Hiring an accountant: a small business guide

Julie Corkish, ICAEW’s head of practice, explains what small business owners should consider when hiring an accountant.

If you run a small business, hiring an accountant is one of the best investments you can make.

Running a business isn’t easy at the best of times, but the past few years have been truly exceptional. In a climate where companies are faced with challenging economic conditions, it’s important to seek the right professional advice and support.

Hiring an accountant will free up time to focus on other priorities when running your small business, reducing the risk of errors which can prove detrimental if left to chance.

An accountant can provide specialist advisory services and spot potential financial issues early on, reducing the risk of being investigated by HMRC.

>See also: How to do bookkeeping as a small business

What can my accountant do?

Accountants are more than just bookkeepers. The two terms are often used interchangeably, but in practice are very different. While bookkeeping involves record-keeping, an accountant will provide professional analysis on a business’s finances and give comprehensive advice, as well as taking responsibility for complying with HMRC and Companies House filing deadlines and requirements.

Depending on your budget and how much of the record-keeping you can handle in-house, you might choose to hire both a bookkeeper and an accountant. You may also want to hire other specialists such as a credit controller or a chartered tax adviser; your accountant will be able to advise you on building a finance team as your business grows.

Rising inflation, borrowing and energy costs are putting a squeeze on cash reserves. A business with £1m in stock that owes £100 to a creditor could easily become insolvent if it can’t sell its stock. An accountant can help you manage these competing pressures.

Self-employed people in the UK with annual business income of more than £10,000 will need to follow the Government’s Making Tax Digital rules from 6 April 2024. An accountant will be able to help you navigate these new rules and ensure your business is compliant.

Many accountancy firms offer a “one stop shop” for all services including bookkeeping, accountancy, tax and advice, tailoring bespoke packages to suit your business needs.

>See also: Bookkeeping when you’re a sole trader

How to choose the right accountant

Chartered status and qualifications

It’s worth knowing that anyone can call themselves an accountant, so it’s crucial you check that the person and firm you hire has the right qualifications, training and experience. ICAEW chartered accountants, for example, have a minimum of three years’ in-depth training which includes practical experience. They are bound by a code of ethics, must have professional indemnity insurance and are subject to regulation.

Chartered accountants can offer advice on a range of topics, including staffing and payroll, working with suppliers, managing debtors, business growth and regulation. They can also provide a wealth of information on finance issues, such as raising capital, paying yourself, and dealing with HMRC.

We’d recommend that you ensure that your accountant is an expert in the area where you most need advice. If you’re not sure what help you need or where to start, then ICAEW’s Business Advice Service provides a free consultation to all businesses seeking trusted advice, and can point you in the right direction.

Do you need a specialist?

It’s important that your accountant understands the market your business operates in, and whether your sector is at high-risk from a trading perspective. Some practices will specialise in a certain industry or sector, whereas others will have a much wider range of clients. At the largest practices there are specialist teams that focus on specific sectors, like automotive or property.

Chartered accountants are qualified to offer not just financial advice, but business advice too, so make sure they understand your sector well.

Does location matter?

Although technology means that location matters less than it used to, there’s tremendous value in face-to-face meetings.

It’s important to build a trusted adviser relationship with your accountant, and this often means getting to know them in person, so location can be important.

Having a local accountant may also mean they better understand the specific challenges in your region and support that may be available from your council. You can search for a registered chartered accountant in your area by visiting the websites of any of the UK’s registered professional bodies, such as ICAEW.


When hiring an accountant for your small business, it’s worth asking colleagues and friends for recommendations.

What to discuss during your initial consultation

The scope of your business needs and service levels

Be clear about your business needs and check that your accountant can meet them. In addition to the basics such as charges and compliance deadlines, consider, for example, frequency of communication and turnaround time. Be honest about any concerns you may have about your finances so your accountant can help you assess what you need.

Fees and charges

Be sure to discuss fees and charges – and their payment dates – upfront. If different rates are charged for different services and your budget is limited, work out in advance which services you want to prioritise. Keep in mind that hiring an accountant is an investment that often pays for itself, in terms of money, reduced risk and time saved.

Information the accountant needs to proceed

Your accountant will require certain pieces of information, which will likely include key documents, HMRC letters and National Insurance numbers. Find out what you will need to provide and get it ready as soon as you can.

Hiring an accountant for your small business

Hiring an accountant can be an important investment for your small business, so don’t be afraid to make approaches to multiple accountants to ensure you find the best fit. A good accountant – and the professional advice they provide – could make all the difference as to whether your business survives in tough economic times.

Julie Corkish is head of practice at ICAEW

Further reading

Accounting for start-ups – 6 tips for those starting a new business

Best accounting software if you’re a sole trader

Do you need to hire an accountant?

Should you hire an accountant, or are you perfectly capable of doing them yourself? Is an accountant worth the expense?

Sole traders

If you’re registered as a sole trader, your expenses should be reasonably straightforward. It’s usually a simple case of tracking your money earned versus your money spent on business.

HMRC provides a long list of expenses you can claim as a sole trader, which includes anything that is a legitimate cost of running your business. For example, you might rent an office, pay staff, travel for business meetings, buy stock – the list is endless.

This gets slightly more complicated when applied to costs that can be both personal and business related. For instance, if you work from home then your house is effectively ‘doubling up’ as a home and an office. If you drive one car, your fuel costs are split between personal and business use.

In these instances, the costs are apportioned. If you use your car 70 per cent of the time for business, for example, you can only claim 70 per cent  of your total fuel costs as a business expense.

You can work this out on a case-by-case basis, or you can accept the government’s fixed rate without working anything out. This means you might not be benefiting from the full exemption you’re entitled to, but it is a low-hassle way to do your accounts.

So should you hire an accountant as a sole trader? You probably don’t need to, in that doing your own accounts is not inherently complex. However, just because you could do your accounts yourself doesn’t mean you should.

Not hiring an accountant could be a false economy

Not hiring an accountant certainly saves you money at the outset, but in the long term you could be losing money that you overspend on tax. In fact, a damning YouGov survey found that 10 per cent of small businesses claim almost no expenses, while more than 20 per cent claimed under half the entitled amount. Almost a third admitted losing receipts – a familiar story for many of us.

These statistics make it clear that many sole traders aren’t maximising the expenses system. Only you know if you fall into that camp but if you do, hiring an accountant could be a positive step forwards.

Limited companies

Once you start generating over a certain amount of revenue, even if you’re still only a company of one, it’s considered beneficial for tax purposes to register as a limited company. The rules are very different if you’re registered as a sole trader versus a limited company.

As a limited company, you are no longer personally liable for your business. Your company is a distinct legal entity, which introduces complexity into the tax equation.

The main difference is that you are separating yourself from the company; you’re an individual and the business is a business. Movement of resource from one to the other has to be tracked and is subject to tax law.

Your limited company now pays corporation tax on taxable profits. You pay yourself dividends as a shareholder of the company, and pay income tax on this after a tax-deductible allowance. You claim expenses differently too.

For example: Your purchased assets, renovation costs and patents are called ‘plant and machinery’ and are claimed as capital allowances. There are many items that can be included in this list. However, the time it would take to research which items is probably better off spent paying an accountant for their knowledge.’

If you thought the tax landscape was tricky as a sole trader, it’s a lot more so as a limited company. If these things come naturally to you, then you might enjoy doing your books yourself. For most of us, though, you’ll do better to invest in an accountant.

Tax is trickier as a limited company

Not only will an accountant likely save you money by navigating the tax regulations effectively; they’ll save you money by freeing up your own time. Don’t forget, your time is worth money too – and most likely it could be more profitably spent doing something other than the accounts.

This doesn’t mean you should wash your hands of the process completely. If you don’t track your costs properly, no accountant can be much help to you. You will still have a responsibility to stay on top of your costs and keep receipts.

The better-organised you are, the more an accountant can help you. There’s no point paying someone if you’re going to cuff their hands behind their back before they start.


To return to the initial question, then, is it worth hiring an accountant? It depends. Would you take your car to a mechanic, or tinker about with it in your own garage? If you enjoy doing the accounts and are confident you’re doing it accurately (or don’t really care if you’re not), then you might choose not to hire an accountant.

However, you do need to think seriously about where your own time is best spent as a business owner.

It’s likely that you have many, many other things to worry about and anything that saves you time also saves you money. And hassle. And more money, when an accountant applies little-understood tax exemptions to your accounts. That’s a difficult equation to argue with.

See also: How can I set up payroll without an accountant?

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Julie Corkish

Julie Corkish is head of practice at ICAEW.

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