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Do I need an accountant for my small business?

Do I need an accountant for my small business?

Taking the step to own your very own small business is huge, making you responsible for a lot of your own time and money. Many take the understandable stance to recruit as few staff as possible, and an accountant may especially seem like a non-valuable expense considering the budget. However, the US Small Business Administration’s 2018 study, “The State of Small Business” found that 82% of business closures within the first 18 months are due to cash flow problems, which doesn’t necessarily mean a lack of funds, but rather their poor use.

So, is hiring accounting services worthwhile for a small business? Today, we will discover the ins and outs of accounting services, including who needs them, when’s the best time to hire one, and their overall effects on a growing business.

Small Business Plan

What is an accountant?

Typically, as a business grows, the logistics will be too much for the business owner alone to handle. This usually leads to outsourcing an accountant or hiring one in-house. The following are some examples of what an accountant will do for a business:

  • Financial reporting and recording – Ensuring you have accurate financial information is important for tax purposes, as well as making plans.
  • Budgets and Plans – An accountant will look at the overview of finances and set budgets, ensuring that there’s no overspending involved and that the money allocated will last to achieve the maximum value.
  • Financial Analysis – Accountants analyse financial stats, finding weak points to work on.
  • And more

The main reason that most small businesses don’t want to use an accountant isn’t because they don’t see the value, but more that they don’t understand it.

A business owner first has to contend with their finances, and where their start-up capital will come from. Your goods and services will need a price point, and they will need efficient supply. Without having a plan for a business’ finances that goes beyond a couple of months, your small business is almost certain to fail, but having a long-term plan means having a roadmap for sustainable growth whilst accounting for any potential challenges faced.

Is a small business accountant required for small business growth?

A Small business owner can choose to do their accounting services themselves, but as we claimed before when a business grows, the business finances will become a more complex logistical factor. That being said, it’s important to understand that you will be required to complete tax returns and keep a record of all incoming and outgoing money.

Ask yourself a few questions to decide if you need an accountant for your small business:

  1. Do I know how to use accounting software?
  2. How complex are the logistics behind my business finances?
  3. Do I have the time and capacity to ensure accounting services are done correctly?
  4. Do you understand how to file tax returns?
  5. Have I set long-term, sustainable goals for my business?
  6. Do I know how to commence with financial reporting, tax compliance, payroll services, tax efficiency and business planning?

You don’t need to have a positive answer to each of these questions, as they are all based on knowledge. Suppose you are not confident you can fulfil the role of an accountant. In that case, you should consider immersing yourself in the study.nBusinesses can succeed just fine without hiring accounting services through a new hire or an accounting firm. However, it’s worthwhile noting the stat we quoted leading into this article – businesses that do not concern themselves with the future of their finances are doomed to fail.

It’s worthwhile looking at accountancy services for small businesses not as an investment, but for what it is – a huge advantage that most small businesses do not employ. The health of business finances depends on a business plan, as well as reliance on a sustainable room to grow, free of bottlenecks arising from unexpected sources, which may form from weaknesses in your balance sheet that you’re not even aware of.

It’s worthwhile to note one thing that often sweetens attitudes towards acquiring an accountant – sooner or later, your business will grow too big for a business owner to be concerning themselves with constantly recording and adjusting their accounts. It’s a matter of time, regardless of whether you’re inclined to hire one or not.

What do accountants do for small businesses?

When small business owners underestimate or simply don’t understand, the role of an accountant – they lose out on a huge business advantage. Accountants do far more than prepare your accounts for income tax returns and chase you to keep your documents in order. They provide a range of specialized accounting services tailored to small businesses, such as bookkeeping, tax returns, VAT returns, payroll services, and more.

Accountants prepare income tax returns, compile documents for easy sorting, and much more, including bookkeeping, VAT returns, payroll services etc. Accountants train for years, many of them going through university, to know their craft inside and out. Simply put, even if you know your business, it’s unlikely that you know accountancy.

Small business accounting services vary depending on industry, but the following are some of the main things a small business accounting package is likely to consist of:

  • Business Plan – An imperative tool. A business plan streamlines your day-to-day business choices, and it also improves the chances of acceptance if you’re planning to apply for a loan, rent, or anything else.
  • Business structure – Small business accountants will outline the options a business has in terms of structure. Most businesses begin as sole traders, but there are many advantages to be had, especially as the business grows, switching to another structure – such as the lowered amount of tax that a limited company demands at higher income brackets.
  • Financial software – There are many examples of financial software used by accountants out on the internet, but knowing the basic commands simply won’t cut it. There’s a lot of automation, checks, and higher level quality of life features spread across applications, and someone whose mind is on accounting will know the ins and outs to help them deliver the best possible production.
  • Work smarter, not harder – Growth is great, but only growth you can sustain. Overextension is how the Roman Empire, masters of iron-age logistics, fell, and the same happens to small businesses all the time. You need to know ahead of time how you’ll be growing, and have the infrastructure in place to support that growth.
  • Trends – If there’s one thing you’ll likely never delve into as a business owner running your accounting, it’s accounting trends and constantly updating regulations. Running afoul of HMRC or other governmental entities can be a scary experience, and they rarely give out passes.
  • Income tax returns – An employee may never have to know the stressful period that is the end of the tax year. Proper preparation ahead of time, as well as having tested expertise, is the easiest way to ensure filing your tax returns is as stress-free and simple as possible. With an accountant, you’re effectively paying someone else to do this duty that nobody wants.
  • Cash flow advice and management – Controlling credit and ensuring a healthy cash flow effectively means you’re dodging avoidable, yet highly intrusive problems, like bottlenecks. Having to work harder to free the bottleneck, knowing that you’re missing opportunities, is frustrating, and the longer they exist, the more you’re effectively taking back your progress.
  • Reducing workload Being proficient is one thing. However, let’s face it, a business owner has a million other things on his mind. Business changes, but accountancy

Accountants also offer fully managed payroll services, including payslips, national insurance, and pension contributions, ensuring your employees are satisfied.

Small business accountancy services are tailored for both new start-ups and established small businesses. These services include company accounts, tax returns, bookkeeping, payroll, and more, all aimed at alleviating financial pressures and supporting the success of small enterprises.

Having your dedicated accountant is crucial for personalized support and advice. They will get to know your business in detail, offer tailored services to meet your specific needs and help increase tax efficiency to support the growth of your business.

When is it ok to do your small business accounting?

At the start of 2019, there were almost six million small businesses in the UK, with this number rising steadily. With the current recession, and more people wanting to generate their income on their terms, small businesses, especially self-employed or freelance businesses are becoming more common.

Self-employed individuals, especially freelancers, are usually fine to manage their books and accounts. If your business aims to maintain a healthy income to support yourself and your family, then you probably don’t need to worry about an accountant. But if your goal is to set up a company that will grow and be financially successful, then an accountant is going to help you achieve that goal.

Alternatively, you might consider using an online accountancy firm, which offers tailored services without minimum contract periods, to help manage your finances.

Finances plan


If you do decide to manage your accounting, you should still consider consulting an accountant as you start so that they can help you set up your accounts and any software you use to handle it. An initial consultation will also help you to make planning decisions that could direct your small business decisions for the next few years.




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