Do I Need to Hire an Accountant?

Individuals are not obligated by law to keep financial books and records (companies are), but failing to do so can be an expensive financial and tax blunder.

You may fail to pay a bill, causing your credit score to suffer. You may have no idea how to divide your money between saving and investing. Alternatively, you may ignore expenses that could result in tax savings. So, it makes sense to keep track of your finances.

Here in this article, we will help you understand what an accountant is, what they do if tradespeople need an accountant, the pros and cons of hiring an accountant and how to hire one. So, if you are unsure whether you need an accountant or not, this article will provide all the information you need!

What is an Accountant?

An accountant is a person who oversees maintaining and interpreting financial records. Most accountants oversee a variety of financial activities, whether for individual clients or for bigger enterprises and organisations that hire them.

What Does an Accountant Do?

Accountants utilise data and financial statements to create a picture of a company's, organisation's, or individual's financial health. Accountants examine earnings and losses using their arithmetic, accounting, law, and financial expertise. They give investors and business owners the information they need to understand how a firm performs over time. This data is used to create a company's report as well as legal filing reports.

Some accountants will determine payroll needs, maintain payroll data, and prepare and handle monthly payrolls to verify that the money earned corresponds to the client's employment. To complete audits, interact with internal and external auditors. Staff should be informed on billing invoices and accounting policies so that they can pay others, vendors, and clients.

They also prepare profit and loss statements, monthly closing, and cost accounting reports, analyse revenue and expenditure trends, and recommend appropriate budget levels to the client, as well as ensure expenditure control and analyse financial information to prepare entries to accounts, such as general ledger accounts, and documenting business transactions.

Do Tradespeople Need an Accountant?

When a tradesperson goes self-employed, they must decide whether to handle business bookkeeping, expenditure management, tax computations, and tax payments alone. Or do you hire an accountant to do it for you?

While the sole proprietorship, as it's often known, is widely regarded as the easiest business form to set up and operate, these individuals must still maintain track of their accounts and satisfy their tax obligations as self-employed workers.

Here we will discuss whether tradespeople need an accountant to keep on top of their bills and tax. So, if you are newly self-employed and unsure how or where to start with needing an accountant, this section of the article will help.

Contractors and small business owners will find that a larger pay package entails a greater obligation to manage their finances. If you don't have good procedures and processes in place, it can be a pain, but it is required. You don't want to irritate the tax collector.

Not everyone is a good fit for an accountant. You might save money by doing it in-house if you're experienced with accounting software or have someone else to help with admin.

If a tradesperson wants to start their firm or work as an independent contractor, an accountant can help them get off to a good start. You don't want to get started and then realise you need professional assistance.

They can hire an accountant to assist them with tasks such as:

• Creating a Business
• Advice on starting a business
• Requests for loans
• Observance of tax laws

If you're starting a business on your own, don't wait until the end of the year to hire an accountant.

Qualified accountants are masters at sweating the small details while also striving to obtain you all the rebates and write-offs you're entitled to. The best part is that everything is legal. It's incredible what a skilled accountant can accomplish! Keeping the taxman and your accountant happy has never been easier, thanks to the ability to integrate accounting platforms.

Accountants are capable of far more than simple addition, subtraction, multiplication, and division. They can assist you in developing and implementing plans, as well as acting as a business coach. Find the appropriate accountant, and you'll have a trusted advisor to help you through everything.

However, when you're self-employed, you don't have to hire an accountant. You can prepare your tax returns and other documents. If your business is simple and uncomplicated, executing this annual activity isn't too difficult if you remain on top of your paperwork and invoicing.

Therefore, it is not a legal requirement to hire an accountant. However, it is recommended as it takes the stress out of your finances.

The Pros and Cons of Hiring an Accountant

Here, we will go over the advantages and disadvantages when hiring an accountant. So, if you are unsure of what direction to go in, do it yourself or hire an accountant, then this section of the article is for you.

Hiring a dependable and professional accountant has numerous benefits for your company. Accounting businesses provide a wide range of services, including business planning, bookkeeping, accounting, and tax preparation.

Pros

Here are the pros of hiring an accountant:

Bookkeeping

Bookkeepers who are accountants are exceptional. They have a keen eye for revenue streams unique to your sector and can help you maintain a strong financial structure.

Accountants are designed to look over your day-to-day financial activity. These small jobs can add up quickly if you don't pay attention, from submitting a payable purchase order invoice to producing bank deposit statements. Failure to provide all transaction data daily might throw your recordkeeping systems into disarray.

Even if you believe you have the time and expertise to manage your bookkeeping, you'll still require the services of a bookkeeper to create the foundation for your accounting system.

Many firms hire a part-time bookkeeper to help them set up their accounting systems and stay on top of transactions until they achieve stable development. Once this level of growth is achieved, a company should hire full-time accounting help.

Minimising Business Expenses

Due to a lack of financial management skills, business owners subject themselves to unjustified financial expenses. As a result, many enterprises fail before they even get off the ground.

Although employing a professional accountant can be costly at times, it will pay you in the long term. This is because accountants with a keen financial sense are adept at spotting money leaks in a company.

Accountants can help you save money in a variety of ways, including:

• They can offer positive cash flow by bringing in more money and cutting expenses
• Remove inaccuracies from balance sheets and cash flow statements to provide stringent financial controls
• Using financial software to its full potential
• Keeping track of your year-end finances on time

Reducing Tax Liability

Accountants can assist you in drafting your estate tax filings or annual tax returns by providing tax advice. They oversee payroll, budgeting, and auditing financial data, financial statements, and company strategies. To help reduce the tax burden, an accountant proposes tax-saving methods and advocates forming an individual retirement account.

Taxation is a complicated subject, and almost no firms are aware of tax regulations, expenditures, or reporting requirements. An account can provide you with a more detailed picture of your tax situation.

They consider everything from personal tax returns to concluding annual contracts and communication with HM Revenue and Customs and other organisations. They also go above and above to ensure that your payroll is running well and are skilled at spotting financial issues that could hurt your company.

Time-Saving

You're always on the clock as a business owner. Fortunately, hiring an accountant frees you up to focus on other important aspects of your organisation.

Meeting your tax deadline isn't a problem for you as an employee. As a freelancer, you're also aware that you have a quarterly tax period. When it comes to running a business, though, deadlines can pile up significantly. You must keep track of customer deadlines, IRS compliance dates, and tax schedules to avoid getting into trouble.

Are you certain that you can devote this much time and effort to managing your finances? If not, an account is well worth the money–it's a haven for your company.

Investment Advice

Many accountants are also financial planners with extensive experience, and they can assist you in allocating your funds to the most appropriate investments. Hiring an accountant who is also a registered financial advisor is a win-win situation for you and your company.

Expert investment advice is available to assist you in developing a good level of wealth and financial management plans. You'll also benefit from an accountant's risk management, estate planning, and retirement income techniques.

However, if you wish to engage a separate accountant and financial advisor, that is entirely up to you. The key thing is that you're seeking advice from specialists.

Cons

Here are the cons of hiring an accountant:

Extra Expenses

We understand that money is a major concern for most organisations, particularly start-ups, which must stretch every dollar while working hard to gain traction. If someone in your company has financial knowledge and expertise, they may be able to take on the responsibility of an outside accounting firm.

Even though this isn't a permanent position, relying on in-house expertise in the short term may be an excellent approach to save money until you're ready to hire committed pros.

Clients typically use accounting companies only when it is necessary.

Underuse of Own Skills

You might already have someone on staff who has all the essential skills to handle the accounting duties. If that person already has a job, it may be possible for them to carry on their regular tasks along with accounting as part of their usual workweek.

If the person in issue keeps their expertise up to date, this can save the company a lot of money.

Using an in-house employee also eliminates the necessity for due diligence when hiring an accounting firm. It takes time to evaluate the appropriate expenses, services, locations, and credentials. Keep in mind that anyone can call themselves an accountant or tax adviser, even if they aren't certified by the ICAS, ACCA, or ICAW.

Mistakes Can Still Be Made

No matter who you hire as an accountant, they will be human. They may still make errors. It's usually not a big concern if they make a minor mistake that can be fixed quickly.

However, it has the potential to be disastrous. For instance, let's say they're entering your company's expenses into the software, and they overlook a significant expense. If you don't catch this, you could end up paying more in taxes since you've lost a key deduction.

However, when you pay an accountant, it is to take the weight off your shoulders, so it can feel like a waste of money if the calculating isn't done correctly.

Lack of Communication

You will save time by delegating your business accounting to another person, but you must remain hands-on. Even if the accountant you hire is doing the work, you should still check things regularly to ensure that everything is operating smoothly.

You and the accountant should work together, and each of you should play an active role.

Examine where your business is now and what you require; this can help you choose whether you need the services of an accountant. It's usually a good idea to bring in another pair of eyes if you don't want to gaze at numbers or if you'd prefer to have someone else look in the direction you need to walk in next.

However, if you have the necessary skills and time, you may always purchase accounting software and do it yourself. You are the only one who knows what is best for you.

Must Disclose Personal Information

Almost always, your accountant will be someone with whom you have no personal relationships. As a result, the financial records will be accessible to strangers.

On the other hand, accountants are usually safe because they are not legally allowed to share the documents. Some accountants use encrypted cloud storage solutions, such as Dropbox, to keep their records safe from unauthorised users.

How Much Does It Cost to Hire an Accountant?

Hiring an accountant seems like it makes your life easier as a business owner; however, charges do apply when hiring an accountant.

So, how much does it cost to hire an accountant?

Here we will show you the average cost in the UK to hire an accountant.

The average cost of accountant services has decreased as the number of accountants has expanded, and online bookkeeping has become a way of life for many entrepreneurs. Accountant fees vary, but when it comes to the average cost of an accountant for a small business, the fees you pay will be partially or entirely offset by the taxes you will save.

They don't usually charge by the hour, but rather for the job they're doing for you. The amount they charge you is determined by the sort of service you require. Most of them don't charge a sign-up cost, but they will charge you a monthly fee.

When determining the pricing of a service, an accountant will consider the following factors:

• The amount of money your company makes per year
• How well-organised are your books already?
• The size of your company – the number of employees and the scope of its operations. Self-employed people, for example, will pay less for an accountant than a firm with multiple staff. Keep in mind that the smaller a company is, the fewer transactions it must monitor, resulting in cheaper accounting costs

The cost of a tax return accountant is normally a one-time fee for the year, ranging from £150 to £250. However, if your income is variable, this cost may be higher. This is because the accountant will have to document more complicated tax returns, resulting in a higher service price.

If you're a contractor or freelancer, monthly rates can range from £50 to £150. This may include your accounts, VAT filing, Self-Assessment filing, bookkeeping, payroll, end-of-year submissions, and filing with Companies House (if a limited company).

Fees for a sole trader or someone in an unincorporated business partnership (that is, a limited company) can range from £30 to £130 per month, and they'll cover all the services outlined above for contractors except filing with Companies House (sole traders and partnerships do not send their accounts to Companies House).

The amount you pay as a landlord is determined by the number of properties you own. From a tax standpoint, accounting for landlords, especially those with many properties, is complicated, so expect to pay extra. Expect to pay £100-£175 per month for one property, rising to £175 per month for each additional property after that, including your taxation (and corporate taxation if your properties are owned in a limited company).

Limited corporations (and their directors) pay various fees that are paid monthly over a year, like the examples above.

Self-Assessment, business account preparation and submission, Companies House submission, VAT reports, payroll (for employees), bookkeeping, and other services may be included in the fees. Depending on the size and complexity of their enterprises, monthly fees for limited corporations can range from £100 to well over £1,000.

How to Hire a Tradesperson Accountant

If you are looking to hire an accountant but unsure of where to start, we will help you understand the process.

You may be wondering whether you need an accountant or where to start. If this is the case, take a look at this step-by-step guide:

Step 1

When hiring an accountant, you first need to determine determining how much financial assistance you need. You should also examine your financial records and cash flow to assess your current situation.

You'll almost certainly need a full-time accountant if you're facing major cash flow issues. A part-time accountant who specialises in taxes is a smart choice if you're in good financial shape and mostly need help preparing for tax season.

You should also keep track of any industry-related issues. If you're new to a sector and having trouble making your company model work, an accountant with appropriate industry experience could be able to assist you.

Step 2

Once you've completed the first stage, you'll probably know whether you need a full-time accountant or part-time assistance. Many businesses can get by with a part-time accountant.

You may only be able to afford a part-time accountant depending on your financial condition. This is still preferable to having no accountant at all.

Part-time accountants usually work on an hourly basis, allowing you to use their services as needed. (For instance, during tax season.) A full-time accountant is a better choice if you have an ongoing issue or know you'll need an accountant for a long time, such as during a business revamp or large scale.

Step 3

A firm may not be the ideal option if you only need one accounting specialist for your company. However, for people who require accounting services but do not prefer a certain individual, an accounting firm is a viable option.

Accounting firms are exactly what they sound like: businesses with a team of accountants that can handle a wide range of financial concerns. Accounting firms provide a service like that of a full-time accountant in that they provide as much assistance as you require.

They do, however, come with the flexibility that a part-time accountant offers. In other words, you can pay for the services as you go, with the caveat that a retainer fee may apply.

Step 4

When selecting an accountant, make sure you get someone with experience in the size and area of business that you operate in. If you're a tradesperson, it's pointless to hire an accountant who specialises in pubs.

Similarly, if your company is small, don't hire an accountant who specialises in huge companies; your demands will be very different. As a result, look for an accountant that knows how to organise your revenue.

Step 5

Decide how you'll evaluate your accountant's performance and ensure you're both on the same page. Then arrange for them to meet with any department heads or staff with whom they will be working.

This is also an excellent moment to establish any communication guidelines or preferences.

It's also critical to inform your accountant about any reporting choices. The accountant will most likely know best practices, but if there's a specific report you're looking for, now is the time to request it.

Conclusion

Overall, hiring an accountant does have its advantages and disadvantages. However, accountants are skilled professionals who will make sure all your money is on track and organise your tax bills to make sure everything is in line.

Hiring an accountant does include extra expenses to your business/work. The extra cost may be worthwhile to ensure your income is calculated, so hiring an accountant is a sensible option.

Accountants are capable of far more than simple addition, subtraction, multiplication, and division. They can assist you in developing and implementing plans, as well as acting as a business coach. When you choose the appropriate accountant, you'll have a trusted advisor who can help you navigate the financial terrain of your trade firm.

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