Accounting services for SMEs – how do you decide what your business needs?

By QuickBooks UK

2 min read

Which accounting services does your SME need? 

When you first start your own business, the accounting services workload you need to manage isn’t always clear until you’ve been up and running for a period of time. Budgets are usually tight and entrepreneurs can be tempted to think they can manage it themselves.

Anyone who has been through this journey though will agree that the sooner you engage a qualified accountant, the more time and money they will save you in the long run. Even if you’re on a tight budget, accounting services advice should be seen as an investment in the financial health of your business.

An accountant’s advice can help clarify:

  • Your financial goals
  • Important financial deadlines
  • Your responsibilities are to HMRC, Companies House etc.
  • Which accounting services tasks you should be able to do yourself
  • The accounting services processes you need to put in place.

You need to be honest with yourself. Do you have a head for figures? Are you prepared to spend your evenings completing a nearly overdue VAT return? Are you willing to invest your time in keeping up to date with relevant tax laws? You need to decide which tasks you are willing to spend the time and effort doing yourself, versus where you need accounting expertise.

Which services do you need?

This will depend on what stage your business is at, the complexity of your financial activity and how much you want to or can afford to spend a month. If you’re a freelance designer working part time from home then it’s fairly straightforward to track your invoices and payments, and complete your tax return online. It starts to get a lot more complicated when you add in employees, premises, assets and income from different sources. These are the areas you could consider using an accountant for:

  • Company formation – should you be self-employed or a limited company? You need to understand the tax implications and the different financial responsibilities involved
  • VAT – advice on whether you need to register for VAT and completing quarterly VAT returns
  • Bookkeeping – it may be an expensive use of their time but they can do your transactional bookkeeping – issuing invoices, tracking accounts payable and receivable, and monthly reconciliation
  • Financial advice – using the reports produced by your (or their) accounting software, they can analyse your cash flow, sales forecasts, outstanding invoices, profit margins etc. to pick up on any areas of concern.
  • Payroll – including how you should pay yourself and how much, ensuring employees are paid on time, taxed at the right level and PAYE and NIC payments made to HMRC
  • Tax returns – advice on tax relief, tax credits, calculating how much income tax or corporation tax you owe and the preparation and filing of returns
  • Statutory accounts – compiling and submitting full or abbreviated accounts on time
  • Dealing with Companies House – including registering the company, submitting your annual statutory accounts and confirmation statement
  • Expenses – up-to-date advice on allowable expenses including what you can claim if you work from home, and what can be offset against your tax bill
  • Business finance – understanding the options and putting the application together.

Once you’ve decided which services you need, get a few different written quotes before deciding which one to go with. A good accountant will want to save you money in the long run, so if you’re worried about costs, ask them to help you with the basics in the first year so you understand what’s involved and then you can do it yourself going forward.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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