Do I need an Accountant?

It is easy to think you can do without a professional service if you have a degree of competency in the skill which they provide. After all, why pay for a plumber when you could do it yourself after a trip to a hardware store? But there is a reason why the professions are still here and are resilient to any fluctuation in the economy. Accountants, like lawyers and skilled handymen, are always in demand. So, do you actually need an accountant? The answer is, more likely than not to be, “yes”.

This blog in recent weeks has been highlighting the greater degree with which people are managing their own books with the mass adoption of IT solutions, and has also examined the decline in bookkeeping as a value-added service. And while it is true that the client can save themselves money by doing some accountancy functions themselves, they (unless they are a qualified accountant) will always inevitably require some professional financial advice when running a business, whether that is as a sole trader or a limited company.

Given the complexities of most western governments’ tax systems, it would be a remarkable individual who could keep on top of all the tax obligations and opt outs that get passed into law each year. This is one of the most pressing reasons why it is always prudent to consult with an accountant over your tax affairs; they are very easy to get wrong, and getting your tax affairs wrong can be very stressful, costly and, potentially, legally problematic.

But consulting an accountant will not just ensure that your business affairs are compliant with tax laws; a good accountant will also advise you on how to legally structure your business affairs to minimise your tax burden and will also monitor the appropriate tax systems for any change that could either disadvantage your business or provide it with an opportunity.

Also, while many accountancy functions can now be undertaken directly by an accountant’s client, it is always good to have that second pair of eyes who can professionally ensure that your books are in order. True, you may no longer want or need to pay your accountant to do your bookkeeping for you, but you may want them to check that you have been doing it correctly by yourself.

Indeed, the vast improvements and widespread adoption of online communications technology means that it has never been easier for an accountant and their client to share information and review the same set of books simultaneously (through Cloud computing), whether or not they are actually in the same room.

Because an increasing number of people are now self-sufficient with bookkeeping, accountants can dedicate more time to other high-end services that they offer clients. Accountants are not just there for VAT returns, basic accounting and bookkeeping; there are lots of other services that an accountant or an accountancy firm can provide for their clients.

For example, if you are an expanding company and are looking to hire someone, an accountant can assist with managing their payments through payroll processes as well as ensure that they are probably registered with HMRC. In addition, accountants can also help with setting up a workplace pension scheme and manage pension payments (either for yourself or your staff).

A good accountant also acts as a good sounding board for professional aspirations and intentions.Do you have a business plan? An accountant can constructively interrogate it for you, to ensure that the sums and the financial logic within it add up and make sense. If you also want to monitor your monthly cash flow and project forecasted earnings, an accountant can be brought in to help with that.

It is therefore wrong to view your accountant just as the medium between yourself and HMRC. Accountants can help you to deal and communicate with a wide range of bodies and organisations, through which you may want to make applications for funding or place tenders for contracts.

When choosing an accountant or accountancy firm, you may want to do so according to specialisation or sector. If you are intending to work within a particular industry or business-type, the chances are that there are accountants who specialise in dealing with businesses in that field.

Although any good accountant will be able to cover all the basics that you require to run a business, a specialist will be able to advise from an experienced and knowledgeable perspective, often making suggestions that your ‘average’ accountant would not make. Such an accountant will also be able to offer some professional comparisons on how other businesses in your field are constituted and how they are performing.

However, the true value of an accountant is that they share some of the strains and stresses that are inevitably involved with running a business, especially small ones. There are already enough things to do in keeping a business going, and there never seems enough time to do everything that needs to be done. Hiring an accountant eases this burden considerably.

Legally, you are under no obligation to hire an accountant to manage your tax affairs. However, you are legally expected to submit a complete and accurate set of accounts to the taxman, and there is no better way of ensuring that you do this than by employing a professional accountant to do this for you.