As an accountancy firm, we think every business owner should have an accountant (unsurprisingly). But we also know that many businesses do their own accounts, mainly because they think it saves money. How cost effective is it to not use an accountant and when can we save you money?
Outsource to a specialist
We know that small business owners have a lot on their plate and often start out having to do everything themselves because of cost, resources and simply not knowing otherwise. But as your business develops, you will start to see the value in outsourcing certain parts of the business – and certainly those that aren’t your area of expertise or that take up a lot of time. Your business accounts may well fall into this camp. Finding an accounting firm and tax specialist who can take care of this very important aspect of your business can save a great deal of time, stress and money.
Tax evasion vs tax avoidance
Keeping money in your business is the holy grail for most business owners. But there is a massive – and important - difference between tax evasion and tax avoidance. Tax evasion is illegal and includes not reporting all income and not filing your tax returns, or deliberately filing incorrect returns. Tax avoidance is utilising legal ways to make your money go further, such as making the most of ISAs and other tax allowances. HMRC are extremely strict on both tax evasion and overly-aggressive tax avoidance, and small businesses in particular really can’t afford to get it wrong. An accountant will know how to maximise your tax efficiency legally and without prompting HMRC to take a closer look at your affairs.
Understanding HMRC rules
Do you know when you are due to submit your tax returns, VAT returns or payroll? Annually, quarterly or monthly? Has your business been affected by the roll-out of Making Tax Digital? And did you choose to delay any 2020 tax payments because of Coronavirus? There are differences too in the way sole traders and limited companies submit their accounts, so your company set up can have a huge bearing on your tax liability. A qualified accountant and/or Chartered Tax Adviser will be fully up to date with all changes, an invaluable resource in the current constantly changing financial landscape.
Knowledge of what you can claim
Tax relief and those items you can and can’t claim for are often subject to change. There are also different methods of working out and claiming your expenses. If you have a second income stream, such as rental property, any profit must also be declared and again, there are certain expenses you can and cannot claim for. Any secondary income will have a bearing on your overall tax bill, so it definitely pays to have your accounts worked out properly.
In short, an accountant is an expert in all things tax – knowing what you can claim for, how and when to submit your tax return and avoid late submissions and fines, how to record other income streams, and advising on how to run your business in as tax-efficient a manner as possible. An accountant is not a luxury expense, but a necessity in running a profitable business. You will likely more than make back your accountant’s fees in the tax they save you and/or the time you save - and accountants’ fees are tax-deductible too!
Contact Us
Please contact us to find out how you we can help you to reduce your tax liabilities and maximise your tax efficiency.
Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
