Keeping the business running, focusing on growth, and managing finance at the same time can be overwhelming. It is stressful and time-consuming. There is a possibility of making costly mistakes and missing deadlines, deductions, and compliance. Also, it increases the complexity of accounting, financial forecasting, and calculating expenses. That’s why an accountant for small businesses plays a crucial role in the UK SMEs.
In this article, we’ll explore how an accountant plays a crucial role in sole proprietorships, partnerships, and limited companies. Also, we learn about the services offered by accountants and factors to consider when selecting the best one.
Why Small Businesses in the UK Need an Accountant?
Small business owners work as managers, marketers, HR, and controllers of finance. Handling the basics is okay, but UK tax accounting rules & methods become burdensome. So hiring an accountant is necessary for:
1. HMRC Compliance: Your accountant ensures the accuracy of preparing and submitting self-assessment tax & VAT returns within deadlines, in avoiding mistakes, deadlines & penalties. For this, you can stay updated about HMRC laws.
2. Time-saving: When your accountant manages and monitors your business accounting regularly, you won’t need to worry about your finances. You can better spend on focusing on business development.
3. Financial expertise: Professional accountants act as an economic partner of your business by assisting you with valuable insights into profitability, cash flow, and forecasting.
4. Tax efficiency: Accountants categorised the allowable expenses to maximise tax deductions. It ensures you pay the necessary amount rather than overpay for the highest tax efficiency.
5. Business growth support: Accountants do more than manage your business. They handle your bookkeeping, arrange funding, trigger strategy, and scale KPIs.
When Should You Hire an Accountant?
Not all small businesses need to hire a full-time accountant. It will depend on your needs, business size, and the types of complexity. It makes sense to hire an accountant for:
- If you are an individual or a solo trader, you need to hire a part-time or seasonal accountant for the self-assessment tax return during the tax season.
- For a partnership business, each partner needs to submit tax returns separately and needs an accountant.
- Limited companies need accountants for a business structure, legal procedures, accounts management, including bookkeeping, payroll, tax services, finance, etc.
- You have to register when your yearly VAT reaches the threshold. Accountants will assist you with registration, submit returns, and MTD compliance.
- UK tax laws are complex, strictly monitored by HMRC, and change every year. Even if you don’t owe any taxes, you still need to file your self-assessment returns when you receive a notice from HMRC. So, your accountant can ensure HMRC.
- When you handle payroll with PAYE to set pension schemes and manage salaries, go with an accountant.
What Services Do Accountants Offer for Small Businesses?
| Services | What’s Included |
| Bookkeeping | Accountants can manage your finances by recording transactions, payments, bank reconciliation, and monitoring your cash flow. So that you can stay up to date with your business finance. |
| Self-Assessment Tax Submission | Your yearly self-assessment submission will be prepared and submitted by your accountant to HMRC, so that you can avoid paying extra money for any errors. |
| Business Tax Filing | If you are a limited company, your tax filings will stay compliant with HMRC. Accountants will handle your company’s tax planning, preparation, filing, and reporting. |
| VAT Reporting and MTD Support | Whether your business is registered for VAT or not, accountants will handle your complete VAT process from planning to filing. They will do all the tasks using modern cloud-based software like QuickBooks, Xero, and FreshBooks for the best results. |
| Payroll Support | If you hire an accountant, you will get various payroll services. Like payroll processing, get payslip from PAYE, pension scheme, manage salaries, and many more. |
| Business Strategy | Whether your business is not succeeding or you are expecting more, an expert accountant will give you advice as per your needs. You will get easy solutions to your complicated problems. So you can take your business to the next level. |
| Company Setup Framework | Sole trader, partnership, or limited company accountants will help set up & transform your business and do expert planning to give you the best results. |
Benefits of Hiring a Small Business Accountant in the UK
In addition to managing finances, accountants offer you additional benefits. Such as:
- Decrease Stress: Take the extra workload so you can get more free time to stay compliant with your business.
- Maximize Profitability: Planning the expenses correctly, they remove unnecessary payments and save more money.
- Expert Choices: Even if your company is doing good strategic planning, you can always do better and achieve more.
- Investment Opportunities: While some businesses struggle with making the right investment decisions, businesses with accountants get the best benefits from their wise investment choices.
- Sustainable Development: Not only do accounts help you to grow your business at present, but they also give you tailored suggestions so that your business achieves long-term success.
How to Choose the Right Accountant for Your Small Business
Selecting the right accountant is crucial for building a long-term partnership. Here are some tips:
- Select certified accountants, members of ACCA, ICAEW, or CIMA.
- An accountant with more experience in the field is definitely the right choice.
- An accountant with digital software skills is always preferable.
- You need someone approachable who explains finances in plain English, not jargon.
- Accountants with flexible communication skills are likely to communicate better with you than others.
- Checking your accountant’s success history and rating is always worth it. This way, you can get the best accountant for your small business.
Do Small Businesses Need a Local Accountant?
Having a local accountant for your business is not mandatory. With cloud-based software, you can handle your finances from anywhere, anytime. But the interface, rules, and regulations can be complex, especially for businesses. If not followed correctly, they can cause more unwanted problems. That’s why many established or growing businesses prefer to have an account. By investing a little, they can save more money and time.
The choice is yours, but it’s always a wise decision to have a small business accountant.
Final Thoughts
Indeed, an excellent idea for a small business to recruit a professional accountant. Make prudent choices in your accountant and run your small business effectively. From tax savings to expanding growth, you will find a significant difference after hiring an expert for your growing company.
Frequently Asked Questions
How much do you need to pay for your sole trade accountant?
Your cost will depend on what you need. The average charge of a sole trader is from £25 – £70 per month.
How can an accountant help to grow a business?
An accountant tracks income & expenses, simplifying accounting by integrating A2X software, analysing financial insights, and making expansion plans for future growth.
What type of accountant is best for a small business?
A professional accountant, like a certified accountant by CPA, ACCA, and CTA, is the best option for a small business.
Is your accountant ensuring HMRC?
Definitely, an expert tax advisor can ensure HMRC by preparing & submitting tax returns accurately within the deadlines, avoiding costly errors and penalties.
