Why you NEED an accountant
Posted on 4th July 2019 at 16:23
Outsourcing any part of your business is a scary thought, especially when you haven’t done it before. The thought of entrusting somebody else – often, in this digital age, somebody you have only ever spoken to online – with a vital aspect of your business is very daunting indeed.
But, as the famous quote goes, “if it scares you, it’s a sign you need to do it”.
There are loads of really good reasons to outsource your finances to an accountant – and I can’t think of any negatives. Yes, it costs money, but think of all the spare time you’ll gain from letting an expert take control. You could spend extra time with your friends and family, or even use it to work on your business and make back the money you are spending on outsourcing.
Time is priceless, and isn’t something you can ever get back – imagine all those extra evenings and weekends you can spend doing whatever it is you want to do, rather than slaving over the bookkeeping!
Accountants are not just number crunchers
An accountant can help you with the legal side of your business, as well as your finances. Each type of business has a different structure, so it is important to hire an accountant that specialises in your area. You may be a limited company director, a sole trader or a contractor working through an umbrella company, amongst others.
Furthermore, we all know that the taxman loves his paperwork – but business owners don’t! New additions to that never-ending pile of admin can be passed onto your accountant if they are tax related, but a good accountant can help you with so much more. This could include all the legal and compliance documents your business has to complete, any payroll related paperwork, lost documentation and more.
If you haven’t yet decided which type of business is right for you, your accountant can advise you based on the type of business you run, how much it earns and your future plans for the company..
You could end up taking home more money than you do now
Even though hiring an accountant will cost you money, it could actually end up being a more profitable decision than you initially think.
Your accountant can help you with chasing unpaid invoices and following up with clients who owe you interest on those unpaid invoices – always an awkward task that I’m sure almost every business owner would rather somebody else handled for them.
As well as being your unofficial debt collector, your accountant can also help you with claiming expenses. There are a number of tax breaks that so many business owners are missing out on by failing to claim valid expenses. Did you know, for example, that you can actually claim the tax relief for the entire cost of your limited company’s accountancy fees? This is only allowed providing your accountant’s time is being spent working wholly on your company’s affairs, though – but they can obviously advise you on this.
No room for error – or costly mistakes
As well as helping you claim expenses that you weren’t aware of, your accountant is also there to help you avoid costly errors that can end up coming back to bite you later on.
A late tax return, for example, can cost you hundreds in penalty fees. Underestimating your tax bill can also land you in trouble with HMRC, which is every business owner’s nightmare. The lost money isn’t the only problem, either. Such mistakes can take hours and hours to fix – which, in turn, can eat into your money-making time which can take additional hours – or longer – to make back.
If HMRC comes knocking, your accountant will be there to represent you
An HMRC investigation is never any business owner’s idea of fun. Statistically, it is quite unlikely that you will ever be investigated if you are filing your accounts correctly and on time. However, if you are ever picked to be investigated, it can be extremely time-consuming, not to mention stressful and expensive!
The penalties a business owner could face for mistakes related to tax and accounts can be highly detrimental to the running of the business – but there are more serious problems that you could be facing if you are late returning paperwork to the government or underestimate your tax bill, which can both result in a large fine. If HMRC decides to carry out an investigation into you and your business, having an accountant on your side really is invaluable.
What are the implications of not using an accountant?
Falling behind with paying invoices, chasing invoices or failing to claim back valid expenses can be mistakes that all gradually add up and cost the business a lot in the long run – and not only in terms of money.
The time spent rectifying mistakes can also be devastating for a company’s money-making activities. Marketing and advertising can get left behind, client work can suffer and eventually you may need to pay out a lot more than you originally budgeted for in order to correct such errors.
Tips for stress-free outsourcing
Trust your accountant! If you hire somebody to take on your company’s financial affairs, let them get on with it. You are paying them good money to do a difficult job, so help them out by responding to requests for information, and keeping on top of your books, if this is not something you have hired them to do.
Don’t forget that accountancy is an unregulated industry in the UK, meaning that anybody can call themselves an accountant and market themselves as such. By ensuring you are working with an accountant who is recognised by at least one of the following institutions, you are protecting yourself from being ripped off – and worse, being given the wrong advice:
Chartered Certified Accountant – ACCA or FCCA - Member or Fellow or the Association of Chartered Certified Accountants (ACCA)
Chartered Tax Advisor – CTA, ATII or FTII – Member or Fellow of the Chartered Institute of Taxation (CIOT)
Chartered Accountant – ACA or FCA – Member or Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW)
Chartered Accountant – CA – Member of the Institute of Chartered Accountants in Scotland (ICAS)
Chartered Accountant – ACA or FCA – Member or Fellow of Chartered Accountants Ireland (formally, but still legally known as the Institute of Chartered Accountants Ireland (ICAI)) (CAI)
Chartered Management Accountant – ACMA or FCMA – Member or Fellow of the Chartered Institute of Management Accountants (CIMA)
Certified Public Accountant – ASPA or FSPA – Associate or Fellow of the Association of Certified Public Accountants (ACPA)
Making the decision to work with an accountant is a smart move – but how to you know how to find the right one to work with? We hope that we can help you, and if you would like to find out more about Effective Accounting and how we might be able to help, please book a call with our founder Nicola here, or send us an email.
Nicola J Sorrell
- Effective Accounting
Founder | Xero Champion | IR35 Expert
Share this post: