When to hire an accountant for taxes

Staying on top of tax regulations and guidelines is crucial for anyone running their own business. It can be a complex area to navigate alone, especially if you don’t have a lot of experience of bookkeeping and finance. This article will look at the signs that mean it’s time for you to hire an accountant for tax support, by looking at the following:

• You’re spending too much time on bookkeeping
• Your business is growing
• Your figures don’t add up
• You’re finding it difficult to keep track of transactions and receipts
• Your revenue is up, but profit is not
• You’re being audited

The first sign that you should be looking for an accountant’s support is if you are spending a lot of time organising your bookkeeping and doing accounting tasks.

As a business owner you’ll be used to multitasking, but how do you tell that accounting is taking up too much of your time?  Ask yourself what is your time worth – how much do you charge a client for an hour or work, or how much money could you be making if you spent that hour doing work for a customer? Let’s say your time is worth £100 an hour, and you’re spending 10 hours a week on accounting jobs, and perhaps, even more, when it comes to tax and self-assessment season. That’s £1,000 per week you’re spending on accounting, as well using up your focus and attention, which you could be using to grow your business instead of doing financial admin.

This simple calculation of your time’s worth should give you an indication of if it’s worth hiring an accountant, as their fees may be less of a cost than you initially thought when you think of your time as money too. Not only will they be quicker at doing your tax admin and bookkeeping tasks, but you’ll also have the peace of mind that you aren’t making any errors when doing it on your own.

If your business is growing at a fast pace, then it can be easy to feel out of your depth managing more and more invoice admin, calculating larger totals, and perhaps filing more expenses. An accountant can help you keep a tight hold of your finances and stay on top of the mounting paperwork when things are expanding much quicker than you can handle on your own.

Also if your business revenue is nearing the VAT threshold of £85,000, and you don’t know a lot about how to manage VAT, then it could be worth consulting an accountant to support with this new aspect of tax for your company.

Another sign that it might be time to hire an accountant is that your figures simply don’t seem to add up. You might be preparing your balance sheets or cash flow forecasts, and if they don’t look right on your first attempt, that’s more of your precious time that you are spending in order to fix it, instead of working on your business operation.

When it comes to tax season you’ll be relying on a lot of reports, transactions and paperwork to all come together to calculate an accurate tax bill. An accountant can help you get your numbers back on track, and support you with filling out the tax return itself to save you time and stress.

A major part of submitting your tax return is to have all the relevant records and receipts to prove that your purchases are tax-deductible items. If you have an expense-heavy business operation you may find that the paperwork quickly adds up and your paper filing system is no longer working for you. 

While some accounting software like Countingup can help you manage your receipts by allowing you to take pictures so nothing ever gets lost, an accountant can also support with organisation and advice on how to stay on top of this part of your business — and with Countingup, you and your accountant can work from the same data when you share the app with them.

If your business is growing then you’ll likely have higher revenue (more money coming in). But what about if your profit (the money you’re taking home after expenses) isn’t growing at the same time? Accountants are skilled at taking an objective look at your business finances and bookkeeping records to understand where your money might be leaking from. 

It’s unusual for smaller businesses to be investigated by HMRC, due to the lack of tax inspectors available, but if it ever does happen it can be stressful, time-consuming and expensive. 

And if you find yourself in an audit situation and don’t already have an accountant, then it’s a good time to hire one. They will be able to help you manage your compliance when it comes to tax laws, checking your self-assessment and navigating VAT if applicable. 

Hiring an accountant before an audit happens is beneficial because not only will they guide you through the audit process, they’ll be able to potentially suggest insurances that will be able to pay for the fees that official audits require before it happens. Accounting firms may offer insurance directly through their business so that it covers the considerable amount of hours they’ll have to spend working on an audit with your business should you be investigated.

Countingup is the app designed to help small business owners save time and money. The business current account comes with free built-in accounting software that automates the time-consuming aspects of bookkeeping and taxes. You can view real-time insights into your business’ finances, such as cash flow and profit and loss statements. It also allows you to calculate tax estimates so that you can keep on top of your tax bills and expenses effectively. 

Find out more here.