The role of an accountant is varied and therefore the benefits of having one are too. How can an accountant help your business?
Before choosing an accountant – and in fact, before even deciding you need one – you must be clear about what such a service can do for you and your business. The best known ones are of course reducing your tax bill and filling in all those hideous forms, and this is what most people think of when they decide to take on an accountant. Both of these are indeed true, but there are also a number of other services and support functions which an accountant can provide for freelancers and sole traders. Let’s look at some of them:
Help with filling in tax forms correctly
If you have a very simple business model, then you could be forgiven for thinking that you can fill out your tax return, and any other documentation, by yourself. What you have to make sure is that you complete them correctly – and equally importantly, that you get them in on time.
If you complete a document incorrectly then the best case scenario is that HMRC will send it back to you to do it again, which could lead to you submitting it late. If you miss a deadline for important documents like tax returns, then you could face a fine. At worst, your forms could be sent to a tax inspector, who will then go through every single element of your finances in minute detail! Using the services of anaccountant means you can be assured that the right forms will be completed, at the right time and in the right way. Leaving you free to focus on earning more money.
Help with minimising your tax bill
Completing the forms correctly is one thing, but doing so in the way that is going to save you the most money is quite another. A good accountant will make sure you take advantage of every legal way to minimise your tax bill, which means that the service will probably ‘pay for itself’. A good accountant will also make sure that you take full advantage of the ever-changing tax laws, so that you pay as little tax as possible.
Help with planning your tax liability ahead
Tax planning is more than just simple tax preparation. An accountant will work with you throughout the year to offer advice that allows you to operate the business in a way which gives you the biggest tax advantages. Rather than just looking at the figures at the end of the year and saying ‘Ah well, if you had done it like this…’.
Help with your personal finances
Because your personal finances are of course directly related to your business income as a freelancer or sole trader, another advantage of having a good accountant is that they will give you personal financial advice throughout the year as well, as the two are so closely linked. This will enable you to manage your personal finances more effectively and save you money.
Help with growing your business
As well as handling all the paperwork and making sure that you legally minimise your tax bill, an accountant can also be a great source of advice to help you develop your business. If you want it to be a success, it’s vital that you make the right financial decisions, as well as the right managerial ones, very early on. A few wrong moves at the start can put you out of business surprisingly quickly!
A good accountant wants you and your business to succeed, as it is a reflection on them as much as it is a reflection on you. They can act as a business consultant, assisting you with various business problems, and offering good solutions based on their experience.
Help with making business decisions
Your accountant will also act as a ‘sounding board’ because they will come to know your business almost as well as you do. In fact, they will probably know the financial side even better! Objective input from someone who is in this position, but who doesn’t have the ‘emotional attachment’ to it that you do, is worth its weight in gold. An accountant’s advice and input can be as valuable, if not more so, than all of that the number-crunching and form-filling.
Help dealing with problems
If your business does face problems at any point, or has needs that are beyond the scope of you and your accountant, they will usually have close connections to other professionals such as bankers and lawyers, who can help you out. Often, your accountant’s connections could be just as important to you as the accountant themselves.
Help with saving time
You set up your business because you are really good at what you do. As a freelancer or sole trader, the likelihood is that you charge an hourly rate for your time, and this is how you make money. So, if you are spending that valuable time working on your accounts, it’s time that you could be using to generate more income. In effect, every hour you spend working on your accounts (and let’s face it, as a non-expert it’s going to take you quite a bit of time!) – it is actually ‘costing’ you at your hourly rate. So by appointing an accountant you are saving time – and also money!
If all of the above makes sense, and you have decided that appointing an accountant is the right business decision for you, then the next step is to find a good one. Here are some simple steps which we would recommend to anyone:
- Just as accountants know other professionals who can help you, other professionals know good accountants. Begin your search by asking for referrals for accountants from other small business owners. Recommendation is always the best way to find a new supplier for any service.
- When you are searching for a good accountant, find out what their areas of expertise are. Most crucially, do they specialise in working with freelancers and sole traders and will understand your specific issues or are they a ‘general’ accountant who is more familiar working with limited companies? This is a vital piece of information to find out.
- It is also important to ask a question about an accountant’s phone call and/or email policy. You need to have easy access to your accountant when you have a question, without being charged every time they communicate with you.
- Lastly, ask them how they will handle your taxes, what their fees are, what services they offer, what experience they have and who their other clients are. The accountant that you choose will have access to all of your financial information and will be an integral part of your business, so make sure you choose the right one first time.