There comes a time in every successful small business’s life when the books begin to get a little more complex, and outside help is needed. What can be tough is to establish precisely when that line is crossed, and the penalties for failing to engage a professional could be huge – you could be landed with a larger than expected tax bill or miss the threshold for VAT registration – and a good accountant can pay for themselves by maximising both your and your business’s tax efficiency.

Is managing your accounts difficult or time-consuming?

Remember that your expertise is in running your business, and not all business owners have a natural head for figures. Many businesses hire an accountant to complete their end of year process, but some find that using their services throughout the year makes life a lot easier, and makes the end of year reporting go much smoother. The harder you find it to keep the books up to date, the more time you will spend on it, and all of that time could be better spent doing what you do best: running your business.

Can you afford to take on an accountant?

Of course all business owners are trying to save money, and make as much profit as possible. However it need not cut too far into the bottom line to engage the services of a finance professional to help your business. If you count up the amount of time you spend doing the books, and work out how much you could earn if you were working during that time, then you can quickly assess the costs versus the benefits of taking on someone else to help out.

Don’t forget that expenses on hiring professionals are tax deductible – and a good accountant will be able to make sure that you claim back every bit of expense that you are entitled to. You do not need to necessarily employ a full-time accountant, you can usually take them on for a couple of hours at a time, whenever you need a little help.

The price of accountants varies wildly. You can usually get your end of year books completed for around the £200 mark whereas to get occasional advice can cost anything between £20 and £80 per hour (and higher) – depending on the nature of the task and the local conditions. It pays to shop around but don’t just pick the lowest price: you have to balance it with the right level of service for you as you will be entrusting your accountant with your livelihood.

Do you want peace of mind?

It can be extremely stressful not only managing the day to day running of a business, but keeping track of invoices, receipts, expenditure and income. Not to mention the additional pressure that comes around big events such as the end of year accounting, tax returns and so on. Taking on a professional might just help you to get to sleep at night.

Are you claiming all that you can?

One of the areas that a professional accountant can really help you in is in the area of claiming appropriate tax deductible expenses. There are huge opportunities for savings, and any small business owners remain completely unaware of some of the opportunities they are missing – and also of some of the risks associated with an incorrect claim, which could result in huge fines and unexpected tax bills.

Just some of the areas that you may be able to claim against your profits, reducing your exposure to income tax, are:

  • Certain office, equipment and property expenses
  • Some bank charges
  • Travelling expenses by car, van – and even by bicycle!
  • Meals when away on business trips
  • Clothing, when worn specifically for the business
  • Meals when away on business trips
  • Marketing, some entertainment and professional subscriptions

Every business’s needs are different, and only by discussing your circumstances with an accountant can you be sure that you are claiming everything that you are entitled to – and not incorrectly claiming anything that could result in you getting into trouble at a later date.

Should your business be VAT registered?

Once your business begins to turn over a certain amount of money (currently as of 2016 that is £83,000 in a rolling year), you are required to register for Value Added Tax (VAT). Your business may be small and have a low-turnover now, but many small businesses have fallen foul of the concept being based on a rolling year, because they only complete their accounts annually. This can mean that a business could suddenly find that their book keeping has become a whole lot more complex, and it could be very costly to employ someone to put it right. Investing early in the right accountant could save you a lot of time and trouble – and money – if you are nearing the VAT threshold.

Writing a business plan for a loan or overdraft

Although it is good practice to keep a business plan up to date at all times, most companies and sole traders only write one when they have to – usually when starting up, or applying for a loan or an overdraft from the bank. The financial figures and projections that are required as part of a well developed and credible business plan take time and expertise to get right, and hiring an accountant could be the impetus for your business to successfully obtain the cash injection that it needs.

What is your company’s legal structure?

An accountant can advise you on the most efficient structure for your business: your status as a Sole Trader, a Partnership or a Limited Company has wide-ranging implications. You may be able to claim part of your living expenses against tax, or employ yourself through a company to cut costs. There are different levels of personal liability for each structure and an expert can guide you through the ins and outs – including guiding you through the minefield of preparing the documentation you need to submit for compliance, tax and any statutory accounting.

Do you have any employees?

Your accountant can help with payroll, and make sure that your employees are being paid correctly. They also can make sure that you have taken care of any legal requirements such as the forthcoming auto-enrolment of employees into a pension scheme. And are you totally confident that they are being paid the Living Wage, and their tax codes are correct? An accountant can take all of those headaches away from you.

Have you had a tax inspection?

It is possible that one day the tax inspector will decide to take a look at your business. Although this is not an everyday occurrence, and some business are never inspected, it remains a risk, and you need to ask yourself some questions before cutting corners on your financial management.


Are you confident that your book-keeping is all in order? 


Do you know what receipts and records you should be retaining?


Could you can properly explain all of your finances if you are asked to?


Is it all of your paperwork filed in order?


Are you confident that you know how long you need to keep documents for?


Do you know what receipts and records you should be retaining?


Is it all of your paperwork filed in order?

If the answer to any of these is “no”, then it could be that an early investment in the services of a qualified accountant could potentially save you a lot of time and headaches later on!

Do you need to take on an accountant?

So, after all of that, the short answer is: Maybe!

It’s a decision that you can not take lightly, as every cost in a small business has to be justified. It is not a sign of failure for the sole trader or small enterprise owner to admit that although you may well be a Jack of all trades you can only a master of some. An accountant can offer valuable assistance to your business all the way from when you very first start it up; then later as your company begins to grow and expands; then provide professional advice in the event of  acquisitions and mergers; and all the way on to if you eventually decide that you want to sell the business or wind it up.

It’s by no means compulsory to take on a financial professional to keep track of your business finances, but there are lots of different ways in which it could be a wise investment, and it almost always will eventually save you money in the long run – not least in giving you the knowledge that you can constantly keep your finger on the pulse of how well your business is performing, and that you have instant access to all of the information you need to keep it running on a profitable basis.