Why Hire an Accountant for your Business?
How could you hire an accountant to help your small business? And what do you need to know to make the right choice? Find out in this article.
- Are there reasons as to why you should NOT hire an accountant?
- What services can accountants provide?
- What can hiring an accountant do for your business?
- What can a good accountant do for you?
- How to find and hire an accountant
1. Are there reasons as to why you should NOT hire an accountant?
There are about 43,000 registered accountancy firms in the UK. The top 100 UK accountancy firms earned fees totaling £15.2 billion in 2018 according to Accountancy Age and businesses in the UK acquired more than £17.7 billion of accounting services in 2017.
Microbusinesses (i.e. those with fewer than 10 employees) are usually served by local accounting firms, leaving the mid-tier, regional catered by specialist “boutique” accounting firms. There is, however, a recent rise of online accountants that provide basic bookkeeping and compliance services for a fixed monthly fee.
If you dig deep enough, I’m sure you could find a few reasons why you shouldn’t hire an accountant. Yet, what if your business was falling down that sinkhole unable to find its way out?
And what with only a few tweaks by someone who knows how you could have survived the not so inevitable fall?
This is where the decision to hire an accountant could be the best decision you ever made.
2. What services can accountants provide?
Accountants can help you handle growth transitions, hiring staff, and making sure that utility bill is accounted for in order to keep your business lights on whilst you concentrate on making it glow ever brighter.
Most people are uncertain as to when would be the right time to appoint an accountant. However, it is common practice for small businesses to believe they can put off hiring an accountant until the unavoidable happens and you begin to trip over your feet.
So, the question is, do you hold off a while, whilst going to find your feet? Or take the plunge and start your business on stable ground.
Let’s take a look at some of the reasons why people hire an accountant. What are the benefits? Why should you hire an accountant for a growing business or a new start-up?
Accountants provide professional services from the business plan stage and beyond:
- Business start-up consulting
- Financial documents & statements
- Loan applications
- Tax returns
- Financial reporting
- Accounting software solutions
The important aspect to consider when you hire an accountant is, is it viable to employ an accountant for the size of your business? And what type of business have you set up?
So depending on what type of business you started such as sole trader, sole proprietor, limited companies, limited liability partnerships, a corporation or on a self-employed basis; invoicing under your name, you will need to consider what type of accountant suits your company.
Most small businesses believe that filling the gaps, or plugging the hole themselves whilst the business is at the foundation stage will save money, and offer up priority funds to be diverted elsewhere in the business.
However, what could you be missing out on whilst your head is stuck in that abyss of business paperwork? Is this where the brains of the business need to be? How could you better use your time? And how much is your time worth?
Do the maths first! Is the time you spend on your taxes, inventory - plus the inevitable errors you will make (we’re not the professionals remember!) – let alone the stress and hassle you will surely spring on yourself if you let things slack and you find yourself under pressure to get things done at both ends of the business.
Is your time really worth less than hiring an accountant on an hourly basis or even just for end-of-year tax returns purposes?
To keep the cost down you may need to consider when would be the best stage in the business to hire an accountant, and for how long do you really need one working on your business?
This means being realistic about the type of business you’re starting and whether or not you need a full-time accountant or is it possible for you to hire one on a retainer basis?
3. What can hiring an accountant do for your business?
An accountant can help out in various stages during the growth of your business. Accountants handle much more than just your payroll and tax returns – they can help to offset some of your living expenses against tax if you’re invoicing under your name.
A lot of small business owners feel it necessary to have control over all facets of the business. It’s understandable you want to establish your own business strategy, regulate your workload, and determine your finances. However, this can distract you from making the right decision for your business, and sometimes it stops you from delegating to the right professionals. To save money you might do your own basic bookkeeping, which is simple enough if you have the right accountancy package, however, most bookkeeping tasks such as recording and entering sums have also been included in the work done by the accountant.
Of course, you understand your company the best, but inevitably an accountant has more experience. Attaining the right rebates for your company is something experienced accountancy firms can do for your business, which you might fall short of. Moreover, if you did employ an accountant in the early stages of planning your business, most accountants have the knowledge of accounting software that can add financial projections and other reports to create realistic business plans.
4. What can a good accountant do for you?
It can be daunting when dealing with government paperwork while running your own business. This is why so many small business owners hire an accountant when their first tax returns are due. Microbusinesses often seek assistance from an accountant when it comes to VAT; however, there are a lot more benefits gained from hiring an accountant.
Some of the tasks an accountant will do for your business:
- Manage payroll and ensure all employees’ tax codes and payments are recorded correctly
- Maintain records and organise shares/stock allocation, such as when a business partner leaves or a new partner joins
- Prepare statutory accounts
- Keep up-to-date with the latest tax laws
- Complete the required legal and compliance documents for your business
- Help you keep track of your personal finances
A major advantage of using an accountant is the personalised advice you receive on tax planning and finance. With the added advantage that most accountants nowadays have the ability and software for cloud computing, which refers to the sharing and storage of data via internet connection. The software used enables you and the accountant to streamline your workload and provides you with a real-time view of your finances, versus the traditional accounting methods which are a lot more antiquated.
5. How to find and hire an accountant
It is crucial to hire an accountant who understands your business and preferably someone who has experience in your sector. Take time to do your research and ask other established businesses who they use. More importantly, find out what different accountants charge and determine if they suit your niche of the market.
You will find many small business accountants who are active on social media and a variety of those online host platforms. Welink Accountants is a place where you can search for respected members of AAT licensed accountants and bookkeepers.
Do an online search for members of professional associations, including the Association of Chartered Accountants (ACCA), the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS).
Key questions to ask yourself about the accountants:
- Are they regulated by a professional body?
- Do they have professional indemnity insurance?
- And just to be sure, what if they fall short, and you end up back in that sinkhole!
Remember that a good accountant should be able to help you at every single stage as a business grows. And whether you’re a sole trader looking to expand, or a large corporation facing complex laws, everybody can benefit from hiring an accountant to look after their financial affairs.