Afraid to hire an accountant? The 5 most common fears and how to get over them

July 26, 2021 in Accounting

The fear of the unknown is the most common reason that many of us don’t do a lot of things and the same goes for business. What if I’ve made the wrong choice? What if this or that happens?

Would it really be so bad if I just carried on doing the same thing…?

Many business owners are afraid to hire an accountant for this very reason. They are afraid because they don’t know exactly what they can do for them. This is understandable, as hiring anyone can be scary but there is so much value in having this particular professional in your corner.

To help you get over this fear and see the bigger and brighter picture of hiring an accountant, here are the 5 most common fears or reasons not to hire (and how to get over them):

Reason 1: “I can’t afford an accountant”

With so many expenses in running a business, it makes sense if your fear for not hiring an accountant is a financial one BUT you have to think about the return on investment. An accountant doesn’t just file your taxes at the end of the year. They save you a lot of time, money, and stress from your accounting to your forecasting and business investments.

Think about how much you would pay for complete peace of mind in your financial decisions and not having to worry about late penalties or audits. Is the price worth it now?

Reason 2: “I don’t want to show them my numbers”

Many business owners don’t feel comfortable talking numbers with a new person or they may feel embarrassed by where their revenues are at or at the state of their business. Whatever your fear when it comes to your books, try not to fret. Accountants are well-versed with working with new businesses from the ground up and they’ve always seen worse!

In fact, they much prefer it if you consult them as early as possible so that they can be your advisor and confidante as you’re building your business.

Reason 3: “I won’t or don’t know how to find the right person”

It’s not going to be quick to find the right person for your business, that’s for sure, but it can be easy. Start by asking other business owners of a similar size to you for their recommendations. You can also do your own Google search for accountants in certain locations or specialities, or for one that offers the services you need.

With this information, you can then establish contact with each professional and make the best choice for you and your business.

Reason 4: “I/we can just do this in-house”

This fear or reason often links to money. “I’m not making enough money in the business to justify an accountant” or “I can save money by doing my accounting myself.” While this may make sense when you’re a very small business and you have this time, it just doesn’t as you grow.

If you want to be successful in business, you’ll need essential processes like your accounting done properly and an accountant will save you so much time doing it right (whilst saving you money in the process).

As we mentioned previously, an accountant does so much more than just filing tax returns. They can help you navigate ever-changing compliance laws, avoid costly mistakes, identify tax-saving opportunities, and plan your business strategy.

Reason 5: “I’m too busy”

Last but not least is putting off finding an accountant because you’re too busy. It’s just like that caveman cartoon where one is offering circular wheels to two cavemen who are trying to push a cart with square ones – an accountant will SAVE you time in your business. Yes, it will take time at first to find and work with one BUT the time you save later can be invested back into the things that matter.

If you feel the fear, do it anyway. If you think you can’t afford an accountant, you don’t have the time to find one or you can manage on your own, think again. The value an accountant brings to your business far outweighs the ‘costs’ of bringing one on board. Making the right financial decisions is crucial to the success of your business, so can you really afford not to have an expert on your side?

Tax Relief for Working From Home

July 14, 2021 in Accounting

HMRC has revealed that, since April, nearly 800,000 employees have claimed tax relief for working from home during the pandemic.

Employees can claim a full year’s entitlement where their employer has instructed them to work from home, even when they have only worked from home for one day during the tax year. Employees who have returned to the office to work since April 6th or who are due to return shortly are still able to claim the working from home tax relief for the entirety of 2021-22 tax year.

Once an employee has had their application to HMRC approved, they will see an adjustment to their tax code which will mean that the tax relief is applied automatically to their salary.

The tax relief available is based on £6 a week and eligible employees will receive tax relief based on their highest rate of tax. i.e. a 40% taxpayer would receive £2.40 per week towards the cost of their household bills or nearly £125 per year.

Potential claimants, that haven’t yet taken advantage of the relief available have up to four years to apply. If you have been eligible in any or=f the previous four years, you can also backdate your claim (to the 2017-18 tax year).

Claims for tax relief for working from home can be made via the online portal HERE or we can assist clients and employees of clients to make the claim

The Most Dangerous Accounting Mistakes For Your Small Business

June 28, 2021 in Accounting

 

Starting your own business is an amazing thing to do but it’s also notoriously risky. There’s a lot to think about when you first start out on your own and it can be tempting to put accounting on the back burner, but that would be a huge mistake. Good accounting is crucial to the financial health of your business and mistakes can be devastating, especially in the early days. It’s important to know which mistakes to avoid to ensure that your small business is around for years to come.

1. Bad Bookkeeping

New business owners are often overwhelmed and tend to neglect bookkeeping. However, it’s essential that you keep the books up to date and record all of your earnings and expenses. Without this data, you won’t have a clear picture of how you’re faring financially, which can lead to a myriad of nasty problems.

 

Meticulous bookkeeping allows you to spot trends, understand your spending and examine which practices generate the largest ROI. You can then leverage this data to improve the financial health of your business, maximise your profits and manage your cash flow. Staying on top of the books allows you to stay one step ahead and put out fires before they start.

2. Confusing Cash Flow and Income

The money you take isn’t the money you make.

 

£100,000 in revenue sounds great, but if you had to spend £30,000 on equipment, insurance and employees to make that money, you’re actually left with £70,000 profit. You’ll then have to pay tax on your gross profit, so the net amount will be smaller again.

 

It’s vital to know not only how much money is coming into your business, but how much is going out. Getting carried away with gross numbers is a common mistake that new business owners make, and it quickly lands them in hot water. It’s important to stay grounded in reality and know how much you’re really making so that you don’t overspend.

3. Using Outdated Practices

You’re a 21st century business and your accounting practices should reflect that. Online accounting and bookkeeping softwares are faster, easier and dramatically more efficient than ledgers and Excel spreadsheets.

 

Online accounting software is easy to learn and significantly reduces the margin of human error by automating processes and calculations for you. This means that you’re much less likely to make mistakes on your tax return. It also reduces the risk of making the wrong financial decisions due to inaccurate information.

 

With this type of software, you won’t have to spend hours updating and organising your financial information. Another benefit is that it allows you to locate and cross-reference information quickly and easily, without having to spend hours searching for the right files. It may be more expensive than the DIY approach initially, but using online software will save you many man hours.

4. DIY Accounting

Accounting is complicated; there’s a reason it takes accountants years to fully qualify. Trying to manage your accounts all by yourself is a surefire way to waste time and stress yourself out. Besides, without extensive financial knowledge it’s unlikely that you’ll be able to save a significant amount of money on your tax return. Furthermore, you’ll be heavily penalised for making even a minor mistake on your return which could cause financial problems for your business.

 

Trying to manage on your own is a drain on your resources so the sooner you seek professional help, the better. Investing in the services of a qualified and chartered accountant is one of the best decisions you can make regarding the financial health of your small business.

Summary

It’s important to avoid the above accounting mistakes in order to set your business up for success. Neglecting or mismanaging your accounts can have serious consequences, so it’s best not to take any risks. Whilst it’s tempting to put accounting off until later, you need to make it a priority right from the very start. Good businesses and bad accounting just don’t go together.