When to Hire an Accountant
In the United Kingdom, there are around 22,000 registered accountancy businesses. According to Accountancy Age, the top 100 UK accountancy companies collected £15.2 billion in fees in 2018, with about three-quarters of that going to the top four firms (ie PwC, Deloitte, EY and KPMG).
While there are mid-tier, regional, and specialised “boutique” accounting companies, local accounting firms often serve the needs of the UK’s micro businesses (those with less than 10 employees). Furthermore, in recent years, a number of online accountants have developed, offering basic bookkeeping and compliance services for a monthly charge.
In 2017, UK businesses spent more than £17.7 billion on accounting services. So, how can a small business accountant assist you, and how do you go about finding the proper one?
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What are some of the services that accountants can provide?
An accountant can assist you in determining the best legal form for your business, whether it’s a sole trader, partnership, limited liability partnership, or private limited company. They can register your business for you, assist you with your business plan, and advise you on finance sources and pricing for a fee.
You could conduct your own basic bookkeeping to save money, which is simple enough owing to accounting software. When your business is more established, you may be able to hire a freelance bookkeeper to handle some or all of your bookkeeping duties. These can include invoicing, credit control, payroll, preparing balance sheets, and so on, in addition to tracking all monies entering and exiting your organisation.
Of course, an accountant can do your bookkeeping, which may or may not be more expensive than hiring a bookkeeper. They can recommend accounting software and modify it to your specific needs, allowing you to save money by handling your own day-to-day paperwork.
When is it appropriate to hire an accountant?
1. To establish a corporate organisation.
Before you begin trading, you should engage an accountant to determine the legal structure of your firm based on its complexity and your goals.
As a limited business, you’ll have more flexibility when it comes to paying yourself and any tax ramifications. Furthermore, this will ensure that the company is recognised as a separate legal entity from you, ensuring that your personal assets are not jeopardised if the firm encounters difficulties.
2. For the preparation of statutory accounts and tax returns
Putting together a limited company’s annual set of accounts, as well as the tax return that goes with it, is a complicated procedure that requires the assistance of professionals. It’s critical to stay on top of compliance obligations; otherwise, you risk facing fines and an administrative headache.
Using an accountant to handle these forms can also save you money by allowing you to classify tax deductible items more precisely.
3. To forecast cash flow
Cash flow is a business’s lifeblood, yet it’s also one of the most prevalent reasons for failure. Creating a 12-month forecast will allow you to better plan for any deficits and determine whether you will need to take out a loan or obtain equity financing.
Setting financial goals and milestones for where you want your firm to be in the future can also be a valuable exercise.
4. Obtaining financial resources
Depending on the type of business or sector in which you operate, there are now a plethora of different financing options for start-ups, including traditional loans, equity finance, and a variety of more niche services.
An accountant can assist you in determining which sources of financing are best for your company. They can also assist you in putting together an application and any supporting documentation needed to increase your chances of obtaining expansion capital.
While accountants may assist you at any point of your company’s lifecycle, if you have the time, you can handle basic bookkeeping duties yourself.
As a general rule, it’s always a good idea to meet with an accountant for a couple of hours every now and then to ensure that your money are in excellent hands.
Cloud software is assisting accountants in shifting their duties to become more advising, so make sure your accountant can provide growth services like access to capital and assistance with business planning.
5. Professional assistance is required when writing an efficient business plan.
A business plan stating the desired aims and objectives is required for any business owner. A business plan will keep you on track, as you may lose sight of your ultimate business goal if you don’t have one. It would be a wise option to hire an accountant at this stage; their expertise, talents, and business experience will be crucial in drafting an effective company plan.
Hiring a professional accountant from the start is always a sensible idea. To expand your firm, you’ll need to have appropriate financial knowledge and competence. Furthermore, while starting a firm, you may not believe that an accountant is necessary.
It’s possible since your primary focus will be on creating the best product and attracting more customers. Profitable businesses, on the other hand, recognise early on that a qualified accountant can help them develop. It would be beneficial if you conducted thorough study on how to locate the finest accountant for your company, as this is a crucial decision for your company’s performance.