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Posts by shahood

A Few Reasons Why You Should Contract an Accountant  

Apart from filing taxes, there is a lot more that an accounting firm can do for your business. Oftentimes, business owners are not able to keep track of their finances throughout the year. This is one of the many reasons why many small businesses are not able to make it past the first year. 

A number of business owners do not even have a distinction between their money and money belonging to the business. This is what happens when you DIY on managing your business finances. Shockingly, many business owners simply use pen and paper to make a record of their finances with regard to debits and credits.

On the one hand, some businesses do alright with this type of arrangement. On the other hand, a large number of them fail for a number of reasons. The vast knowledge and experience a well established accountant can bring to your business cannot be overemphasised. Here are a few reasons why you need an accountant for your business:

  1. Identifying Your Deductions

An accountant will help you to identify how you can maximize on your deductions throughout the year. They will advise you on how you can make strategic decisions for your mandatory end-year deductions. On your own, you may not remember to track and account for issues such as out-of-pocket expenses and depreciation. 

  1. You Do Not Want an Audit!

Any business owner will break out into a cold sweat at the prospect of getting a visit from the auditors. It is unfortunate that many business owners think about hiring an accountant after an audit so they can come in and fix things. 

With the guidance of an experienced accountant, you can avoid the auditor altogether.  Some of the errors that will bring the auditors to your office include too many errors on the tax forms, excessive write-offs and being too generous. An accountant will ensure that these issues do not occur in the first place. 

  1. You Will Save Time and Money

You are probably wondering what money you can hope to save if you are paying an accountant. If you factor in the time and effort needed to manage your finances personally, you will consider the accountant’s fee money well spent. Think of the money you could lose due to poor financial decisions for instance. Furthermore, that time and energy could be spent in running and expanding your business. It therefore makes sense to hire an accountant to get the finance management issues off your shoulders as you concentrate on running and building your enterprise.

  1. Get Help with Budgeting and Cash Flow 

Having the time or even the foresight to calculate the consequences of making some major financial decisions is not always possible. An accountant can guide you in making decisions based on available data and also be your consultant with regard to any financial decisions you want to make. 

  1. Future Plans  

An accountant will come in handy when you are making future plans for your business. You can pore through your past business reports together and come up with a way forward as far as the seasonality of the business is concerned. 

You will be making the work of running your business easier by hiring a professional who can take a lot of the financial stress off your back. That way, you can make time to concentrate on other aspects of your business.

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Focus on your business, not on your bookkeeping!

In the short-term, doing your own bookkeeping may prevent you from parting with your hard-earned cash but, if you get it wrong, you could end up paying more in the long-run. Better to leave it to the pros while you get on with managing your business.

There’s more to bookkeeping than meets the eye. (After all, there’s a reason why there’s an entire profession dedicated to it.) Get it right and the taxman will be silent. Get it wrong and he’ll be ringing in your ears until you get it right.

What does bookkeeping involve?

Bookkeeping involves taking detailed notes of all the financial activities carried out by your business.

The reasons for doing this are two-pronged – firstly, to get your records ready for review by your accountant and, secondly, to ensure that your business finances are in HMRC ‘inspection-ready’ condition.

What are the pitfalls of DIY bookkeeping?

Many sole traders, contractors and small business owners believe that being the boss of their own bookkeeping can save themselves wads of cash and, ultimately, increase their take-home pay.

With this in mind, they do their own books and complete their tax returns completely unaided then, at the end of the year, hire an accountant simply to sign-off and file their accounts. If there are any complex or technical issues that fall outside the scope of their knowledge, their accountant will step in to save the day.

Whilst this approach may feel right, it doesn’t mean it isn’t without risk. After all, pretty much everyone knows how to make a record of a bunch of transactions. But not everyone knows how to pay themselves the right amount of salary and dividends in order to reduce their tax burden.

That’s why there are scores of small business owners out there who mistakenly believe that, because they’re religiously paying VAT on a quarterly basis, they’re playing by HMRC’s rules. Then they find themselves the unfortunate recipients of a letter to the contrary from HMRC! More often than not, VAT payments are made every quarter, but the right amounts of VAT aren’t.

Driven to the depths of despair by the wrath of HMRC, small business owners then make a last-ditch effort to remedy the situation by calling upon accountants for help – only to be billed hundreds of pounds to be dug out of the hole they dug themselves. To add salt to the wounds, they tend to get slapped with penalties from HMRC (often for hundreds of pounds) for failing to pay the right amount of VAT on time.

Ultimately, these same small business owners end up paying an accountant roughly what they would have done from the start. So, not only do they waste their time doing their own bookkeeping, they also waste their money, too.

How can we help with your bookkeeping?

As a freelancer, consultant, start-up or small business owner, your time is always best spent doing what you do best – whether that’s photography, web design, copywriting or something else.

At AudTax Accountax, our team of accountants and tax consultants are responsible for staying abreast of the latest developments affecting businesses. If you would like to find out more about how we can help with your bookkeeping, contact us today.

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