Do I Need An Accountant?

What types of business need an accountant?

Do I Need An Accountant?

If you’re asking this question, the odds are that you are a freelancer or small business owner with a few other engagements. Your time is short, and you need to get many things done quickly.

Unfortunately, your finances CAN NOT be rushed like some other tasks. Managing finances as a small business owner is tricky because of complicated UK tax regulations and the sheer skill you need to do it properly. But when you combine that with your limited time and accounting expertise, you may have a situation on your hands.

The solution as a UK based sole trader or owner of a limited company is to hire an accountant. Not just because they are professionals, but a myriad of other reasons come into play as well. 

To be clear, there are no legal requirements for small businesses to hire an accountant – you can manage your finances yourself if you want to.

However, you’ll soon see that hiring a local accountant for small business is one of the best decisions a small business owner can make.

Why hire an accountant?

1. Set up your company the right way

As any business owner will tell you, those early days can be a minefield. Choosing and setting up invoicing software, registering for the correct tax (do you register for VAT or not?) and even factors such as budgeting and planning.

This is exactly where a good accountant for small businesses will earn their keep. Besides just sorting out the papers, they can advise you on your new tax liability and talk with the good people over at HMRC to register you for the necessary taxes – corporate tax, VAT, and even setup and manage payroll, if you employ staff.

How long do you think it will take if you did all that yourself? That’s valuable time (and effort) you could spend on the thing you do best… Your business!

2. Avoid hefty fines

As a registered company, you have to file annual accounts with HMRC and Companies House. In some instances, failure to do so attracts a little more than fines; some businesses can face legal action.

But that’s not something you should need to worry about. An accountant for small business ensures that doesn’t happen. They will collate all the paperwork, submit them on time and keep you on the right side of the law. You don’t have to worry about changes to tax regulations, tax relief thresholds, what expenses you’re entitled to (or not) and the proper way to declare investments or other assets. 

Take a look at HMRC’s site for more information on penalties and fines.

3. Process payroll without a hitch 

Payroll processing is not just time-consuming; it requires focus, attention to detail and adherence to legal processes. And if you get payroll wrong for your staff it can be an absolute headache.

No-one likes to be paid late, and people quickly notice if they’ve been underpaid. Likewise being overpaid can cause more headaches down the line when refunds need to be made. 

Add into the mix NI contributions, tax codes, tax thresholds and things like student loan repayments and you’ll see why payroll processing is not a job you can quickly do in an afternoon.

Many small businesses will hire a part time accountant just to process their payroll at the end of the month. Outsourcing payroll to a local bookkeeper means you don’t have to hire an in-house accountant.

4. Keep clean and accurate books

Bookkeeping is quite different from payroll processing, but it’s just as necessary. You have to log every receipt, invoice and evidence of payment, which can feel like more than a chore. 

It’s worse at the end of the year if HMRC seeks you out. You do NOT want to be in the spotlight because of some missing paperwork. 

If the idea of reconciling bank transactions, entering invoices and receipts, and completing claim forms sounds like your idea of a wasted day, that’s where an accountant can save your time (and your sanity).

Keeping your finances clean and tidy all year round is a full time job (a bit like house cleaning), but one that really helps come that spring cleaning in April. And as we all pay tax, an accountant for freelancers, sole traders and small limited companies can make a huge difference to your stress levels. 

5. Receive expert advice on cash flow management 

It’s often said that cash flow is the lifeblood of any business. So you need to keep a close eye on how much money you have to spend, or you can find yourself out of business. 

But accountants don’t just help you keep accurate records of your cash flow; they also understand where your money should go based on your industry and other nuances. Plus, they understand the pillars of financial success and can give you advice on subjects like loans, funding, and even wise investments.

In the UK there are also often options for tax relief, as we saw during the Covid-19 pandemic lockdowns. 

6. Grow your business

As a small business owner, there’s really only one person who can grow your business, and that’s you. Cashflow, invoicing and timely payment of tax and expenses are all crucial parts of your business growth.

Financial management is one of those factors that can’t be underestimated in the overall success of a business. In fact many small business owners will spend all their time, efforts and money on securing and growing their business. But then at the end of the year, they get tripped up by the mess their accounts are in, plus some slightly horrifying tax bills. 

By delegating accounting tasks, you have more time to focus on client acquisition, marketing and customer service. You know, the things that actually help to grow your business.

7. Save money

Hiring an accountant for a small business can also help you save and keep more money. For example, an accountant can audit your accounts and see where you could save, identify applicable tax rebates or opportunities to offset your tax.

Did you know that there are many different tax deductions for small businesses in the UK? These range from vehicle hire for business purposes to unsettled invoices. Part of the role of an accountant for small business is identifying these opportunities so you can run your business more efficiently – and get what you’re owed from the tax man.

The bottom line

When thinking of hiring an accountant for a small business, many people ask themselves, “Could I do this myself?”

But the question really is “SHOULD I do this myself?” Or going further, you should also be asking, “How much stress or potential expense could I save myself by hiring an accountant?”

So in summary, if you’re looking to:

  • Free up time 
  • Avoid stress
  • Focus on things that matter and grow your business
  • Avoid fines and hassle with HMRC

Yes, you should hire an accountant for your small business.

Setting up as a sole trader or freelancer in the UK?

Running a limited company?Get in touch for a FREE no obligation chat about your business. Contact Henderson & Co Accountants on 028 3044 1333 or email on