Many small business owners, especially those with an aptitude for figures and a good understanding of basic accounting practices, start out doing their own business accounts. When a business has just started up and money is tight it can make sense to prepare your own accounts if you know what you are doing and if you own a small business with non-complex affairs.
But, of course, that assumes you know what you are doing, that you understand the different aspects of business taxes, what you can offset against a tax liability etc. Corporation tax is far from simple and whilst you may be able to correctly and accurately keep accounting records and file your tax return it is possible that you are missing out on, for instance, claiming certain types of expenses that could reduce your tax bill.
The actual filing of a tax return in the UK, and the annual return to Companies House, has been made a much easier task in recent years now that HMRC have implemented a good online filing process. The process guides you through the form filling and checks for obvious mistakes such as where figures do not balance but ultimately it is the figures input that will determine the calculation of your tax bill. They may balance correctly but still, in fact, be wrong and lead to a higher tax bill than necessary. And if you are not aware of this the tax authorities will not be rushing to issue your business with a refund.
So, on the surface of it, you can prepare your own company accounts and file your own tax returns for a small company but is it really saving you money?
Are you sure you have claimed all the expenses you are entitled to or, more importantly, that you have not incorrectly claimed for expenses which are not allowed?
This is where a professional accountant can help you save more than it will cost to employ them. They will structure your business in order to minimise your tax liability, set up a tax efficient payroll system and ensure you are complying with all the latest tax regulations.
What small business owners often do not factor in to the amount they have “saved” doing their own accounts are the days (or even weeks) they can spend struggling with their company accounts and their corporation tax return to HMRC, and worrying that they have done it right, when instead they should beputting all their energies and time into running their fledgling business.
A good accountancy firm can easily save a company more than the cost of their fees by implementing tax efficient strategies as well as saving you, the business owner, time and worry.But only you can gauge how much that peace of mind is worth to you and it is only sometimes when you have struggled with the business accounts that you truly appreciate the worth of a chartered accountant. And if you are concerned that the cost of the accountant could escalate then choose a fixed fee accountancy package with a set cost decided upfront so there are no nasty surprises at the end of the year.
About the Author
This article has been written on behalf of Tuchbands, a leading chartered accountancy practice covering all industry sectors. They are experts in providing high quality fixed fee accountancy and tax services to businesses of all sizes throughout Greater London and the Home Counties. These London accountants have also helped large overseas companies to successfully establish themselves in the UK.