When you run your own business, it can be difficult to know when to reach out and add extra help to your staff, whether that’s through employees or independent service providers. It might be just as tough to determine when to hire an accountant to assist you handle your personal finances today with the abundance of accounting software available.
However, every small firm eventually needs an accountant. Even if you handle everything yourself, dealing with things like annual tax time is unpleasant for everyone who does not receive a refund.
Accountants can assist you in drawing up your company’s legal structure, offering skilled counsel on financial subjects such as cash flow and tax planning, as well as keeping track of day-to-day bookkeeping like company accounts, invoices, and costs. But, when should you call a limited company accountant for your small business? Here are 5 signs it’s time to hire an accountant.
1: You’re a new and growing limited company
Setting up a corporate structure is essential for small enterprises. The appropriate legal structure guarantees the company can fulfil legal responsibilities such as paying board members and avoiding tax concerns to maintain it tax efficient while it is trading. It’s a good idea to seek advice from an accountant before your limited company begins operations.
This business organisation structure also assures that the firm is treated as a distinct legal entity from its directors, which protects personal assets in the event the firm becomes insolvent.
2: Your business needs professional assistance with accounts and tax returns
The tedious tasks of preparing annual financial statements and filing tax returns such as a self-assessment tax return, a company VAT return, and a corporation tax return may all be challenging for non-experts.
In the UK, HMRC and Companies House have numerous tax compliance standards, therefore it’s critical to pay taxes accurately and submit tax-related paperwork correctly. Because they’ve made a mistake reading a legal requirement, no small business wants an impending HMRC audit.
When you engage an accountant, however, this anxiety is alleviated. Limited company chartered accountants can advise on tax planning as well as correctly filing corporate and personal tax returns, including calculating how and where to save money for a company director.
3: You need to forecast cash flow
Surprisingly, cash flow is frequently given as one of the most common reasons for a limited company to fail during their first year. In many of these situations, accountants have not been engaged or consulted, and there is no 12-month forecast of the corporation accounts – which is responsible for detecting any shortfalls or financial concerns to be addressed in advance.
Accountants can help with this by calculating the future and determining whether the company will ever require debt or equity financing. These plans might also assist small businesses in generating achievable financial objectives and targets for the long term, allowing them to save money while also laying a foundation for success.
4: To prevent tax investigation
No new company owner wants to face the prospect of an HMRC audit for incorrect filings. Audits can be expensive, time-consuming, and anxiety-provoking when done alone.
However, when you hire an accountant, some of your anxiety fades away. Accountants will assist a small business through each stage of the inquiry procedure while also preventing it from breaking tax regulations in the future. They’ll almost certainly have established an audit trail, making the process simpler for both your company and the tax agency by allowing them to trace which transactions took place over time, as well as who approved them.
5: Your business is experiencing a significant amount of growth
Many businesses develop in ways that the founders had not anticipated. From sole traders wanting to go full-time into limited companies, or an established business taking on a new client or project, small company owners and long-term company directors frequently have trouble when their limited business grows faster than they originally anticipated.
When a firm grows, an accountant can handle any growth transitions, such as adding employees or acquiring more office space. They can concentrate on things like payroll, employee tax and national insurance payments, bookkeeping chores like property tax or rent and utility payments, while also using accounting software to analyse cash flow, administer business accounts, and assess stock management and pricing.
Many businesses and start-ups grow by choosing to outsource sales, marketing and other departments. This can be tricky to manage financially, so having an accountant available is essential to make sure that all outsourcing can be done efficiently and legally. Despite not being in-house, external staff members are still part of your company, so it’s essential that you make sure all financial legalities are in place.
Furthermore, hiring an accountant is also investing in their expertise. Hiring an accountant allows you to not only benefit from their financial services, but also from their sound judgement.
Specialised chartered accountants can assist with more than just numbers; they may offer excellent business planning advice. They might provide financial predictions, track bank accounts alongside a business plan, and help with the statutory accounting requirements.
If you’re thinking about hiring an accountant, it’s likely that you already know what an accountant can do to help with the next stage of your business’s growth. The ideal accountant may relieve you of any difficult or financial concerns, allowing you to focus on the day-to-day instead.
As a last suggestion, you’ll find that an accountant that works with cloud-based accounting software is also quite helpful, since you’ll be able to keep track of what your accountant does while also seeing your company’s financial situation at a glance.