on your own.
What can an accountant do for a sole trader?
You might wonder whether you really need an accountant as a sole trader. After all, it’s usually just one tax return a year, right?
That’s a reasonable starting point, but a good accountant will help you claim every allowable expense on your Self Assessment return – which can make a significant difference to your tax bill. Beyond that, they can handle your bookkeeping, keep an eye on the health of your finances, and help with forecasting for the future.
It’s also worth being aware that Making Tax Digital for Income Tax (MTD IT) is changing how sole traders report tax to HMRC. Rather than one annual return, you’ll need to keep digital records and submit updates quarterly. An accountant can help make sure you’re set up correctly and ready when the rules apply to you.
And being a sole trader doesn’t exempt you from VAT or payroll rules either – both of which an accountant can manage for you.
Do I need an accountant for my limited company?
Accounting for limited companies is more involved than it is for sole traders. As well as maintaining records and submitting accounts for the business, the director must also complete a personal Self Assessment tax return.
An accountant will help you meet all your reporting and compliance deadlines, avoiding unwanted penalties. Beyond compliance, they’ll also help you be more tax efficient – the rules around limited companies and their directors are complex enough that it’s difficult for non-experts to make the most of available allowances. A good accountant will know exactly how to help you save.
Online or local?
Once you’ve decided you need an accountant, the next question is what kind suits you best.
For most small businesses and start-ups, an online accountant is a great choice. Everything can be handled by phone, email, or video call, and the majority of work is paperless – no mountains of documents taking over your home office.
That said, you might prefer a local accountant if you find accounts difficult to follow, or if you benefit from face-to-face meetings. Visual learners in particular often find that in-person interaction helps them understand their finances and puts their mind at rest.
What kind of business are you?
The size and nature of your business will shape what you need from an accountant.
If you’re a start-up or freelancer, price will likely be a key factor – but even with a tight budget, consider your specific needs. An accountant who specialises in small businesses or start-ups will be a solid all-rounder for those navigating business ownership for the first time.
If you’re running a larger business, you’ll probably want someone with deeper experience in your sector, and you’ll likely have a bit more flexibility in your budget to find the right fit.
What services do you need?
It’s also worth thinking about whether you need a specialist accountant. While most accountants are well-equipped to help the average business owner or sole trader, some industries have specific requirements that a generalist may not cover.
Specialist areas to consider include:
- Landlord accountants
- Forensic accounting services
- Music and entertainment accountants
- Charity and not-for-profit accountants
If your business falls into one of these categories, a specialist will give you a much healthier working relationship – and save you stress in the long run.
Still struggling to find the perfect accountant? Check out different accountancy packages here!