All business owners will at some point ask themselves this question: Do I need an accountant? It’s an important question to ask, and an even more important one to answer.
Whether or not you need an accountant depends on several factors such as the size and type of your business. If, for example, you’re a sole trader your financial affairs will be significantly simpler than that of a large limited company.
If you’re a limited company, it’s safe to say you probably should have an accountant. All limited companies need to file accounts at Companies House and the tax office, this includes a profit and loss account and a balance sheet. These things can be both complex and time-consuming, and the bigger the company, the bigger the burden.
If you’re the Director of a limited company, you may well have the skills and understanding to do your own accounts, but you must ask yourself, is your time best spent on these tasks? Could it be better spent elsewhere? If you think the best use of your time is, in fact, managing the financial affairs of your business, then carry on. Though from our experience, this is rarely the case. Often, we find directors add more value in other areas of the business.
In the case of sole traders and partnerships, your requirements are relatively simple. You need to make sure HMRC are aware that you’re trading, keep a record of income and outgoings, pay your tax and national insurance on time and complete an annual self-assessment tax return. Though as with limited companies, you still must ask yourself if your time could be better spent elsewhere. While managing the financial affairs of a sole trader is easier, it can still be time-consuming.
For many small business owners, accounting software provides a middle ground between doing their own accounts and appointing an accountant. Some of the simplest accounting software can help you with the basics, such as submitting VAT returns. More advanced software can help you your accounts, purchasing, sales, manufacturing operations and even customer relationships.
However, there are two main risks associated with business owners buying accounting software:
- They could be unaware that they’re making costly mistakes
- They could be missing opportunities to reduce their tax liability or take advantage of tax allowances
Accounting software can do many things, but it cannot advise you on your finances. This, in our opinion, is where a good accountant adds value, through useful, practical advice that ultimately makes your business more profitable.
Granted, as an accountancy firm you could argue that we are biased on the matter. Though, we often find that in most cases appointing a good accountant pays for itself. We know this from working with our own clients, the advice and support we provide generates more money than the cost of appointing us.
In short, a modern accountant does more than just crunch numbers. So, while the answer to the question Do I need an accountant may vary depending on your business type. The answer to the question, Will my business benefit from an accountant is almost always YES.
