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Running a small business is an exciting journey, but managing finances can often feel like navigating through unfamiliar territory. This is where an accountant becomes an indispensable partner. More than just number-crunchers, accountants serve as strategic allies in your pursuit of financial stability and growth.
With their invaluable expertise, accountants help manage cash flow, maximise tax efficiency, and ensure compliance with constantly evolving regulations. They act as guardians of your financial health, offering clarity in complex matters and guiding you away from potential financial pitfalls.
In this article, we will examine whether investing in an accountant is a worthwhile decision for small businesses, focusing on the crucial role they play in fostering your business’s financial success.
Why do you need an accountant?
Accountants are not just number crunchers; they’re your financial navigators. Whether it’s navigating tax laws, maximising deductions, or keeping your books squeaky clean, an accountant’s expertise ensures your financial house stays in order. They save you time – precious hours you can reinvest into growing your business instead of drowning in spreadsheets.
Additionally, they provide strategic insights that go beyond mere bookkeeping; business planning, financial forecasting, and even tackling audits with confidence. Hiring an accountant isn’t just about compliance; it’s about arming your business with the financial firepower to thrive.
Pros of hiring an accountant
Expert financial advice
Expert financial advice from an accountant can be a game-changer for small businesses. These professionals bring a wealth of knowledge and experience to the table, especially when it comes to navigating the intricate landscape of tax regulations and financial strategies.
Beyond taxes, they offer insights into cost-saving measures, budgeting techniques, and financial forecasting that can steer your business towards profitability and sustainable growth. Their expertise extends to advising on investment decisions, preparing financial statements for loans or investors, and providing clarity during audits.
With an accountant on board, you not only gain peace of mind knowing your finances are in capable hands but also gain a competitive edge by making informed financial decisions that drive your business forward.
Time saving
Hiring an accountant for your small business isn’t just about balancing the books—it’s about reclaiming your most valuable asset – time. These financial champions take on the burden of day-to-day financial tasks like bookkeeping, payroll management, and tax filings, freeing you up to focus on what truly matters—growing your business.
With an accountant in your corner, you gain efficiency and accuracy in financial record-keeping. They streamline processes, handle complex financial transactions, and anticipate financial needs, allowing you to devote your energy to strategic planning, client relationships, and innovation. An accountant isn’t just a cost; they’re an investment in your business’s productivity and future success, giving you the time and space to thrive in a competitive marketplace.
Accuracy and compliance
An accountant is your steadfast ally when it comes to maintaining impeccable accuracy and compliance in your small business’s financial affairs. They meticulously manage your financial records, ensuring every transaction is properly documented and categorised. This attention to detail not only keeps your books in order but also provides a clear and reliable financial picture for decision-making and reporting purposes.
When it comes to tax filings, accountants are well-versed in the labyrinthine tax laws and regulations, ensuring you maximise deductions while staying fully compliant. This expertise minimises the risk of errors or omissions that could lead to penalties or audits from tax authorities.
By proactively staying on top of regulatory changes and deadlines, accountants help you navigate potential pitfalls, safeguarding your business from costly fines and legal complications.
Audit support
During audits an accountant can offer expertise and guidance that can make a significant difference in the outcome for your small business. They prepare and organise your financial records in a meticulous manner that aligns with audit requirements, ensuring that all documentation is thorough and readily accessible. This not only saves you time and stress during the audit process but also enhances your credibility with auditors.
Accountants understand the complexities of audit procedures and can effectively communicate with auditors on your behalf, clarifying any financial questions or discrepancies that may arise. Their proactive approach in audit preparation can mitigate risks and reduce the likelihood of findings that could impact your business negatively.
Cons of hiring an accountant
Cost
One of the primary cons of hiring an accountant for your small business revolves around the costs involved. Accountants typically charge either hourly rates or monthly retainers, which can vary based on their level of expertise, the complexity of your business finances, and the specific services required. For small businesses operating on tight budgets, these expenses can add up and potentially strain financial resources.
Moreover, while accountants provide valuable expertise, the cost may outweigh the perceived benefits, especially if your business has relatively straightforward financial transactions that could be managed through simpler, more cost-effective means such as accounting software.
Loss of control
Hiring an accountant can sometimes lead to a perceived loss of control over your small business’s financial management. By relying on an external professional for critical financial decisions and record-keeping, there’s a risk of disconnect between your vision and the strategies implemented by the accountant. This can create challenges in communication and alignment, particularly if expectations regarding financial priorities or reporting methods differ.
Additionally, depending heavily on an accountant for financial insights may diminish your own understanding of the business’s financial health and trajectory. There’s also the potential for delays in receiving financial information or reports, which could impact your ability to make timely decisions.
Maintaining open communication and setting clear expectations with your accountant can mitigate these concerns, ensuring that both parties are aligned in achieving your business goals while maintaining transparency and control over financial matters.
Overkill for simple finances
One potential drawback of hiring an accountant for your small business is the possibility that their services may be overkill for simple financial needs. If your business operations are straightforward with minimal transactions and uncomplicated financial statements, the cost of retaining an accountant might outweigh the benefits gained. In such cases, basic accounting software or even DIY bookkeeping may suffice to manage day-to-day financial tasks effectively and at a lower cost.
How much does an accountant cost in the UK?
Hourly Rates
The cost of hiring an accountant in the UK can vary depending on factors such as the accountant’s experience, location, and the complexity of services required. Generally, hourly rates for accountants in the UK can range from £80 to £250 or more per hour.
Here’s a breakdown of typical hourly rates you might expect:
Junior Accountants or Bookkeepers
£80 to £120 per hour.
Junior accountants or bookkeepers typically handle basic bookkeeping tasks, payroll, and basic tax returns.
Senior Accountants or Tax Specialists
£150 to £200 per hour.
Senior accountants with specialised knowledge in tax planning, complex financial analysis, or audit support may charge higher rates.
Specialist Services or Consulting
£200 to £250+ per hour.
For specialist services such as forensic accounting, business consulting, or financial advisory, rates can exceed £250 per hour.
These rates are approximate and can vary based on the accountant’s qualifications, the specific services needed, and the location within the UK (London tends to have higher rates compared to other regions).
Monthly retainer fees
The cost of hiring an accountant in the UK on a monthly retainer basis can vary widely depending on factors such as the complexity of your business’s financial needs, the scope of services included in the retainer, and the accountant’s level of expertise. Here’s a general guideline of what you might expect:
Basic Services
For small businesses needing basic accounting services such as bookkeeping, payroll processing, and annual accounts preparation, monthly retainers can range from £100 to £500 per month.
Comprehensive Services
If your business requires more extensive financial management, including tax planning, quarterly reviews, and management accounts, monthly retainers can range from £500 to £1,500 or more.
Specialist or Strategic Services
For businesses needing specialised services such as financial forecasting, business planning, or advisory services, monthly retainers can exceed £1,500, depending on the complexity and frequency of services.
Additional costs
Additional costs of hiring an accountant in the UK may include fees for specific services such as tax preparation, audits, and personalised financial advice, which can vary based on the complexity of your business needs.
While these services may add to your overall expenses, they often result in potential savings compared to DIY accounting, as accountants can help optimise tax strategies, ensure compliance, and provide strategic financial guidance tailored to your business’s growth and profitability goals.
When should you hire an accountant?
You should consider hiring an accountant for your small business when signs such as increasing complexity in financial transactions, regulatory compliance challenges, or a growing turnover indicate the need for expert financial management.
Typically, as your business scales and financial operations become more intricate, reaching thresholds where professional guidance becomes necessary ensures accurate reporting, strategic financial planning, and compliance with tax laws and regulations.
What to look for in a good accountant?
When looking for an accountant, a small business owner should seek someone who not only understands numbers but also listens to your business goals, communicates clearly, and offers proactive advice to help you navigate financial decisions with confidence.
Alternatives to hiring an accountant
Accounting software
Small businesses have several alternatives to hiring a full-time accountant, including opting for user-friendly accounting software like QuickBooks or Xero, which streamline bookkeeping tasks and offer tools for invoicing, expense tracking, and financial reporting.
Bookkeepers
Another option is hiring freelance bookkeepers who provide part-time services, handling day-to-day financial tasks without the commitment of a full-time employee.
Financial consultants
Additionally, part-time financial consultants can offer specialist expertise for strategic financial planning and advice tailored to your business needs, providing cost-effective solutions compared to full-time accounting services.
Get Small Business liability insurance with Protectivity.
Ultimately the decision to hire an accountant is down to weighing up the benefits of their financial support against doing it independently. In terms of further financial protection, having suitable small business insurance is also a significant component. Having the right cover can ensure you’re not exposed to financial losses if costly claims are brought against you.
Protectivity’s small business insurance has been specifically created to support you if claims are brought against your business. Public liability is automatically included and protects you if you’re sued by a third party; for example, for an injury or property damage suffered by a client or member of the public. There’s also employers’ liability for anyone with a team, ensuring that you’re protected against claims from workers who become injured or ill.
Find out more and get an instant quote suited to your needs.
Get Small Business Insurance from Protectivity
*Disclaimer – This blog has been created as general information and should not be taken as advice. Make sure you have the correct level of insurance for your requirements and always review policy documentation. Information is factually accurate at the time of publishing but may have become out of date.
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