You’ve finally taken the plunge and decided to start your own business, in turn becoming your own boss, which is something that not many people have the guts to do. Unfortunately, in the
This article contains affiliate links. For full disclosure see here.
The key component to running a successful business is keeping detailed, well-organised records from the very beginning. If you do this, you can rest assured that no matter what happens with the tax man, or your bank manager, you can still prove what you have stated is one hundred per cent accurate and won’t get into any difficulty with
The average cost for an accountant in the UK for most small or medium sized businesses is anywhere from £300 – £800 + VAT per year, with additional costs for submitting tax returns and any other ad-hoc work you may require.
Bookkeeping & Accounts
One of an accountant’s main responsibilities is to check over the books on a regular basis, ensuring that all invoices have been properly created, paid and then recorded so that they can be consolidated with the business bank account. Often one of the key sticking points for small businesses is charging for VAT separately for the actual service/product cost and then collecting and keeping that to one side for when it is payable.
An accountant would be there to advise you on whether what you have done is correct and tell you when it is payable as well as who it is payable to. This is easy to do yourself with some dedicated accounting software, simply purchase one which will provide templates for all of the records you could possibly need to keep, from income to expenditure, petty cash and VAT. This way you will have all of the records needed to submit your tax return at the end of the financial year.
VAT, Tax Return, Corporation Tax & National Insurance
Tax is one of the most complicated areas when it comes to owning your own business, there is a vast amount of rules, exceptions and payment terms that HMRC use when calculating the amount you need to pay. The good news is that everything you need to know is available online in the form of guides, interactive calculators and of course via live assistance from a representative. If you hire your first employee and are worrying about how much you need to pay and what national insurance contributions are, then you can use the PAYE calculator.
It is also worth noting that accountants aren’t liable for any mistakes they make when working out your tax, it is common for accountants to recommend a company pay a certain amount and then next year find out they underpaid/overpaid after submitting a tax return. If you submit the tax return yourself and make a mistake, you will be in the same situation and will simply be either issued a refund or asked to pay the balance the following year. This way you can save the £200 fee you would pay an accountant for a tax return and put it to better use within your business.
Accountants provide peace of mind for those that are not comfortable dealing with numbers, if this is the case then it may well be a worthwhile investment for you. If you feel confident, do your research and learn all about the tax system then you have no need for an accountant until you grow to a much bigger size. At this point, accountants are useful as they will be able to advise on schemes such as R&D (Research & Development) that can give you large tax savings, especially off the corporation tax or VAT bill.
You may also like: Advanced Accounting Mistakes and How to Avoid Them
About the Author
Sarah is a London based freelance writer specialising in business and finance. She is passionate about small business and encouraging more entrepreneurs to ‘take the leap’ and make their dream come true.
Twitter account is: https://twitter.com/SarahHewitt52