Who Needs An Accountant?
The simple answer would be anyone who is self employed or employed by an organisation but earns an additional income outside this organisation.
However, not everyone who falls within this bracket will be in the same financial circumstances and different rules may apply case by case.
But when it comes to accounting horror stories, whether it be prison sentences for tax evasion or overpaying tax in the tens of thousands, we have heard them all. Don’t play the distressed party in one of these tales of woe – if you’re self employed or make money outside of your regular job seriously consider getting an accountant.
Individuals that benefit most from an accountant
– Small startup companies
As a small startup company, you may not have a lot of free cash. If you haven’t made a profit yet, spending money hiring someone to manage your finances may be far from your mind. You may feel like you don’t have any money left to do so. It may seem like a better idea to plough on and put accountant hiring plans on the back burner.
This approach can end badly. As a small startup you will be inundated by tasks you have to complete under severe time constraints. You simply won’t have the time to set up an accounts payable system, or ensure that your reported financial statements are in accordance with GAAP. A new business is a lot to deal with and the intricacies of the financial side can often go overlooked.
To put yourself in a position where you are make huge profits, or even breaking even, time management is crucial. Attempting to learn the trick and trades of a fully trained accountant at these early stages of your business will set you back. Keep your mind on task and let a professional deal with the accounts to let your startup prosper.
– Small and medium sized companies
It’s a common misconception that only large businesses need accountants. If you’re a small start up pizza company with barely three employees and you compare yourself to an international company like Pizza Hut, one can understand where this misconception is rooted.
But it is a misconception that needs to be buried. Fast.
Sure, with computerised accounting systems you don’t need an accountant to take care of your bookkeeping but if you’re a small or medium sized business company that wants to grow, it is important to look beyond this.
In order to grow, you will need to understand the financial position and performance of your company on a continual basis. Qualified accountants have significant experience in such business. They can also help set up a specialized chart of accounts and management information system that helps identify low performing aspects of the business.
– For freelancers or contractors
As a freelancer or contractor you may not need an accountant for things like assessing financial position or managing payroll. But you may need an accountant to asses your cash flow and cash burn.
You may also need an accountant to interpret the 70,000 pages of tax law to make sure that you avoid penalties, legal charges, or potential criminal charges.
And you may need an accountant to advise you on exactly what expenses you can claim back from the government.
Plus, if you’re earning over £200,000 as a contractor or freelancer you’re deemed a ‘top earner’ which means you are far more likely to be audited. Your audit will be scrutinised several times by people with a wealth of accounting experience. It may be best to have it prepared by an accountant who shares this same knowledge.
Think of an accountant as your safety net. They keep things in order so that nothing goes wrong, but if it it does and you fall off the business trapeze, the outcome will be much less dire. Avoid fines and sticky financial situations by investing a little into trained professionals that can keep your business in the air.
