When setting out on your journey to becoming self-employed, an entrepreneur or a business owner most people ask this simple question, do I need an accountant to do my taxes? This is a favorite question by business owners and with good reason.
The simple and straightforward answer is that you are not legally required, by any government body, to appoint the services of a qualified accountant. HMRC has provided much information for you to successfully complete your tax return and file your own taxes online.
You can save on the accounting fees by computing your own taxes but you might lose out on some of the reliefs given by HMRC to legally reduce your taxes. In light of this, I would suggest using a qualified accountant to do your taxes because of the vast industry experience and knowledge of the UK’s complex tax system.
Do I Need An Accountant If I Am Running A Limited Company?
If you are sufficiently educated in the art of preparing the company’s tax returns, your personal tax returns and the statutory rules of accounting, then it would be possible for you to do your own accounting, tax computation, and filing.
In addition, you have to keep your records for a number of years after the preparation of the accountants, just in case the taxman needs a second look. Do not forget to file your confirmation statement.
For companies, you have better things to do with your time, effort and energy, like making money, instead of focussing on the part of the business that is not making any – the accounting and tax computations.
As A Small Limited Company, Am I Legally Required To Appoint An Accountant?
As a small business, you are not required to use an accountant to prepare your bookkeeping, accountants or taxes. It may be possible to call HMRC and Companies House and let them sort it out for you. Remember that, even though you are calling HMRC they are not there for work out the tax for your benefit and you may end up paying more taxes than you have to.
Most small companies are owner-managed and are therefore exempt from being audited. Companies will not be audited if they meet the following criteria:
1. The company is a small company. Small companies are companies with less than 50 employees, with turnover and balance sheet balance of sixty-five million (65 million) and three million two hundred and sixty thousand pounds respectively.
2. No audit is needed unless a member of the company requires it (assuming of course that they hold a 10% share capital). If it is a company limited by guarantee, 10% of all members must request an audit to be carried out).
Why Choose An Accountant To Do Your Taxes? It Just Makes Sense.
Most entrepreneurs are smart. They chose to use a professional accountant to help with completing the bookkeeping, accounting and tax function within their businesses. It is not mandatory but makes perfect business sense to focus on business growth instead of cutting costs.
Accountants do more than just compiling figures for year-end accounts and submitting the VAT returns. A good accountant can do a number of other duties for a small business:
- Registering the business for the relevant taxes – VAT, Corporation Tax, PAYE, etc.
- Set up and run the company’s payroll, plus ensure compliance with the new RTI rules.
- Performing the Bookkeeping.
- Preparing Micro entity accounts or full accounts.
- Dealing with company-related correspondence (Companies House, HMRC).
- Providing tax planning advice.
- Dividend administration advice.
- Providing professional references.
A professional accountant regularly deals with HMRC and companies. As a result, they understand the nuances of dealing with the tax authorities, the correct format to submit information to HMRC, and are generally far more capable to deal with issues that may arise as a result of dealing with tax inquiries.
Your accountant is just a phone call or an email away if you need crucial advice on any accounting or tax issues. If you need advice on a particular expense that can be offset against CT600 or corporation tax, or you need to know the most efficient way to withdraw money from the business or whether you can legally declare a dividend. Giving this advice will take a good accountant a few minutes to answer that would take you days or even weeks to figure out.
What Should You Consider If You Are Planning On Doing Your Own Accounts
If you are planning on doing your own accountant there are a number of considerations that you must bear in mind. You must prepare your accountants in accordance with Generally Accepted Accountancy Practice, submit information in a timely and accurate manner, including the right format, and ensure you meet the company’s statutory and financial obligations.
You should calculate the amount of time required for you to prepare your own accounts, bookkeeping, and dealing with HMRC, then compare this with the cost of using a small business accountant.
Finally, if your main consideration is to save money then consider the time it would take you to prepare your own accounts and compare it with the amount of money and time you could save by using accountants. It would be better for you to concentrate on running your own business without worrying about the accounts.
If you need an accountant, let Taxfreeman Accountants be your accountant. Get in touch…
