Accounting is one of those professions where there are lots of different ways to do it. You can either go down the route of outsourcing everything or trying to keep up with the books yourself. But what if you don’t want to spend hours each month doing accounting tasks like invoicing clients or preparing financial statements? If you’re running a small business, an accountant can be invaluable. They can set up the legal structure of your company and advise you on how best to access finance.
They can also offer practical support around managing your day-to-day records and accounts. However, it’s important to remember that some aspects of bookkeeping can be outsourced. For example, you might find a good cloud-based accounting system that allows you to upload transactions into the software automatically. Or you could outsource payroll. In both cases, you’d still need an accountant to ensure the accuracy of the data being entered and processed. And while accountancy skills aren’t always necessary, having someone with experience of working within the industry will save you time and money.
When should you manage your own finances?
You are a sole trader, and you want to know whether you need to do anything special about managing your accounts. You may already have some experience of doing it yourself, but you might find it easier to use our guide to see what information you need to provide to Companies House. We explain how to prepare a self assessment tax return, and we tell you where to go for help.
2. When you have a limited amount of transactions, you will incur fewer fees.
When you have a small volume of transactions it makes sense to automate some processes. You don’t want to spend too much of your time doing manual work. If you have multiple employees working on the same tasks, it becomes even harder to keep track of everything. In such cases, automation helps you save time and money.
If you have a few customers, you might use QuickBooks Online to generate invoices automatically. But what about larger companies? Do they really need to do it manually?
There are several online tools available to help businesses with invoice generation. For example, you could use Freshbooks, Xero, Wave, Zoho Books or others. All of them offer different features and integrations.
Invoicing systems like Freshbooks allow you to send out invoices via email or SMS. They also provide reports on how often clients pay you. Some of them even let you set up recurring payments.
3. For simple record keeping
For simple record keeping, categorization into predefined categories makes things easy. You don’t have to spend money on accounting programs or hiring someone who knows how to do it. But there are many free tools available.
4. If you use cloud accounting software
Cloud accounting software allows you to manage your finances without hiring an accountant. There are many different ways you can set it up, including keeping it separate from your personal finances. Here are some tips for setting it up correctly.
When should you hire a certified public accountant?
An accountant can help you decide if incorporating your business makes sense. There are pros and cons to incorporating versus operating as a sole proprietorship. Here are some things to think about:
• You may benefit from having separate legal entities within your business structure. This could include different types of companies, such as corporations, partnerships, LLCs, etc.
• If you’re planning to raise capital, it may be easier to do so via incorporation rather than forming a partnership.
• Incorporating provides you with greater flexibility in terms of how much money you can take out of the business each month, as well as what taxes you’ll owe.
• As long as you don’t plan to file personal tax returns, incorporating doesn’t require you to hire an accountant.
• Incorporating can give you access to additional benefits, including employee stock options, profit sharing plans, health insurance, paid vacations, sick days, and even free legal advice.
• Depending on where you live, there might be state laws governing the formation of businesses, and those rules vary widely. For example, most states allow individuals to form limited liability companies (LLCs), while others require corporations.
2. For official accounts and tax filings
There are many different ways to prepare your UK Limited Company’s accounts. You can do it yourself, hire a bookkeeper or use an online software package such as Xero. However, there are some things you must consider before doing so.
An accountant can help you properly classify your expenses and ensure you’re compliant with accounting standards. They’ll look at everything from how much profit you declare and whether any tax reliefs are applicable to the way you keep your books.
A good accountant will take into account all aspects of running a small business, including how much profits should be declared, whether tax reliefs apply and whether you want to go paperless.
3. For cash flow forecasting
A cashflow forecast helps you understand where your money goes. You can use it to see how much money you’re spending and what you’ll spend it on next month.
You can make a simple cashflow forecast yourself using Excel. But if you want to do it properly, you need to know about financial ratios. We’ve got a list of the most useful ones here.
If you don’t know what those mean, we’ve put together some definitions. If you’d like to learn more about them, check out our guide to financial ratios.
4. To get access to finance
Accounting firm KPMG advises businesses on how much money they should raise and what sort loan they should apply for.
Cloud accounting software makes it easier to manage your accounts. An accountant can help you get finance for your business. If you want to secure finance for your business, make sure you are aware of how to manage your cashflow. You need to ensure that your business is protected against financial risks.
Frequently Asked Questions
How much assistance can I anticipate from an accountant?
The level of support you can actually expect from your accountant depends on whom you choose. Some accountants offer unlimited support, while others charge extra fees for each query. If you are looking for quick responses, it might be worth paying a little more for an accountant who offers unlimited support. But if you want someone who will take the time to answer every question you ask, you could save money by choosing a cheaper accountant.
Can I change my accountant?
If you are changing accountants, it might seem like a simple process. But there are some things you need to consider before making the big decision. Here are three questions to ask yourself about switching accountants:
1. Can I switch?
You can always switch accountants, even during the middle of a financial year. However, most firms charge extra fees for moving clients around mid-year. If you want to make sure you don’t incur any penalties, check whether your current accountant charges hourly rates or fixed monthly fees.
2. What happens to my records?
Your old accountant will keep all of your documents and files for a set period – usually six months. After that, he’ll either destroy them or return them to you. He won’t be able to access your accounts without permission.
3. Will I have to pay my previous accountant?
Most accountants charge a fee to transfer your data to the new firm. Some firms charge a one-off fee, while others charge per month. Make sure you know what your costs will be before deciding to switch.