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Do I Need an Accountant for my Business Taxes?

Depending on the size and type of business you run, you may be able to work out your business expenses and taxes by yourself. Being a sole trader or a single registered company owner with quite a simple business structure in place could mean you can manage your tax affairs by yourself. However, many solo entrepreneurs still prefer to place their taxes in the hands of a professional accountant.

Employing an accountant to handle your business taxes on your behalf can often be beneficial because they will understand the tax system and know what allowances and business expenses you can claim, so their knowledge and expertise can often end up saving you money in the long run!

Why would I need an accountants help?

Many business owners want to be as ‘hands-on’ as possible with their own business. This includes doing as much of the necessary bookkeeping and official paperwork themselves. While some will be fine handling the finer details of VAT, corporation and income tax, others may struggle with making sense of these areas. You may have a situation where you can handle some of the tax reports and duties by yourself but need the help of an accountant for more specialised returns.

If you are set up as a limited company, you will need to pay corporation tax on your taxable profits raised by your business. You will need to file an annual company tax return with HMRC along with your business accounts. This can seem like an onerous task for some, so this is where a good business accountant can step in and lift the task from your shoulders.

If you are just about to start up your business, or you are a sole trader who is looking to step-up a gear and go through the company formations process to officially register your business as a limited company, then having the help of an accountant from day one can help you start off the the right foot and build on a solid foundation.

Keeping your business and personal finances separate from each other is also a good idea for when you need to work out your business taxes. For sole traders looking to register their business with HMRC, you can also conveniently add a business banking service to your registration when you form your company through Your Company formations. This will save you time and money with your business registration process and will help you to better organise your business finances.

Keeping your business and personal mail separate is also useful too and will prevent important mail from Companies House and HMRC from going astray or getting lost in piles of junk mail coming to your home. You can easily set up a Registered Office Address service for your company to save your home address appearing on public record at Companies House. This will also save your home address from becoming a target for cold-callers who may turn up on your doorstep at all hours.

VAT payments

Depending on the size and turnover of your business, you will only need to pay VAT once your annual turnover reaches £81,000. When this happens, you will need to register your company for VAT and submit a VAT return once per quarter to HMRC.

When registered for VAT, your business must charge VAT on the goods or services you supply. You can then claim VAT back on any goods or services you buy for your business. But you can only do this on products and services that are VAT registered. Some items you purchase for your business will be VAT-exempt and others may have a reduced rate of VAT applied to them, so you need to be careful to claim back the right amount of VAT. Again, this is where using the expertise of an accountant can help you to claim back the right amount of VAT, but also ensure that you are charging the right level of VAT on the goods or services your business provides.

Your accountant can also help you with the different VAT schemes that are available. Choosing the right VAT scheme for your business will also mean you can save money. For example, if your business has less than £150,000 in turnover, you can choose the flat-rate scheme that will result in you paying a reduced rate of VAT, but this will mean your company will be unable to claim back VAT on your business purchases.

If you want to take on your own company tax affairs, then you can get help and guidance on filling out and submitting all the required forms from the hmrc.gov.uk website. There is also guidance about using compatible accountancy software so you can submit your figures online.

Should you be one of the many business owners who prefers to focus their time and energy on growing and expanding their business instead of being mired down with bookkeeping, balancing accounts and dealing with TAX and VAT, or you find accounting to be confusing and frustrating, then you would be advised to place these important aspects of your business in the hands of a professional accountant.

Choosing a good accountant to work with will ensure that you get things right from the start. Your accountant will also check to make sure that your company has claimed for all the expenses that you are entitled to – many of which you may not know about. They will also ensure that your VAT and TAX obligations are met in a timely manner, avoiding rejections and penalties being applied from HMRC.

In many cases a good quality accountant can end up paying for themselves through the savings they make! Many business owners are unaware of the various tax reliefs that are available to your company, as well as corporation tax deductions they may be eligible to.

But can’t I just use accounting software?

While there are very good accounting software systems that can calculate VAT and tax for you, very many of them can only handle the most simple data for working out your returns. This is why most companies prefer to employ or hire an accountant to handle the corporation tax returns they need to submit.

There are also some business types that are not suitable for software-only calculations, such as partnership tax returns for example. It is worth talking with an accountant first before paying out for any expensive accounting software to manage yourself. It may work out cheaper and easier to hand these duties over to an accountant instead.

If you are not particularly good with figures, tend to forget important dates, or you prefer to be more hands-on with your business than locked away in an office, knee-deep in paperwork, then an accountant will make sure your accounts are up to date. They will also enable you to avoid additional penalties from HMRC for failing to meet submission deadlines, or for submitting incorrect information.

Further reading:

A Date To Remember? Important Dates for Small Businesses

Self Assessment Basics – What You Need to Know

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