You’re a sole trader with a small business – do you really need an Accountant? You may be surprised to learn that there is no mandatory requirement for sole traders to use an Accountant and, there will be many occasions when you can confidently forge ahead on your own steam. But, can you dispense entirely of accountancy support? Let’s take a closer look at the options during the various phases of your business journey.
1 -Getting the foundations in place
Perhaps you’ve bought the yellow “Dummies Guide” to Starting and Running a Business, read a few websites and tried to figure out what your friends are up to. It’s not been easy and the problem you’ve probably already encountered is that it can really eat into your (already limited) time. And there’s so much information out there. So much conflicting information. It’s too general and it’s riddled with words you don’t fully understand. Can you relate?
Starting a business IS challenging and if you’ve started your business from scratch, naturally you don’t want to invest in any more than the absolute minimum. I can relate. But, as I discovered early on this can be a false economy. I dive into more detail about “what holds us back from investing” in a recent guest post here.
If you want to save both your sanity and money in the long run it’s crucial to get the foundations of your business rock solid from the start.
Investing in support doesn’t mean outsourcing: it could mean attending business workshops or finding some one-to-one mentoring.
One of my missions is to help demystify what’s expected of you and to explain which healthy financial habits to establish from the beginning. I run a workshop in Winchester for sole traders in the early throes of setting up a business and it’s meant to help you shift from bewilderment and frustration to clarity and momentum. Take a look at what’s on offer.
2 – Running your business
Recording the money coming into and money going out of your business
If you’ve cracked the basics (offered in my workshop above) and you enjoy keeping track of the all the numbers, transactions and receipts then by all means you’re the best person for the job. Most small business owners can manage their own bookkeeping. It might not be the most exciting task of the week but as long as it is performed regularly (and accurately) you shouldn’t need further support in this area.
Reporting your income and expenses to HMRC and completing your tax return
You’ve dabbled in doing your own tax returns but deep down you’re not 100% sure that you are doing it correctly. You don’t feel that you have a handle on what needs to be done accounts wise and tax wise, but you’re too embarrassed to admit it. Goodness only knows where you put that receipt, what you could or should be claiming for and how you’ll get through your tax return with your sanity intact.
Let me start by saying that it’s entirely normal to feel this way. But, here’s the thing – tax is complicated and it’s the reason why many Accountants spend years studying tax and countless additional hours keeping up to date with the changes in tax legislation. If you want to gain peace of mind that all the legal bits have been squared away and the opportunity to save more of your hard-earned income, then outsourcing your tax work (compliance in accountancy speak) is the option for you.
You can look at bespoke and outsourcing packages here.
When it’s ok to do your own tax return
Doing your own tax return is perfectly achievable if your tax affairs are straightforward, you have no property or investment income AND you are adept at keeping up to date with changing tax law.
Your first year in business
Getting support in preparing your first tax return is always a good idea. The rules in the opening years are complicated and it would be advisable to seek professional support in order to maximise possible tax savings and refunds that you are legally entitled to receive.
3 – When the complexity of your business changes
Things have really shifted up a gear for you and you’re thriving. You’ve got a solid business model and it’s sustaining you. You’re thinking of taking on an employee or two. Perhaps you’re nearing the VAT registration threshold. You’re probably reviewing whether it’s worth setting up a limited company. Or maybe you need clarity on what your numbers are actually telling you. An Accountant can support you in all these areas.
Perhaps the volume of paperwork is mounting to unrecognisable proportions and managing it is really eating into your productivity, your time and your profits.
You’re feeling a little out of control and the chaos is really grinding your down. Can you relate?
If this is you, take the opportunity to talk to an Accountant about moving to accounting software systems such as Xero which have been designed to help small business owners make efficiencies in cost and time. You might consider outsourcing all your bookkeeping requirements. Take a peep at what’s on offer.
What other support might you need?
There are many other ways in which an Accountant can provide small business owners with support:
- Pricing your product or service to help ensure your business is sustainable
- Help to identify ways to save your business money
- Support with cash-flow and budgeting
- Assistance with the preparation of funding and grant applications
- Helping you gain clarity on what your numbers are telling you, enabling you to be proactive in your business and not reactive
I support small business owners in all of the above areas. If you’re interested in finding out more you can drop me a line here.
How do you go about choosing the RIGHT support?
Be careful, because anyone can call themselves an Accountant. The term “Accountant” is not legally protected. The term “Chartered Accountant” is. You can’t call yourself a Chartered Accountant unless you are one. Always check credentials.
Where possible use personal recommendation. Look at websites – can you see your own problems reflected in the copy and in other clients’ testimonials?
Having the opportunity to meet up with and talk to your Accountant might be an important consideration to you. Do you want to feel that you can ask what you perceive to be silly questions? Have a chat and try and establish whether there is “a fit”.
Never go by the cheapest rate. Be mindful of the price-quality equation. There’s more on pricing of services here.
Do you really need an Accountant?
This is a question that you will need to be asking yourself at every stage of your business journey. If you’ve decided to invest in an Accountant make sure you look into selecting the right one for you and your business. Don’t forget that you don’t need to employ someone full-time. Sometimes just a couple of hours bespoke support can help you on your way.
Keen to spend more time in your zone of genius?
Maybe you like the idea of someone dependable explaining to you in plain English what you should start doing, what you should keep doing and what you need to stop doing to help your small business to thrive.
Or, perhaps you want to spend more time in your zone of genius and less time trying to fathom out tax, accounts and record keeping so you can tell the taxman how your business is doing – and so you could tell how your business was doing.
Over to you
Do you outsource? Do you DIY your small business accounts and tax? I would love to hear about your experiences in the comments box below.
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