Will I be able to run my business without an accountant?

[Theo Allen]

Hi there, a colleague and I are just about to launch a business delivering social marketing solutions to local businesses near us. We have everything in place to launch, and have decided to register as an Ltd comaony in order to give us a competitive edge.

My question is, is an accountant necessary? We're looking to complete approx 2 jobs a month, and will very rarely be claiming business expenses. There will only be the two of us in the business for the foreseeable future. Because of all this, would it be a bit of an overkill to hire an accountant? would it be suitable for me to get a few books on accounting, maybe take an online course and purchase some accounting software, and just do it all myself?

Cheers

 

[Scalloway]

Is your business a partnership or a limited company?

 

[cjd]

Certainly it's a very good idea to learn the basics of finance and accounting, but doing it at start-up is a big distraction. As your business grows you'll need a variety of professional support, lawyers, HR, accountants etc so in my view it's best to form these relationships early.

An accountant is usually the one to start with. In the early days they don't cost much and take the worry out of that side of the business. Running a small business can be lonely, you need an objective view from time to time. A good one is invaluable and will save you money in the end.

 

[The Byre]

The UK has the most complex tax laws on Planet Earth. I thought America was bad, as they have local, state and federal taxes and sometimes those three can even be in conflict - but the UK . . . Dear God! It's bloody nuts. I even even accountants struggle to keep up with the nonsense that pours out of the febrile minds of Westminster!

Every month, we get a newsletter from our accountants and the contents is often nothing short of hilarious! New tax relief measures now altered (yet again) for rented hairdressers' chairs? Riding stables differently taxed to stud farms? Yet more totally bizarre and complex tax relief for businesses who invest in other new businesses? How, when and where to apply for additional, yet temporary tax relief, if you are a second or third tier supplier to the oil industry? Different rules and treatments for those trading with Guernsey, Jersey, Isle of Mann, Luxembourg, Holland and different rules for moving jobs, goods, services, IP and money?

WTF - I mean, just who makes this rubbish up?

Just by pinning my little ears back and listening to what our accounts told us when we set up and nodding occasionally and saying "Ho-hum . . ." as if I understood a single word spoken saved me a quarter of a million pounds on day one!

And you have to ask whether you need an accountant?

Welcome to the land where even accountants need accountants!

 

[Scott@KarmaContent]

Not getting an accountant is a false economy, even for the most simplest of Ltd companies. I tried to save money this way when I started my business and trust me, it's VERY easy to get in a mess.

Get some quotes and have a chat with some local accountants and find the one that best suits your needs. If you don't you will almost certainly regret it.

 

[STDFR33]

Hi there, a colleague and I are just about to launch a business delivering social marketing solutions to local businesses near us. We have everything in place to launch, and have decided to register as an Ltd comaony in order to give us a competitive edge.

My question is, is an accountant necessary? We're looking to complete approx 2 jobs a month, and will very rarely be claiming business expenses. There will only be the two of us in the business for the foreseeable future. Because of all this, would it be a bit of an overkill to hire an accountant? would it be suitable for me to get a few books on accounting, maybe take an online course and purchase some accounting software, and just do it all myself?

Cheers

Not claiming expenses that the business has incurred to make this simpler will mean paying more in tax that is legally due.

An accountant will be able to give you lots of advice as a start up. One bit I can immediately think of is registering for VAT voluntarily - you will more than likely make a small profit from using the flat rate scheme.

As a side issue, you and your friend should also pay for a decent shareholders agreement to be drawn up by a competent solicitor.

Of course you can read books and try learn tax and accountancy yourself. Or you could spend that time winning new business and maintaining ongoing relationships with existing clients within the business.

 

[Jeremiah@RHJ Accountants]

You need to view your accountant as an asset and not a cost to your business.

A good accountant will save you tax, help your business grow, have a network of professionals for you to tap into, be an agony aunt or uncle! and many more the list goes on.

When a major event in your life happens like, Marriage or Divorce, having a baby, buying a house or car your going to speak to your accountant!

So pick one who you can build a relationship with and trust and you will see over time they are invaluable to your business.

 

[KM-Tiger]

The first thing to understand is the difference between bookkeeping and accountancy. Yes, do the bookkeeping yourself, with software it's easy, and it will mean you are always on top of the financial position of your Ltd Co.

But you will find it difficult or impossible to do the necessary filings with Co's Ho and HMRC, and that's where you will need an accountant. If your bookkeeping is good, then that need not be expensive.

The other aspects are the advice an accountant give you and tax planning. Rough rule of thumb is that you will save more in tax than your accountant's fee.

 

[cjd]

As above - do the bookkeeping yourself but make sure you use software that your accountant can communicate with.

 

[Pish_Pash]

You don't need an accountant ......except to do the excessively dull & obtuse stuff like converting your accounts into iXBRL format for HMRC etc. In fact by not having accountant, forces you to learn stuff (quickly!)....knowledge is power.

 

[Mitch3473]

You dont ' need ' an accountant but you should have one, get one from a referal and one that is flexible...... and as one poster put it, they are invaluable for any financial advice. When wifey No2 proposed the first thing I did was call my accountant. Unfortuately for me No2 heard the conversation. She still reminds me 14 years later.

 

[Swisaw]

If you are only two people and have spare time during working hours, you may do better without an accountant because you save some money.
Keeping accounts is really easy. All you need is to keep precise records of your expenditure and revenues. To fill tax return form, just follow the instructions online or with the paper form. But when the business becomes bussy leave this headache for an accountant.

 

[johndon68]

If you are only two people and have spare time during working hours, you may do better without an accountant because you save some money.
Keeping accounts is really easy. All you need is to keep precise records of your expenditure and revenues. To fill tax return form, just follow the instructions online or with the paper form. But when the business becomes bussy leave this headache for an accountant.

A good accountant will save you more money than they cost you. The OP said they were a limited company so, at year end, it is no where near as simple as filling in a form.

I can do 'accounts' all the way up to management accounts etc but I still have an accountant do all the year end filing for me.

John

 

[boring-friday]

A good accountant will save you tax, help your business grow, have a network of professionals for you to tap into, be an agony aunt or uncle! and many more the list goes on.

Well they probably won't if OPs selling less than £500 a month (for example) with hardly any expenses to reclaim will they?
Doubt he'd even save money on the flat rate scheme either, they'll be enough small local businesses that aren't vat registered to cancel out any benefits.

@OP I'd just start the business and focus on making it work, worry about paying tax when you're actually making some money. Would start as sole trader/partnership aswell

 

[Jeremiah@RHJ Accountants]

The OP did not mention any figures, however claiming little expenses would not make sense to me either!

Is the OP aware of what they can claim and being tax efficient is best practice in my opinion.

I never mentioned FRS vat, however many local small businesses do benefit from this.

Seeking professional advice from the start of a business surely is a good thing

 

[Jeff FV]

I'm with @boring-friday & @Swisaw on this.

Get your business started (as a sole trader) and see if its going to make you any money. If it does, and starts to get complicated, then get an accountant.

But see if your business has wings first.

 

[boring-friday]

The OP did not mention any figures, however claiming little expenses would not make sense to me either!

Is the OP aware of what they can claim and being tax efficient is best practice in my opinion.

I never mentioned FRS vat, however many local small businesses do benefit from this.

Seeking professional advice from the start of a business surely is a good thing

He said 2 small business clients a month.
I assume he means because there won't be many expenses.
He might not be aware he can claim an extra £5 a month as expenses but that won't cover your fee will it?
I know you didn't, someone else did. We're not talking about many small local businesses though are we, we're talking about the OPs

 

[STDFR33]

I'm with @boring-friday & @Swisaw on this.

Get your business started (as a sole trader) and see if its going to make you any money. If it does, and starts to get complicated, then get an accountant.

But see if your business has wings first.

You can't start a business with someone as a sole trader. What you have is a partnership.

If you have a partnership, you need be getting a good partnership agreement. That costs money.

Someone mentions having two small clingers. If you earn £150k, 2 small clients could be £50k in revenue. If you earn £20k per year, 2 small clients could be £1000.
The advice from tax, to trading entity and anything in between can vary greatly.

I would advise the OP to visit an accountant for a free initial consultation in any case. It could end saving them a small fortune and many, many hours of headaches.

 

[Jeremiah@RHJ Accountants]

There may be more than £5 per month extra to claim maybe £10

However the point still remains seeking professional advice is surely a good thing for any start up business.

Most offer a free consultation so why not take advantage of this?

 

[boring-friday]

You can't start a business with someone as a sole trader. What you have is a partnership.

If you have a partnership, you need be getting a good partnership agreement. That costs money.

Someone mentions having two small clingers. If you earn £150k, 2 small clients could be £50k in revenue. If you earn £20k per year, 2 small clients could be £1000.
The advice from tax, to trading entity and anything in between can vary greatly.

I would advise the OP to visit an accountant for a free initial consultation in any case. It could end saving them a small fortune and many, many hours of headaches.

OP won't be earning 150k per year with 2 small business clients, I doubt he'll be earning £20k either, when/if he does I agree he should get an accountant.
But for now hes better off not having to pay £50-100 a month whilst making zero money (in my opinion)

Most offer a free consultation so why not take advantage of this?

Yeah I guess, would personally feel like I'm taking the piss if I got a free consultation with zero chance of paying them any money, guess its fair enough if he might use them in the future though

 

[STDFR33]

OP won't be earning 150k per year with 2 small business clients, I doubt he'll be earning £20k either, when/if he does I agree he should get an accountant.
But for now hes better off not having to pay £50-100 a month whilst making zero money (in my opinion)


Yeah I guess, would personally feel like I'm taking the piss if I got a free consultation with zero chance of paying them any money, guess its fair enough if he might use them in the future though

You aren't paying for a subscription service. Year end accounts for a company will cost from £600. Whether you pay it monthly, or annually, if you are unable to do the work yourself, you have a cost.

Tax planning is very difficult to do at year end. It gets even harder beyond year end, if at all possible.

In addition, bookkeeping. Why struggle throughout the year when you can have someone on hand to help you?

Looking at the cost as a monthly subscription is illogical.

I remember taking a client on several years ago that lost £25k in tax relief because they had bought a franchise as a sole trader, rather than the company they formed afterwards.
Getting it right from the start can, more often than not, be most beneficial.

 

[boring-friday]

You aren't paying for a subscription service. Year end accounts for a company will cost from £600. Whether you pay it monthly, or annually, if you are unable to do the work yourself, you have a cost.

Tax planning is very difficult to do at year end. It gets even harder beyond year end, if at all possible.

In addition, bookkeeping. Why struggle throughout the year when you can have someone on hand to help you?

Looking at the cost as a monthly subscription is illogical.

I remember taking a client on several years ago that lost £25k in tax relief because they had bought a franchise as a sole trader, rather than the company they formed afterwards.
Getting it right from the start can, more often than not, be most beneficial.

Yes but he'll be saving himself the 'not a subscription service' £50-100 a month if he gets none/barely any customers.
I also told him he should start as a sole trader/partnership.

OP isn't buying a franchise though is he, if he was going to be spending £100k+ then I'd agree to get an accountant

 

[STDFR33]

Yes but he'll be saving himself the 'not a subscription service' £50-100 a month if he gets none/barely any customers.
I also told him he should start as a sole trader/partnership.

OP isn't buying a franchise though is he, if he was going to be spending £100k+ then I'd agree to get an accountant

Trading through a company, whether you have 1 or 100 customers, you have filing obligations with Companies House and HMRC.

I explained the franchise as an example of not obtaining advice before proceeding with an idea. It wouldn't be possible for me to give specific examples with just the most basic of briefs being supplied.

In some cases an accountant is not needed. I would always tell those that do not need one, that they don't.

I honestly don't see anything wrong with a business seeking help from a professional, even if it is 'tyre kicking'.

 

[boring-friday]

Trading through a company, whether you have 1 or 100 customers, you have filing obligations with Companies House and HMRC.

I explained the franchise as an example of not obtaining advice before proceeding with an idea. It wouldn't be possible for me to give specific examples with just the most basic of briefs being supplied.

In some cases an accountant is not needed. I would always tell those that do not need one, that they don't.

I honestly don't see anything wrong with a business seeking help from a professional, even if it is 'tyre kicking'.

He doesn't have any customers though does he lol. And yeah but I assume its quite simple if you're earning less than around £20k per year and a sole trader, above roughly that point I agree he should get an accountant.

Yeah I know that mate but someone opening a franchise is a long way off someone working from home with barely any expenses and selling around £500 a month (currently nothing) isn't it?
Edit: swear theres a new law that you don't even have to pay tax on less than £1k a year anyway, amiright? lol

I can't be bothered arguing anymore anyway so you can have a free 'thanks' and I might give you a shout when I open a restaurant next year if you're lucky lol.

 

[STDFR33]

He doesn't have any customers though does he lol. And yeah but I assume its quite simple if you're earning less than around £20k per year and a sole trader, above roughly that point I agree he should get an accountant.

Yeah I know that mate but someone opening a franchise is a long way off someone working from home with barely any expenses and selling around £500 a month (currently nothing) isn't it?

I can't be bothered arguing anymore anyway so you can have a free 'thanks' and I might give you a shout when I open a restaurant next year if you're lucky lol

We don't know where the OP in terms of financials. And for that reason, I agree that it's pointless arguing over points we don't know even exist.

Thank you for considering me, but I am not taking on clients. I'm just here to help small businesses where possible.
I do wish you all the best with your future business, however. Watch the VAT, it can be quite frustrating in that sector.

 

[Jeff FV]

Someone mentions having two small clingers.

In that case, I think a doctor might be more useful than an accountant!

If you earn £150k, 2 small clients could be £50k in revenue ...

Of course if you are talking those sorts of numbers an accountant would be a must, but as the OP is

... delivering social marketing solutions to local businesses near us

I suspect they may be lucky to be taking £150 a month, at least in the first instance. (But then I'm not really sure what "social marketing solutions" are)

 

[STDFR33]

In that case, I think a doctor might be more useful than an accountant!



Of course if you are talking those sorts of numbers an accountant would be a must, but as the OP is I suspect they may be lucky to be taking £150 a month, at least in the first instance. (But then I'm not really sure what "social marketing solutions" are)

With revenues of £150pm, professional advice is even more important in this case. As a limited company is highly unlikely to be the correct of trading vehicle.

I suppose someone has to keep SpongeBob busy.

I'm bowing out of the thread now.

 

[Rockpapercopy_biz]

No, technically you do not need an accountant to run a company. But you will need to run your own business books [payments and receipts] and know how each amount classifies against your tax return. Best to join a 1-day-accountancy course at your small business center to get some general ideas. That of course applies if you have a basic business structure [sole traders or a partnership]. If you plan to set up a limited company, that's a different story [also dependant on your annual gross income]

 

[Paul Norman]

You do not need an accountant. You can do your own accounts. Provided, of course, that you know how, and have a reasonable understanding of tax matters.

You can also knit your own clothes and make a suit out of material. You can buy a book on neurological illness, too.

Ok...being serious. It would be my recommendation for all businesses to hire an accountant. They take away the risk of stuffing it up and getting a big fine.

 

[Glenn Martin]

Yes you should take advice from an accountant when starting up, after that its up to you how much or how little you use them. Getting it wrong can be costly, HMRC issue fines like confetti. I have had to un pick quite a few DIY businesses that thought it would be easy doing accounts themselves with advice from the man down the pub who pays no tax and claims for everything.

Like Paul indicates I am able to paint a room in my house, but I choose to get a painter to do it leaving me time to do what I enjoy.

You should also maybe think outside the box a bit if just starting up instead of trying to avoid the cost of an accountant think of the value it could bring. For a start a sole trader accountant could have 100-200 clients all of which could be potential clients for your service. If he was happy to refer you.

Costs for accountancy are not as bad as you think I would certainly meet a few and make an opinion on what they bring to the table for you.

 

[Deleted member 268094]

Getting an accountant isn't necessary but it is definitely advisable. At the very least get 3 recommendations and speak to them about your plans. They should be able to save you you more money than you spend on them and be able to demonstrate how they will do that (a good question to ask them when you do speak to them). I'd also suggest that if you're not sure if you need an accountant then you probably need one as by asking taht question you've indicated you may not know enough to make that decision with confidence. With everything else you have to deal with in a new business is this something else you want to take on board?

 

[MyAccountantOnline]

Will I be able to run my business without an accountant - YES.

But you are going to spend a very long time learning all that's required if you want to ensure you pay no more in tax than is legally necessary and dont incur any fines or penalties for getting things wrong. Accountants take many years to learn what we do

If you want to keep costs down keep some really good accurate accounting records and use an accountant for things that will save you time and money.

 

[FD Analytical Accountants]

A great accountant will save you far more in tax, hassle, fines & penalties that they charge in fees.

They'll help reduce the likelihood of a tax investigation, get you access to funding and finance to buy equipment, help you to get a bank overdraft AND an experienced accountant should be able to give you some great advice to actually help grow your business.

 

[Ian J]

A great accountant will save you far more in tax, hassle, fines & penalties that they charge in fees.

They'll help reduce the likelihood of a tax investigation, get you access to funding and finance to buy equipment, help you to get a bank overdraft AND an experienced accountant should be able to give you some great advice to actually help grow your business.

Well you would say that wouldn't you

I'm not sure that my accountant saves me any tax at all and as far as gaining access to funding I would rather place my faith in a specialist broker for whatever type of finance you are looking for.

I use an accountant to save the hassle of doing everything myself

 

[Talay]

If you are of any size and have employees then outsource it.

I wasted too long doing things internally and messing about with cheap but ultimately rubbish software packages and should have gone external once we put more folk on payroll.

 

[Deleted member 59730]

Of course you do not NEED an accountant. You might USE one.

A bit like a batsman in a cricket match. The scorer doesn't help him score more runs.

 

[Claire Freshney]

Personally, I need an accountant. You are only as good as what you know. I'll stick to designing and leave my accountant to do the rest. He charges me £100 a month and that allows me to sleep at night.

 

[Deleted member 59730]

He charges me £100 a month and that allows me to sleep at night.

You can buy herbal sleeping tablets for less than that ;-)