What
Find an accountant who specialises in small businesses or freelancers, ensure they understand the type of work you’re doing, and provide you with useful and proactive guidances, rather than just bookkeeping.
Why
Working with an accountant can help simplify some of the complexities of running a business - outsourcing some mandatory tasks, and providing you with useful oversight of your responsibilities.
Whilst it is entirely possible to do all of the financial reporting, administration and process yourself, in the first 12 months, you’ll probably have a great deal on your plate already: starting your business, finding your clients, delivering the work.
Having a great accountant in your corner helps you feel reassured that you’re not going to make any financial mistakes in the first couple of years, and provide you with invaluable insight and recommendations on maximise your profits, invest in your business wisely, pay the correct tax and national insurance, and how to take any money from the business.
They’ll also be able to make sure you’re aware of any key deadlines (such as tax returns, payment on account), and provide you with proactive and forward-looking advice on how to grow your business.
Some accountants also provide services such as company formations and offer software to help you keep your business records.
Not all accountants are created equal - not all accountants understand small businesses or freelancers - so it’s always sensible to find a firm who understands your business model, and ideally has worked with people who provide similar services to you.
How much might I need to pay?
Prices will vary depending on what services you’re getting and your business, but roughly:
Self-employment (sole trader) tax return and accounts:
£30-75/month + VAT
Limited company tax return and accounts:
~£75-150/month + VAT
Some may charge additional fees for “bookkeeping” (i.e. entering your transactions, purchases and records into a digital system such as FreeAgent or Xero). Some may charge for licenses for access to those accounting platforms too.
Whilst this might seem like an expense you might not want to bear, especially during your first year - reframe the thought, and think about the value of the time you’ll be saving. Hours, potentially days - which could be spent on delivering work for your clients.
It’s important to know
Even though you might choose to work with an accountant - it’s really important to have a good understanding of what your accountant is doing for you.
Ultimately, you’re responsible for your business, and even though an accountant will help lighten the workload, you’re the one signing off on your tax return and making tax payments.
Keep involved in the process, ask lots of questions, and use the collaboration with your accountant as an opportunity to learn about how your business is operating, your responsiblities, tax and more.
How
1/ Speak to your communities to ask for recommendations of accountants - generally, there will be some much-loved and recommended accountants who others endorse, that are ideal for your needs.
2/ Have a conversation with the accountant before you sign-up, to ask any questions you might have, and encourage them to ask you questions about your business too. Ask for references or examples of other businesses they’ve worked with who are similar to you.
3/ Ask what services they provide, so you understand what you’re getting, for instance:
- Can they help you with company formations?
- Will they help you with bookkeeping, or is that left to you?
- How do they help you at the end of the tax-year to complete your tax return?
- Will they provide you with advice on how to take money from your business?
- Will they be able to advise you on topics like pensions, investments, savings?
- Will they provide you with proactive advice on growing your business?
- If you’re a limited company, can they provide you with payroll/PAYE?
- Can they advise you on IR35 (or dealing with mixed-employment type situations)?
4/ Once you’re confident you’ve found a partner you can work with - hold an initial session where you share more details of your business, so they can start providing you with advice.
5/ Consider reviewing your accountants every few years, especially if you’re not happy with the service they’re providing you with.
