Why an Accountant is an Investment in Your Business not an Expense

Why is an Accountant an Investment, Not an Expense?

Because an accountant will help you pay less tax.

Maybe that’s not 100% right. An Accountant will help you pay the right amount of tax by understanding the financial regulations and requirements specific to your business.

Can you imagine the likes of Sir Richard Branson, Baroness Brady, or Sir James Dyson filling in their own tax return?

I can’t, either.

OK, so you’ve got a way to go until you reach the dizzying heights of ‘celebrity entrepreneur’.

But you’ve got something in common with the Bransons, Bradys and Dysons of this world; you’ve got a business that comes with financial responsibilities.

If you’re a Sole Trader, there is nothing that says you must work with a professional accountant (there are different requirements if you are – or become – Limited), it should be something you think about.  Particularly as your business becomes more established and successful, and your financial responsibilities start to grow.

Why You Should Work With An Accountant

I’m a huge fan of “Do what you do best, and outsource the rest!”

One obvious advantage of working with an accountant is that you can free up some of that precious time there never seems to be enough of.

But there are other things to take into ‘account’ (if you’ll excuse the pun!)

Tax legislation changes all the time, as do rules about business expenses. That’s the expertise of an Accountant – helping you pay the right amount of tax (not too much; not too little) based on the tax regulations in place at the time you submit your accounts to HMRC.

Yes, how much tax you pay depends on how much money you make but that isn’t all there is to it.  An Accountant can not only help you save on tax, they can advise you on different ways to reinvest your profits.  That way, you can make a realistic growth plan, or come up with a strategy that will help you become even more successful.

And what about if you’re running a Side Hustle? You will have your at-source taxation handled by your employer, but how do you manage that alongside earning from the business you are running alongside employment.

Goodness, you may even find you are entitled to a tax rebate in some cases. I know I did.

I wouldn’t have known that or have been able to calculate my return – my Accountant did that for me!

So, Should it be an Accountant or a Bookkeeper? And What’s the Difference?

If you thought a Bookkeeper and an Accountant were one and the same, you’re not alone.

But in reality, while some of their tasks will overlap, there are differences between the two.

A Bookkeeper’s main role is to process the financial transactions of a business. This means they are the person who keeps your day-to-day business finances in order and up-to-date.  They will do things like process receipts and payments, pay invoices as well as develop and maintain your business financial systems.

An Accountant’s main task is to deal with financial compliance such as filing accounts and submitting tax returns. They also have a role to play in advising business owners about the strategic, financial management of their business. An accountant can also conduct regular tax planning to minimise business and personal tax liabilities and provide advice on cashflow management.

As a micro or side hustle business owner, you may not need the services of a bookkeeper and an accountant.  Just keep in mind that the more up-to-date you are with your day-to-day finances, the less work your accountant will need to do (which in turn, should cost you less!)

How Do I Find The Right Accountant?

It isn’t hard to find a qualified accountant.  But you are probably going to want to find one that you can work closely and comfortably with.  You’re trusting this person with your business, after all.

You could always start with a visit to The Institute of Chartered Accountants in England and Wales website. They act as an independent regulator to maintain standards of professional conduct. They also have a handy ‘Find and Accountant search facility. With more than 150,000 members, there’s sure to be someone there you can contact.

What Questions Should You Ask an Accountant?

To help you find the right accountant for your business, here are some questions you can ask them.

1. Are you experienced in my industry?

If your accountant has some experience in your industry, it’s also likely that they will understand the unique challenges that come with it.

2. What services do you offer?

Not all accountants are created equal.  Some may specialise in tax, while others focus on auditing and corporate compliance.  So, if you’re looking for general advice, make sure the accountant you choose is able to offer it.

3. How will you help my business?

 You accountant should want to get to know your business and understand your industry, so they can help you thrive and grow.  This means they should be easily contactable, and willing to talk to you about your business in detail before you start working together.

This is a working relationship built on trust. You need to interview candidates for the post of your accountant, taking on board their skills and experience and – importantly – whether you like them o not!

What About Doing Your Accounts Yourself?

If you are Limited, you cannot do it yourself.

If you’re a Sole trader and you really want to do it all yourself, you’ll need to keep up-to-date with all the rules, regulations and legislation.

For this, the HMRC website is the place to spend your time. They offer dedicated small business financial advice, with regular webinars and email alerts to help you keep on top of things.

So, do you employ an accountant, or do you muddle through by yourself? (I think you know what I think!) I’d love to hear your thoughts, so please post them below.