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Whether you need an accountant depends on your trading status, your financial experience, how much financial and accounting work you wish to do yourself, and whether you feel competent to deal with your tax return, etc.
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Reasons for using an accountant
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• A good accountant should relieve you of much of the worry and stress of being self employed by reminding of what you need to do and when you need to do it.
• An accountant who is good for you should also know and understand your business so they can provide business advice, and act as a general mentor and adviser when times are tough or difficult decisions need to be made.
• The Inland Revenue can be reluctant to help a taxpayer claim the expenses and allowances to which they are entitled. An accountant should always do this.
• If you operate 'collectively' (eg as an association or a partnership) it's valuable, for your own protection, to have an outside accountant checking and validating your accounts.
• If your turnover is large enough to require you to register for VAT it's also large enough to warrant the advice and assistance of an accountant. VAT bookkeeping is complicated and mistakes are treated very severely.
• If you have a limited company you are legally obliged, as a minimum, to have your accounts prepared in a statutory format. This is not a straightforward process. You may also need an accountant's report or an audit, in which case you will have to have an accountant authorised to carry out the work, who will normally be a Chartered or Certified Accountant.
• Having a good accountant can pay for itself in terms of making appropriate tax claims and suggesting relevant expenses as well as making sure that you comply with VAT, tax law and other legalities, preparing your accounts, tax computations and tax returns.
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| Bookkeeping
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Whether or not you want to use your accountant for bookkeeping depends on your personal preference and financial experience and aptitude. If you have a fairly low number of transactions, and are not VAT-registered then your accountant should be quite cost-effective in doing this work for you. If you have a high number of transactions, it may be worth your while employing a separate book keeper to write up your transactions weekly or monthly.
By and large a good book keeper is more cost effective than an accountant at this work. But if you're going to use a book keeper and an accountant make sure the accountant is happy with the book keeper's work. This could save a lot of trouble.
If you can maintain your own books and records this keeps your accounting and bookkeeping costs down, and means you are much more in control of your business - you know who owes you money, how much your costs are, etc. People in this position usually run better and more profitable businesses.
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