Doing your company accounts can be a daunting task for many small business owners. To help, we've sought the advice and guidance of not 1 but 2 accounting experts to help make this essential business task easier.
Stuart Crook from Wellers Accountants and Laura Hughes from Crunch spoke to Premierline about which tasks you can complete yourself and which you’re best hiring a professional accountant to help you with.
The best place to start when deciding whether or not you need an accountant is to assess the nature of your business and your role within it.
Do you need an accountant if you are self employed? If you’re a sole trader, your bookkeeping requirements are relatively simple – you have to keep a record of income and outgoings. In addition you must tell HMRC that you’re trading, pay your tax and national insurance on time and do an annual tax self assessment. With a simple Excel spreadsheet and time to ensure you get your self assessment right, keeping up to date with this needn’t be too onerous without an accountant involved.
Do you need an accountant for a limited company? If you’re a limited company, you have to file accounts at Companies House and the tax office. These include a profit and loss account and a balance sheet. If you don’t know how to create these, it’s worth considering getting support from the pros.
You may decide that you have the skills and understanding to do your own accounts. But have you considered what you would be sacrificing while you spend time and effort getting them right?
As Stuart Crook from Wellers Accountants points out, “could you be earning more money contributing more value to the business by getting an accountant to do this particular task?”.
It’s a very important point to make, because trawling through statements, invoices and receipts and stressing about meeting your filing deadlines is a major distraction from the efficient running of your business. “Don’t get bogged down with the processing if you could be used elsewhere to drive sales,” adds Stuart.
Some small business owners have found a middle ground between doing their own accounts and hiring an accountant – accounting software. Sage offers a host of off-the-shelf packages, from the simplest software that helps you submit your VAT returns, to more complicated software that helps with your accounts, purchasing, sales, manufacturing operations and even customer relationships. Most of Sage’s software involves a monthly fee with online, telephone or local support available.
However, there are two main risks to the business owner with buying accounting software:
They could be unaware that they’re making costly mistakes and they could be missing opportunities to reduce their tax liability or take advantage of tax allowances.
Luckily for SMEs, there’s another model for managing your accounts, which bridges the gap between buying accounting software and hiring an accountant.
Crunch is one such service, which combines online accounts management software with a team of accountants available to support you as you need them. This means that, when it’s most important, you get the expert’s view whilst keeping control of the figures yourself.
“The most important time to involve an accountant is when you initially set up your business and file your first Year End accounts,” says Laura Hughes at Crunch. “There are loads of common mistakes people make when forming their company – not putting a shareholder agreement in place or issuing too much share capital – that can be easily avoided with a quick chat.”
Another advantage of this model is that by working collaboratively with your accountant on a daily basis, you are able to get the best advise from them in a timely manner. “Every business is individual,” says Laura, “and your accountant can't know how to best advise you unless they know what's going on. So keeping them up to date either by talking to them directly or by regularly updating your bookkeeping software offers real benefits. Think of accountants like doctors,” she adds, “they can’t give you a diagnosis unless they have all the information.”
Finally, you may wish to go the whole hog and hire an accountant to do your accounts for you. This involves keeping up to date records throughout the year and keeping in touch on a regular basis to get their advice and support as your business grows. At your Year End you hand your file to your accountant. Their experience, their knowledge of your business and their understanding of the latest accounting and tax legislation will be put to good use – namely by ensuring your accounts are filed on time and by reducing your tax bill.
Whilst some would say that this is an old school method, if you’ve chosen your accountant wisely, and you’re using them when it matters most, you’re likely to get great value out of having them involved. Indeed it’s broadly accepted that an accountant is most valuable when you’re setting up your business. They can show you the ropes, explain how to avoid mistakes, and make sure you tick all the right boxes to pay the right amount of tax on time.
Choosing the right accountant for your business can be a bit of a minefield. Read our top tips for finding a good one and then work closely with them to get the most from the relationship. That way you’ll also keep your accountancy bills down too.
At Premierline we can arrange the right business insurance policy to meet your needs. From shop insurance to home business insurance, hairdresser insurance to accountants insurance we can recommend the right policy for you.
