Consider this when deciding if your business needs a finance professional

by QuickBooks UK

3 min read

As a small company with a tight budget and many demands on your cash flow, hiring an accountant might not be top of your priority list. It might be worth reconsidering that though: businesses that don’t stand to gain from retaining the services of a finance professional are rare indeed. Let’s have a look at what you should consider when making that decision.

The trade-off between cost and time

It’s easy to see an accountant or finance professional as an expense you could do without. Managing your accounts yourself is certainly an option, but take care to understand what’s involved in that. You need to be aware of all the regulatory requirements you face as a business and should understand the implications of getting it wrong.

Consider how much time it will take for you to manage your accounts during the year. Work out an average hourly rate for your time and total it up. Is that figure higher or lower than the cost of paying for an accountant? If you do decide handle accounts yourself, a solid accounting software package will take the sting out of it and make sure that, if you do later decide to hire some help, your records are in good shape.

What are the legal implications?

As a sole trader, your business will be legally required to register with HMRC as well as paying tax by self-assessment each year. Are you prepared to handle all of that yourself?

When you become a limited company, the amount of admin work required for HMRC increases significantly. Most importantly there’s a legal requirement to provide annual accounts, giving an accurate record of your finances. Again, it’s possible to do that yourself (and not use a finance professional), but it can be a time-consuming and confusing process if you’re not familiar with it.

A robust yet conservative business plan

Properly forecasting the growth of your business should give you a realistic idea of where you might be this time next year, allowing you to plan accordingly. Entrepreneurs have a natural tendency to be optimistic about growth, whereas an accountant can offer an impartial opinion on where your business is heading and help make sure you’ve factored in all of the possible stumbling blocks.

Cash flow advice for growth

Business growth brings with it all sorts of new challenges and opportunities. Hiring staff, finding bigger premises and identifying new suppliers are just some. All of these things impact on cash flow, the life blood of the business. Managing cash flow can be challenging. An accountant of finance professional can support you in an advisory capacity apprising you of the options available. You can consult them on purchasing decisions and they’ll tell you exactly what you can afford.

Tax & payroll advice

Tax law is a notoriously complex field. Knowing how much tax is payable, which costs may be exempt and understanding the different levels of VAT payable are just some of the challenges. Once you hire staff you have an obligation as an employer not only to pay them but also to make the correct tax and National Insurance contributions on their behalf. Furthermore, it’s possible to minimise the amount of tax you’re required to pay and a good accountant will know how to do that.

Am I ready to borrow?

Many businesses will need to acquire some sort of funding somewhere down the line. Before anyone lends you anything, though, you’ll have to convince them that the company is in good shape and that you’re likely to pay the money back.

An accountant of finance professional can guide you on the best funding options for your business and make sure that your records are all prepared for scrutiny by prospective creditors.

Ultimately, hiring an accountant will afford you two things: time and peace of mind, and it’s impossible to put a price on either. It allows you to keep your mind on building the business, safe in the knowledge that you’re in good hands.

There’s more helpful information on managing your company’s finances at our finances resource page.

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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