Do I Need a Tax Accountant for My Small Business?

When you run your own small business, you don’t have a huge team to assist you. Instead, you’re probably working with just a few dedicated employees, or even flying solo. As a result, you have to take on many different roles.

You might simultaneously have to be responsible for both HR and marketing or take charge of product development while also managing logistics and supply chain, completing sales, and so on. This multi-tasking can be daunting, but as a determined and entrepreneurial small business owner, you can rise to the challenge in most cases.  

However, there may be some specialised tasks which you need to delegate to employees or outside professionals. For your small businesses, accounting and finance is an area which, if you don’t have prior experience and expertise, you may want to get some outside help with. 

Can I do my own accounting for my small business? 

If you have previous experience in accounting and managing business finances, then doing your own accounting for your small business may be an option for you. So if you feel confident differentiating between the benefits of bookkeeping systems or integrating your e-commerce platform with your cloud accounting system, then you’re in luck! 

You can choose to do the accounting for your own business by becoming a sole trader. Doing this means you have some reduced obligations compared to other companies. You won’t be required to file your accounts with Companies House every year, and there’s no need to worry about HMRC annual corporation tax statements either. Instead, you file a self-assessment tax return, which can be time-consuming but is fairly straightforward. 

However, you can only become a sole trader if you own and operate your business entirely as an individual. This status means that you and your business are a single entity rather than being separate, and as such you can keep 100% of your post-tax profit, but you’re also fully liable for any losses. 

What does a CPA do for a small business?  

A CPA (certified public accountant) is a licensed accounting professional who has a duty and commitment to protecting the public interest. They operate at many levels within finance and business and for many different kinds of clients. They must have a high level of qualification and be an accredited member of a professional body.  

CPAs can carry out a range of different tasks for the businesses they work for, with some of the most important relating to assurance and tax. Auditing and assurance services assess the financial situation of businesses and organisations, ensuring investors and stakeholders have accurate information to support their decision-making. CPAs also give businesses tax advice and help them with tax planning, ensuring that they’re compliant with HMRC regulations while also achieving maximum tax efficiency.  

A CPA can help your small business by: 

  • Managing your financial data, including by setting up cloud accounting software 
  • Creating and maintaining bookkeeping throughout the financial year 
  • Preparing your financial statements, which all companies have to file annually with Companies House 
  • Providing corporate tax advice and helping you to file your tax returns 
  • Setting up and managing business systems, such as those for payroll and invoices 
  • Advising you on important business and financial decisions such as budgets and significant expenditures, risk management and taking out loans 
  • Helping you ensure that you’re compliant with financial laws and regulations 

While it’s not a strict requirement for a small business to engage a CPA, their work can be a huge advantage at some crucial moments for your business. They give you and any stakeholders or investors’ confidence and clarity. 

What are the benefits of hiring an accountant for a small business?  

Save time 

Running a business is a busy job, and most entrepreneurs and small business owners have to play a lot of different roles. Being able to hand over accountancy and finance tasks to a professional accountant is a huge time saver, taking some of the tricky and potentially time-consuming tasks out of your hands. An accountant can also help you set up business systems which will save time and improve efficiency in the long run, freeing up your time and enabling you to focus on what you do best. 

Save money 

You might not realise that there are ways your small business could be saving money and achieving better value for money, but an accountant can spot these opportunities and advise you on how to streamline your business and reduce your outgoings. This might come through tax efficiency, or by cutting down on unnecessary expenditure and prioritising the investments and opportunities which bring the greatest returns. 

Experience and expertise 

Accountants don’t just crunch the numbers. When you engage an external accountant, they bring a wealth of knowledge, which comes from working with lots of different companies. This allows them to provide advice and insight which you might not have within your small business, and they can make valuable contributions and recommendations to enhance your business planning. 

Managing complex tasks 

While the idea of saving money by managing your business’ finances and accounts yourself might be appealing, this can be a more complicated undertaking than is immediately obvious. Without strong experience and knowledge of accounting practices, there is always the risk of making a mistake or missing something. And when it comes to financial management, relatively minor mistakes or decisions made on the basis of incomplete or inaccurate information can have significant ramifications. That’s why it’s often a good idea to get an expert in to look at some of the more complex matters. 

How much does it cost to hire an accountant?  

The costs of hiring an accountant will depend on the level of qualification and experience the particular accountant has. If an accountant is a CPA (certified public accountant), they fulfil the educational and professional experience criteria required by a professional body, and therefore they’re likely to charge more for their services than an accountant without this status.  

If you don’t think your business can afford to engage an accountant on a long-term basis, you could just bring them on board at particular times, for example when you’re preparing to file your financial statements. Since accountants often charge by the task rather than by the hour, it’s certainly possible to use their services in a specific and ad hoc way. Although as you grow your business, you may want to have someone on a more permanent basis to ensure that things are running smoothly all year round. 

Grow your business

When you take on too much and spread yourself too thin trying to manage your business as best you can, you do not always focus on the strategic plans for growing your business. This means that you may be missing out on potential business opportunities for growth. Hiring an accounting and advisory firm, allows you to tap in to various experts that can take a holistic view of your business, build a strong relationship with you and gain a deep understanding of your needs and corporate and personal goals.

An accounting firm can enable you to tap into valuable resources advising you on various services from accounting and audit matters to tax planning, payroll, corporate finance, and VAT matters. Your accountant or advisor can address key issues and risks to ensure that you are compliant and ensure that your processes and structures remain in line with your goals. Our experts at Rayner Essex can advise you throughout your journey and create value that will enhance your business and lead to growth.

Get in touch

If you have any questions, feel free to contact us and we will be happy to help or feel free to complete our contact form, for a free initial consultation.

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