Do you need a bookkeeper or an accountant?
Posted on 7th February 2019 at 10:05
Whether you are self-employed, a sole trader or running a small limited company, you don’t have to work with a bookkeeper or an accountant.
The important question you need to ask yourself - ‘Is it a good use of my time to do my own accounts, self-assessment tax return and VAT returns?’
As most small business owners know, our time is precious. We need to decide what we need to prioritise.
When it comes to keeping our accounts up to date, the answer is usually easy. Ask a qualified professional to do it.
Now you have to decide who you should ask.
Your bookkeeper is your day-to-day contact, keeping all your receipts and records properly organised for you.
An accountant can do this for you too, but they add most value to your business by:
• giving advice about how to minimise your tax liabilities
• helping you to optimise the profitability of your business
• explaining your options about dividends
• advising you about strategic financial planning.
Bookkeepers and accountants will probably charge an hourly rate, which they might average out over the year, so that you pay a monthly fee.
To help you make your choice you can ask them to give hourly rates for each type of service they offer, as well as a quotation for the services you want.
Here are a few more things you might like to think about.
How do up-to-date accounts help my business?
Income and expenditure – Managing your costs and sales keeps your business going. You need accurate figures so that you know how things are going on a weekly, monthly and quarterly basis.
You can’t afford to wait until the end of the year to find out the you’ve spent more than you’ve earned.
You will also need accurate figures for your tax returns, salary, National Insurance contributions and VAT.
By making sure your accounts are regularly updated it will be much easier (and cheaper) for your accountant to complete your year-end report and tax return.
A finance system - A small investment in Cloud-based computer software such as Xero can make your life so much easier too. A bookkeeper or accountant will already use some type of software to prepare accounts.
A bookkeeper can add your invoices and receipts regularly for you to keep everything up-to-date, ready for your year-end returns.
If you are registered for VAT, your bookkeeper can prepare and submit your quarterly online returns for you. Making Tax Digital for VAT means that accounts for VAT-registered businesses can only be submitted using ‘compatible software’ like Xero after March 2019.
A bookkeeper can create reports to tell you about the things you really want to know about your business operations. An accountant can advise you about the things that you might want to include in your reports.
Budgets – To avoid any nasty surprises, it’s a good idea to put aside 25 to 30% of all your income to cover your tax liabilities. If you are registered for VAT, you also need to make sure that you will have enough money to cover your quarterly VAT payments. Your bookkeeper can make sure that everything is properly allocated so that you have the right amount in reserve. This can be a great weight off your shoulders.
Expenses – Making sure you claim all of your relevant business expenses will help you to reduce your tax bill. Your bookkeeper will help you to keep track of allowable expenses.
Please get in touch. We will be happy to explain our services and fees to you.
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