You might feel that your start up or small business is not big enough yet to hire an accountant or bookkeeper. Alternatively, you may feel that your affairs are relatively straightforward and you can do it yourself.
However, running a business is demanding enough without having to learn all of the accounting/tax rules, regulations and laws that you need to comply with. Doing it alone can be time consuming and costly if mistakes are made.
There are good reasons for hiring an accountant at different stages of your business growth, including for:
- business planning
- annual accounts and tax returns
- VAT registration and returns
- mortgage applications or lease negotiations
- general financial advice
- ceasing/selling your business.
In addition, your circumstances may have change suddenly and it may be necessary to discuss your plans to ensure continuity in your business.
An accountant can also further explain which business structure is right and help you choose the one that best suits your growth plans. Which structure you choose will define your responsibilities with respect to the paperwork to be filled in, the taxes you will have to manage and pay, and how you can personally take the profit generated from your business.
The main business structures include:
- Sole Trader – you are self-employed and liable for the debts of the business to the full extent of personal assets and can be made bankrupt.
- Partnership – the above mentioned liability also applies to partners, unless they have formed limited liability partnership.
- Limited Company – as the name suggests, the liability of the business is limited to the assets owned by the business, not you personally. However, lenders, landlords and some suppliers may require personal guarantees.
In order to ensure that you are filing your accounts and various tax returns in the correct formats and by the relevant deadlines (for example statutory accounts, annual returns, VAT, self-assessment, corporation tax, PAYE etc), it is essential that you set up a proper bookkeeping system.
You can save on accountancy fees by doing much of the bookkeeping by yourself and there are many low cost or inexpensive accounting systems to record your business transactions. These are designed to help you to keep a digital copy of your receipts, invoices, statements etc all in one place.
When you hire an accountant, they can help you choose the right system for your needs and guide you to producing the information that is required for HMRC, Companies House and banks/lenders. Many modern software systems mean that a better control of the state of the financial affairs of the business can be kept and you can know how your business is performing at the push of a button.
An accountant or qualified bookkeeper can also advise you on what you can claim in the way of expenses. Getting it wrong can be costly, and an accountant should make sure you claim all allowable costs and what HMRC call those that are wholly and exclusively for business.
If paperwork is not your strong point, most accountants offer bookkeeping services to take away the stress, but charges can vary considerably. If in doubt, ask for a quote for services.
Registering your business with HMRC
All businesses must register with HMRC so annual tax returns can be issued. Personal tax returns will be required for individuals (self-assessment) to pay income tax on the profits your business makes together with any applicable National Insurance. Companies are required to submit annual corporation tax returns and pay corporation tax on profits.
You must also register for VAT if you expect your takings to be more than the registration limit. The limit can change, so find out what it currently is here.
If you are taking on employees, a PAYE scheme must be set up and earnings advised to HMRC under the system of RTI (Real Time Information).
Companies must also put together statutory accounts to be filed with Companies House. There is also a requirement to file an annual return.
It can be daunting dealing with government paperwork and compliance when you run your own business. This is why so many small businesses hire an accountant when the first tax filing is due. Preparing your tax documents correctly could save you money by filing on time, paying the correct amount of tax, and avoiding penalties and interest.
An accountant can help you out at any stage of your business. Ask yourself whether you are on top of all the essential business tax issues. If the answer is no, then it may be worthwhile exploring the services of an accountant and/or bookkeeper.
We recommend that you use an accredited accountant. As a starting point, you can use the ICAEW’s directory.
Fourteen local businesses seem set for a great future. All fourteen have recently completed StriveLive, a two-month start-up incubator, with five businesses picking up awards and £2,500 in grant funding.
We are reaching out to you as valued businesses in York and North Yorkshire to publicise the consultation on the proposed York and North Yorkshire devolution deal.
29th November 2022FREE
With multiple dates in York and Harrogate, these fully funded workshops will help businesses involved in the tourism sector to plan for 2023, with Martin Evans of The Tourism Business. Benefit from dedicated group coaching with this fully funded tourism business booster for hospitality businesses in York & Harrogate.
29th November 20222:00 pm - 4:00 pmFREE
In this session, Ian Walker of Ian Walker & Co. Chartered Accountants will consider why having a tight grasp on your numbers and trading performance is important. Not only historic results but also on projection and budgets. He will detail how to compile such figures and how to interpret them, and also touch upon how good financials (numbers) leads to better decision making.
30th November 2022FREE
The Growth Hub is proud to be amongst the organisers of this year's expanded York Business Festival, with a week of events as part of a wider programme of activity throughout November. Read on to learn what will be available through the Growth Hub and other organisations.
We have recently hosted a programme of in-person seminars and other events, some of which were professionally recorded and can now be viewed on our website.
This workshop will provide guidance on cost based pricing, calculating your costs before deciding an appropriate margin, as well as covering market based pricing asking questions such as: What value do you add? What are you worth? How do you position yourself?
Getting into the right habits early on in your business journey will make life easier as the business grows and you find yourself under more time pressure. This workshop with business coach Gareth Allen will pose some useful questions to ask yourself, and give you some ideas to get the basics right.