Hiring an accountant: A small business guide

In this piece, we explore the considerations small business owners must make when hiring an accountant.

When you’re running your own business, it’s inevitable that you’ll end up wearing a lot of different ‘hats’ and taking on a range of different roles within the business. Many businesses and entrepreneurs are operating on a limited budget, so it’s understandable that some may opt to try to do their accounts themselves. However, they may be unaware of just how much of a difference hiring an accountant can make to your business.

Staying on top of your small business’s finances is a big task, even if you aren’t expecting a huge income. If you’re an entrepreneur who wants to ensure the continual success of your business, it’s worth considering hiring an accountant for professional advice and assistance when it comes to your business’s finances. It could be the best investment you ever make. Here is some advice from Ben Herbert, director of d&t chartered accountants.

Fundamental services

An accountancy practice should provide a variety of services to you and your business: accounting, record-keeping, tax returns and payroll.

These services ensure you can monitor expenses and make sure you are a) obeying all HMRC tax requirements (known as ‘compliance’) and b) that you know where you stand each month. A business accountant can help you get set up on accounting software and bookkeeping systems, saving you time, money and hassle when it comes to producing financial statements and tax returns.

Tax advice

Tax is always going to be an inevitable outgoing, but if you run a small business, there are plenty of ways that you can save some money on your tax bill – and do this legally. An accountant can help you plan effectively to reduce your overall tax burden, while still ensuring you are in line with all tax laws.

Auditing

Auditing is the process of reviewing a business in depth in its entirety, and is usually reserved for more established or larger businesses. This is unlikely to be needed at a business’s early stages, so is not covered in depth in this article.

Business advisory

Given their perspective over your financial situation and business environment, accountants can offer a high level of insight across the board, for everything from business and marketing plans to retirement planning. This bullet point covers a huge variety of services and we’ll look at that in more detail in the next section.

Beyond compliance

A quality accountant offers far more than just financial records, reports and compliance. Once all that’s sorted, the fun stuff (honestly) really begins. Having worked with hundreds of businesses, accountants have the expertise and experience to offer valuable insights and realistic advice on what a business needs to do to develop and grow.

Not only can they use their knowledge and skills to help make your business plan realistic and professional, but they can give it additional force and direction with actual figures and informed projections.

A good accountant answers questions you didn’t know you needed to ask! They can help you with:

Their advice is invaluable from the very beginning – even before the business starts. Their independent, qualified professional outlook is key to reviewing business data, and provides insight on cash flow, profit forecasts and performance to ensure your business decisions are well-informed and based on evidence, not just gut feel or luck.

For example, businesses can have many different types of legal structures. An accountant can advise on whether your particular operation would be best operating as a sole trader, a limited company, a limited liability partnership or a partnership, and help you avoid any legal issue concerns. They can help you prepare for and source funding and investment, and advise, for example, on the best loans, overdrafts and opportunities for your specific business’s situation.

Once you’re up and running, an accountant can help advise how you can maintain your business’s successful operation. As a business grows, finances can soon become complex. Without an accountant, it can be difficult to stay in control of debtors and creditors, on top of all legalities and compliance requirements as well as running the business. Tax legislation is complex and ever-changing, making it difficult for a business owner to manage themselves. With an accountant, you can enjoy the peace of mind of knowing that your business is always compliant, and you are always making the most of any potential savings available.

Saving businesses cash

Accountants save business owners much-needed cash every year. They can use their expertise and knowledge in allowable expenses and tax regulations to minimise the amount of tax businesses have to pay. A high-level service many good accountancy practices offer is helping you put a virtual finance controller or virtual finance director in place, even if just for a couple of hours each month. These are invaluable to a business, helping plan, track and monitor budgets to make savings.

The best part is that as well as dealing with tax and regulatory paperwork, preparing VAT returns, year-end accounts, calculating how much money a business owes HMRC in tax and national insurance, and dealing with all correspondence, it frees up time for you to focus on your business. Most small business owners are looking to save money and think they can’t afford an accountant. This may be true, but for many, it’s important to look at the bigger picture and consider just how much your own time is worth. It may be that it’s better to pay for an hour or two of an accountants’ time and have the confidence it has been done correctly by experts, than spend 10 hours of your own time struggling over it – with the risk you’ve made errors.

James Kirby is managing director of property development company Stirlin Developments. Here, he discusses how the company initially managed general accountancy work inhouse before taking on assistance down the line. 

I founded Stirlin Developments in 2007. When we started out there was clearly demand for more commercial property in Lincoln and the surrounding areas, where we’re based. The issue was affordability. We saw a big opportunity for us if we could capture the market for light industrial units that small businesses and SMEs could afford without wiping out their cash reserves.

There were just two of us at the start. By using subcontractors, we steadily grew to turn over £1 million a year by 2013, when I bought out my business partner and refocused our efforts on growth.

To date we’ve developed more than ten acres of commercial properties, with 500 jobs created as a result. We have more than 40 staff on our books, plus a further 20-30 subcontractors, and we’ve recently branched out into residential property with our sister company Homes by Stirlin.

Managing accounts: Inhouse or outsourced?

At the start we needed to balance cost with doing things properly, just like any business. For the first three or four years I did much of the general accountancy work myself – invoicing, chasing debtors, bookkeeping and such like – while using accountants for end-of-year accounts, strategy and advice on business and tax decisions.

By that point it was clear that if I was going to make the business the success that I wanted it to be, I should let the experts do what they do best so I could focus on doing what I do best. Today, every part of our accountancy and payroll is managed externally.

I was introduced to our accountants Duncan & Toplis by a business acquaintance very early on. I felt comfortable from day one with their knowledge, but I understand why some small businesses get put off by the cost at the start. You get what you pay for in this life though, and it’s been the best money I’ve spent. It sets you on the right path to grow faster in the long run.

It’s fitting that we were introduced to our accountants given how much networking and introductions play a part in a successful client-accountant relationship. That’s a hidden benefit that small business owners might not consider when choosing when to outsource their accounts.

Once you know and trust each other, they can become a great source of new business; some of our biggest sales have come through referrals from our accountants. From a business perspective, beyond the obvious admin and time saving benefits, their involvement and advice has been fundamental in our success, although I’m sure this isn’t the case for every business accountant, so choose carefully.

Further reading on accounts

Which digital accounts software is right for your small business?

Related Topics

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