When to Bring in an Accountant
Whether you are launching a new company or expanding your business, financial management is essential. Many business owners question whether hiring an accountant is necessary, particularly in the early stages of a business or when using accounting software. However, the role of an accountant extends far beyond basic bookkeeping or filing tax returns; it can save time and reduce stress.
Read on to learn more about why you should hire an accountant and what key moments one may be beneficial for you and your business.
Why Hire an Accountant?
There are many common misconceptions when it comes to hiring an accountant. If you have a small business, you may believe you don’t need to bother with an accountant or that accounting software is enough for your company. While this software offers tools for data entry and reporting, guidance and insight from a professional provides a more personalised service.
The Benefits of Hiring an Accountant
By hiring an accountant, you can:
- Save Time and Reduce Stress
Managing financial responsibilities consumes valuable time that could be spent developing the business. An accountant takes on the burden of financial reporting and compliance, allowing business owners to focus on more important matters. - Avoid Costly Mistakes and Penalties
The UK tax system includes numerous filing deadlines and compliance obligations. Failing to meet these requirements can result in penalties and interest charges. By ensuring that returns are submitted accurately and on time, you minimise the risk of fines or other consequences. - Receive Proactive Financial and Tax Advice
A skilled accountant does not just record financial information; they analyse it. This means identifying opportunities to reduce tax liabilities and advising on long-term planning to improve profitability and cash flow.
Key Moments to Consider Hiring an Accountant
Although an accountant can assist your business at any time or stage, there are specific moments where their expertise can be particularly valuable:
Starting a Business
An accountant can advise on the most appropriate legal structure for your business, whether you want to start out as a sole trader, a partnership or a limited company. Each structure has different implications for tax and regulatory requirements. They can also assist with registering your business with HMRC to ensure that everything is set up correctly from the beginning.
Managing Self-Assessment and Tax Returns
People with untaxed income, like sole traders and landlords, are required to file a self-assessment tax return annually. The deadline for online submissions is 31st January each year and any late or inaccurate filings can result in penalties. Accountants can manage the entire process, ensuring that all allowable expenses are claimed and that the return is accurate and compliant.
VAT Registration
If your annual turnover exceeds the VAT registration threshold, you are legally obliged to register for VAT. VAT compliance can be complex, with different schemes available depending on your circumstances. Your accountant can advise on the most beneficial approach to manage VAT returns with full compliance.
Hiring Staff and Managing Payroll
Once you begin employing staff, you must register with HMRC as an employer and operate Pay As You Earn to handle income tax and National Insurance contributions. You are also required to comply with the pension Auto-Enrolment legislation. An accountant can help with setting up payroll systems and managing deductions to ensure you meet your legal obligations.
Seeking Investment or Business Finance
Whether applying for a loan or attracting investors, you will be expected to provide detailed and credible financial information. This may include profit forecasts, business plans and due diligence documentation. These documents can be prepared professionally for you to ensure that your financial records accurately reflect your business.
Business Growth or Restructuring
As your business grows, your tax structure may no longer be suitable. For example, a sole trader may benefit from incorporating as a limited company for tax efficiency and liability protection. If you hire an accountant, they can guide you through this transition, making sure it is completed in line with current regulations. Accountants also assist with cash flow management and budgeting to identify strategic opportunities during periods of expansion or restructuring.
Closing a Business
If you are looking to sell or close your business, professional financial advice is essential. By hiring an accountant, they can help you plan the exit effectively, ensuring that you meet all obligations and maximise the value of your business.
Looking for a Trusted Accountant?
Are you looking to bring in a trusted accountant? Here at Hartley Fowler, we aim to create a stress-free working environment for your business. We are on hand to provide you with expert advice tailored to your needs. Contact us today to speak to our team, who will be happy to answer any questions.