The services of an accountant are a genuine lifeline for around 61% of businesses in the UK (and those that do are more likely to succeed - Xero 2021), but do you need to have one?
Overseeing accounts and tax is rarely the favourite task of business owners. It can be confusing, onerous, frustrating and rob you of precious time that could be spent looking after your customers and developing your business. Afterall, you're an expert and specialist in your business and not accounts and tax!
The services of an accountant are a genuine lifeline for around 61% of businesses in the UK (and those that do are more likely to succeed - Xero 2021), but do you need to have one?
The short answer is no. While there is no legal requirement for limited companies to use an accountant there are SO many benefits, such as completing your annual accounts, crunching the bookkeeping, payroll, tax returns and being your most trusted advisor.
Basically keeping you out of trouble and ensuring you are legal are the basics. (We should add at this point that online software alone is also classed as 'DIY' as the figures are only as good as the person inputting them.)
Not only that but do you know exactly what you can claim for to minimise your tax bill? Didn't think so - savvy business owners know that a great accountant will do this stuff and do it well.
Advising on the structure of your business
Sole trader or limited company and when to make the change to limited.
Setting up a new company
Your accountant can register your business with Companies House. They can also advise you on your new tax liability and liaise with HMRC to register you for VAT, Corporation Tax and payroll if you are an employer. Massive time saver, peace of mind and another thing off the list of stuff you don't need to worry about.
Payroll
Wave goodbye to hours of your life each month spent knee deep in income tax calculations and HMRC paperwork. Your accountant/payroll specialist will keep you legal as they know the most up to date rules and regulations for employers so you don't need to sweat it.
It’s also worth bearing in mind that outsourcing your payroll can save you money on expensive payroll software and training. Essentially, where is your time better spent?
VAT
VAT is notoriously confusing for most small business owners and the regulations are forever changing. Your accountant will help you navigate your company’s VAT obligations and advise on the optimal payment scheme so that you don’t pay over the odds or miss out. They also make your quarterly VAT returns a breeze and ensure that you are not faced with any unexpected fines.
Bookkeeping
Bookkeeping is a time-consuming, dull, boring yet essential task for small business owners. Recoring and cross checking every receipt and invoice is a test even for the most hardened of number crunchers. But come year end (or if HMRC start to ask), you really don't want to be hunting down missing paperwork or explain missing/wrong figures. Fortunately, accountants love this work, so you don't have to worry. It's job done!
Annual accounts
As a limited company, you have a responsibility to file your annual accounts with HMRC and Companies House each year. Failure to do so will result in hefty fines and in some cases, companies can find themselves struck off and even face legal action.
Your accountant is invaluable for this. They will diligently produce the necessary paperwork and make sure it’s submitted on the dot (if not before). Tick!
Tax returns
Along with submitting your annual accounts, your limited company needs to submit a tax return at each financial year end to HMRC. The purpose of this is to declare your taxable profit, although you must still submit it even if you made a loss, or are below the threshold to pay tax. An accountant has this in hand for you, so you're sorted.
Amongst the information required is a profit/loss account, but it should show your adjusted profits, ie. gross profit less expenses and investments. Your accountant will prepare it for you and calculate how much Corporation Tax you owe and when - you're really winning now.
Advice and support
The ultimate benefit of a great accountant is the hands on advice and support to help your small business grow and thrive. DIY or online software cannot do this and the expert, real human approach always wins on this.
24/7
Using a cloud based accountancy software should complement the fruits of your accountants labour. Xero, Quickbooks and Sage etc... allow you to have full control over your finances without having to stick a finger in the air to see which way the wind is blowing! Your accountant can set you up in no time - even better if they will include the software for free.
Financial pros of hiring an accountant
If you are still weighing up the pros and cons of hiring an accountant, calculate the hours you will save spreadsheet surfing, number crunching and shuffling paperwork, as well as the monetary cost lost from not doing what you are best at in your business.
Also, factor in the peace of mind you will gain, knowing that your finances are in professional hands and that you will not get on the wrong side of rules, regulations and legislations and the 'tax man'.
Finally, offset the costs you will save in potential tax efficiencies, avoiding fines, buying accounting software and potential training.
Why choose Purple Accounts as my accountant?
You and your business deserve every chance to succeed and by choosing the right accountant you can be confident about your finances and devote more time to making your business a success.
Purple Accounts is owned and run by Chartered Management Accountant David Parker ACMA CGMA. We have won multiple awards and have vast experience in accounting and small business support. Established in 2007, we are XERO Gold Champion Partners and the team is approachable, friendly and specialists in small businesses.
No call centres, no pin stripes, no fuss.
Job done!
To arrange a chat with David to see how we can help your small business.
Call 01925 979500 or email david@purpleaccounts.com.
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