When starting out as a small business it is tempting to deal with your accounts yourself. Why would you want to hire a professional accountant and tax advisor and add more cost to your overhead when you can go do it yourself?
While this might seem like a sensible idea at the beginning, especially when you may only have a handful of sales invoices and supplier payments to deal with, as your business grows the finances can get a lot more complicated and time consuming. This is where hiring a professional accountant can bring in major benefits.
We have shown below the 5 biggest challenges and pitfalls when managing your own accounts, and some of the major benefits from hiring a professional accountant.
Challenges
The Knowledge Gap
While the basic bookkeeping and management of your finances may seem simple grasping, the finer points of accounting and tax principles is complex and takes years of experience to deal with correctly. Completing any accounts or tax returns yourself greatly increases the risk factor for errors, missed deductions and non-compliance with regulations. In the long run these could cost you far more than hiring an experienced accountant.
Time-consuming
Managing bookkeeping, payroll, day to day accounting and the various tax filings can take a lot of time out of your day. This time could instead be spent on invoiceable work, gaining new customers or simple downtime to recharge for the next job. As a business owner you will want to be spending your time growing and developing your business, not spending a large amount of time on bookkeeping and compliance.
Keeping up with changes
Trying to keep up with all the regulations, company law and tax changes can be a nightmare. These changes are issued regularly and are not always widely publicised. There is every chance that you could end up failing to meet your compliance duties due to a missed update. You may also end up on missing out on government incentives and reliefs you could be making use of.
Anxiety on VAT threshold
Keeping track of your turnover and whether you reach the VAT threshold isn’t always simple. Without up to date and accurate bookkeeping this could make it difficult to work out your correct turnover when checking if you have reached the VAT threshold. Even if you have worked out your correct turnover not all of it may fall under VAT. The result of either could mean that you register for VAT when it’s not required, or you don’t register for VAT when you needed to.
Lack of insight
If you haven’t run a business before it is likely that you don’t have the insight that comes with experience. The lack of awareness of good finical management, cashflow management and future proofing your finances could result in lack of funds or higher future tax bills due to poor planning. There is a wide array of financial reports that an experienced accountant can help you with to make these decisions.
We have gone through some of the bigger pitfalls and challenges, but what will you gain from having an accountant? We have shown the major benefits, but this isn’t an exhaustive list and its best to speak to your accountant to find the best way to work together.
Benefits
You will gain the vast knowledge and experience of an accountant who has been practicing for many years. While an experienced accountant hasn’t seen everything, they have seen a lot, and will be able to apply their knowledge to any situation that may come up in your business. They can help from the basics of keeping your bookkeeping up to date and making sure you are complying to regulations to helping with complex tax matters to make sure you aren’t paying more than you need to.
Hiring an accountant will free up a lot of your time by delegating the bookkeeping, payroll, accounting and tax filings. This gives you more time to spend on growing and developing your business, or simply more time to get that extra job or two completed.
Staying ahead of the regulations and changes, an accountant will always be looking forward to the next change or update in regulations or tax and will make sure that your business is making the most of any changes.
You will gain expert guidance on a wide array of subjects, an accountant doesn’t simply complete your year-end accounts, we are here to help you work with your finances and make the best use of what you have. An experienced accountant can analyse the financial data and produce reports that can guide your decisions.
Maybe the most forgotten or underrated benefit is simply having peace of mind. Having someone with experience to keep an eye on your finances, provide guidance and make sure you are keeping up with your compliance can take a major weight off your shoulders and reduce stress. In turn this frees you up to make better decisions, to enjoy your work and have downtime without the need to worry.
Hiring a great accountant is a much better investment that attempting to do everything yourself. We are here to lighten your load and help you grow your business.
If you’d like assistance with your finances or more information on how we can help, please get in contact with us.