Most small business owners have to keep a very close eye on their operating budgets. If money can be saved, that leaves more to invest in future growth but also helps create more profit.
Whether a small business should hire a professional accountant or not is one important decision that many owners have to make at some point.
Even if you decide to create a limited company rather than operate as a sole trader, you are not under any obligation to employ the services of an accountant as long as you are able to meet the basic requirements yourself. You will need to be employing less than 50 people and have a turnover under £6.5million, which basically covers around 99% of small businesses in the UK.
The truth is, however, that a lot of limited companies decide to employ an accountant as it can have a number of benefits. The more complicated your small business gets, the better it is to get the right professional advice and, frankly, using an accountant once your company develops actually delivers a good return on investment.
An accountant is not just there to complete your end of year tax returns. They can advise and help with your small business throughout the year on a number of issues and ensure you make the most of your assets. An accountant can also be very helpful providing financial advice and support in the start-up stages
That can include helping with tasks such as registering your company for things like PAYE if you have employees, VAT if you are above the current threshold, and corporation tax if you have limited company status. These are all important business aspects that you need to stay on top of and it’s not always easy when you’re working hard on everything else.
Effectively running a company payroll, for example, can be a complicated process. If your small business is beginning to grow, you may well be taking more people on in order to meet the demands you face.
Payroll legislation has the habit of changing quite regularly which means you need to stay up to date with all the developments. That can be difficult for business owners including established practices such as Real Time Information (RTI) submission.
Recently, Making Tax Digital came into place for any company registered for VAT with a taxable turnover over £85,000. A professional accountant can also help ensure you are compliant with this newly-introduced process.
- Your accountant will also take the pressure off dealing with general correspondence relating to your business, for example, from Companies House.
- They can deal with all bookkeeping issues as well as advise you on things like tax planning and administering dividends if these relate to your business.
- If your company is looking to expand and move into new arenas, your accountant can help with providing professional references.
- They understand the nuances of dealing with HMRC and can ensure that you remain compliant and on the right side of the current tax law.
While not having an accountant on board can seem like a sensible money saving idea for your small business, it can often be a false economy. If you’re spending too much time doing the books and not focusing on the growth and potential development of your business, you may well be missing important opportunities.
It’s important to look at how much time and effort you are being saved if you employ an accountant that specialises in supporting small businesses. You will probably find that, along with the additional benefits outlined above, you’re actually getting good value for money. In addition, mistakes made when doing your own taxes can prove costly, as penalties and interest will be applied by HMRC for late filing or payment of your small business taxes.
Of course, as your business begins to grow and become more successful, you’ll already have the accounting service you need in place because you will already have built that relationship. If you don’t have a small business accountant on board already, it may be time to look at the possibilities.
The expert team at Neil Smith Accountancy, based in offices in Witham and Maldon in Essex, are on hand to help you with your small business accounts; get in touch to arrange a consultation and see how your business could benefit.