However, failing to take this into consideration could be one of the biggest mistakes you make upon starting out.
So, when you need the expertise of an accountant?
Read on to figure out exactly when and How to hire an accountant.
When to hire an accountant?
Ultimately an answer to this question comes down to you and your role within your organisation. Ask yourse lf the below questions from day 1 of your venture:
- What is the nature of your organisation?
- Are you a Limited Company or a Sole trader?
- What are your expansion plans?
- Do you have a finance-based background, and are you comfortable with doing your accounts?
If you are the sole trader or self-employed
If you are self-employed or a non VAT registered sole-trader, then your accounts may be quite simple depending on your trade.
It is a case of recording incomings and outgoings while dealing with HMRC in terms of paying the income tax and National Insurance contributions on time.
The only issue is this route does not allow for changes in legislation and tax planning so you could alternatively go for the halfway house option and use an accountant for some specific services or tasks you feel you need support with.
Your accountant will set you up with accounting software and will make sure you are compliant while also informing you of the latest opportunities and developments in your industry.
An accountant will assist you with VAT returns, PAYE and planning for payment of your tax liabilities.
Your accountant will then be in the position to advise you on the best way to expand your business in line with your plans.
For the company
In the case of a limited company, this will depend on your role within the company.
If you are from a financial background and comfortable doing bookkeeping and drawing up accounts, then it will be fine if you handle your books in the early stage of your business.
As your business grows the time and administrative burden will require taking on more people as part of the creation of a back-office finance function.
However, during the initial days of many businesses or startups, the owner’s time will be pre-occupied with planning, production, generating sales and marketing.
Most of the initial focus on generating income and getting the business off the ground leaves a little time for anything else, especially the lengthy tasks of bookkeeping, tax, etc.
In this case, the most efficient thing you can do is hire an accountant to advise you on the best steps for structuring a company from day one.
If you do not do this, then the risk is your record keeping could soon turn into an administrative mess which could cost you a lot of time, money and hassle.
So, it’s better to plan ahead.
Now let’s explore some points to keep in mind while hiring an accountant,
How to hire an accountant?
Figure out why you need to hire an accountant
Before you even start your search for a specialist, come up with the outline of exactly why you need an accountant.
Consider all factors which are related to the accounting requirements. These contain:
- The number of people in your payroll
- The business sector you operate in
- The level of your income
- The kind of accountant or accounting firm you want to work with
- Your company’s current financial situation
- If you are considering to sell your company in the future
- The goals of your company
Decide your accountancy needs
After understanding all the needs of your business, you can now evaluate the accountancy services you require before you hire an accountant. You may require all the accounting services such as Payroll, Bookkeeping, business taxes, VAT, year-end accounting or a few of them.
Decide the ideal accountant for your business
Every organisation is different. Similarly, accounting firms are tailored to different types of clients. They have their special set of skills with special ways of doing things. Before you hire an accountant, make sure all the needs of your business and what the accountant firm is offering are aligned.
When hiring an accountant, be careful not to overspend while all you need is a little hand in your particular business.
You have got to find a balance to avoid cheap services that may not fulfill the purpose you want for your specific business.
Most of the accountants will offer services on a retainer basis or an hourly basis.
Before hiring an accountant, shop around to know the average price range of how much you should expect to pay for services.