Wondering when you should hire an accountant? This guide will help you with key things to consider.
The Role Of An Accountant
Accountants do a lot more than simply assist you with your tax return or your business’s cash flow. They can help people grow small businesses, assess your company’s financial situation, acquire tax investigation insurance, and even help you to sell your business.
It may seem that hiring an accountant will be an expensive decision to make. However, they can help you maintain and improve financial stability, as well as save you a lot of time.
You don’t need to hire someone full-time either. If your budget is limited, there are still plenty of options – hiring someone as and when you need to can be a big help for your business.
Starting Your Small Business
Starting a small business is no easy task and comes with various unique challenges. During the planning phase, an accountant can help you to create a more realistic business plan going forwards.
For a start, they can provide financial forecasting to predict your future capabilities. Many accountants have extensive knowledge of a variety of businesses. This can be valuable when it comes to general or specific business advice, improving cash flow, and avoiding common industry challenges.
Hiring someone during the early stages of starting a business can be a crucial factor in whether or not you succeed. After all, if you have a more informed idea of your financial goals, you’ll make much better decisions in the short term that will avoid challenges further down the line.
Choosing A Legal Structure
Another process that all businesses need to go through is choosing a legal structure. This too is an important step for your business’s (and even your personal) financial security. If you choose the wrong structure, you could be personally liable for your business’s obligations.
An accountant can provide you with a better understanding of the different structures available. This will allow you to decide on which one will benefit you and your business the most while offsetting risks further down the line.
Following Tax Laws And Financial Regulations
Of course, accountants are well-equipped to follow tax laws and financial regulations. This will prevent you from falling into any legal trouble with your employees or the HMRC.
Some areas where an accountant can offer assistance are:
- Staying up to date with legislation changes.
- Filing legal and compliance documents for your business.
- Processing payroll and following the necessary payroll regulations.
- Ensuring your business’s status is updated in the government’s company register.
- Preparing statutory accounts.
- Making sure VAT and corporation tax is paid on-time and in full.
Managing Business Growth
There’s a lot to consider when growing a business from scratch. How many new employees do you need, and how many can you afford? How much office space is necessary? How will you manage your company’s accounts? An accountant is invaluable at times like these to help you make those important business decisions.
One of the biggest concerns to expect during times of growth is your company’s finances. Accountants can offer advice on the right path to take, who you should hire, decisions about purchasing or leasing office space, and much more. They’ll also help you save money during times of change by guiding you with financial decisions.
Remember, while fast growth is excellent, it can also be detrimental to your business if you aren’t ready for it. An experienced accountant will be able to provide insight on how to grow sustainably and capitalise on various growth opportunities when you’re able to.
Applying For A Business Loan
When you apply for a loan, a bank requires accurate information as to why they should lend you the amount you want. They’ll assess the risks and chances of getting that money back and will decide on an amount that they feel is appropriate.
An accountant can provide banks with the financial information and planning that is needed to support your request. They can also advise you on the different loans that are available and which ones are good options for your business.
Getting Audited
Getting audited can be extremely stressful and time-consuming. Having an experienced individual during this time can be very valuable and may help you avoid any trouble with the HMRC.
For a start, your accountant will be able to provide you with advice on how to operate during and after the auditing process.
A good accountant will also be able to offer tax investigation insurance. This insurance covers the fees that you’d usually pay during official enquiries, audits, reviews, and the investigation process. It can save you a lot of money and is something that’s worth looking out for.
Using Accounting Software
While you could always use accounting software yourself, accountants often have a better understanding of how to use it to benefit your company.
Accountants use software to gather documents more efficiently, calculate financial projections, monitor a company’s financial records and more.
These days, a lot of accountants opt to use cloud-based accounting software. This allows them to share information quickly, easily, and securely. Cloud-based software is able to create visual representations of various information to help you understand the data.
Selling Your Business
If you want to sell your business, it’s important to get everything in order. A competent accountant will be able to set things up in a way that allows you to get the most out of a sale.
They can gather all necessary documents for selling a business, and present business finances positively. When set up correctly, these documents will show off various selling points of your business and will maximise the profit from the sale.
In addition, your accountant will speak to potential buyers’ accountants regarding legal procedures during the due diligence process.
FAQs
Should you see an accountant before starting a business?
Seeing an accountant before you start a business can be a very good decision for your business’s future. They will be able to help you with things such as forecasting costs, organising cash flow, choosing the right legal structure, and carrying out various business activities.
What time of year is best to get an accountant?
Most companies hire accountants in January because that’s when they need their services the most. However, the time of year that you should hire an accountant may depend on your business’s situation.
For example, if you’ve decided to apply for a loan later in the year, an accountant will be able to help you improve your chances of getting that loan.
What is the first thing an accountant should do?
The first task an accountant should tackle depends on the stage your business is in. In most cases, the first step for accountants will be analysing and recording transactions.
This ensures you stay organised with financial records and makes future accounting processes more efficient. It also allows the accountant to be more accurate whilst sticking to legal guidelines.
Do I need an accountant as a sole trader?
While sole traders aren’t legally required to hire an accountant, it is still a good idea. Doing so will ensure that all your taxes are handled correctly and will help you avoid problems with the HMRC.
Final Thoughts
While accountants aren’t absolutely necessary, they can save small business owners a lot of money. In addition, they’ll help you to stay up to date with tax returns and tax legislation.
Even if you’re not in the financial position to hire an accountant full-time, they can still be of value to you. If you need help organising your financial information, they’re qualified to offer expert assistance. If you only need some advice about your business plan, they can set you up for the future.
It’s important to assess your business’s unique needs and decide where and when you may need an accountant.