Does my wife NEED an accountant?

RHYSDAD

My wife has her own very small part time business doing ladies nails (manicures and extensions) and is earning under the threshold to be liable for any tax. As she is not collecting receipts etc, does she need to employ the services of an accountant or can she declare her gross income on the self assessment form, sign it and send it back? Any advice appreciated because her accountant wants to charge her around £250 minimum for ANY work she does for my wife and she obviously wants to avoid paying that.

Many thanks, RD.

kate2510

Great Scott!! Look for another accountant!! I am semi retired and draw two small pensions and a reduced state pension - I am also a self employed book-keeper for about 6 hours per week on average. I keep receipts for my allowable business expenses and provide details of these and of my invoices to my clients to my accountant who posts my tax return on line in January. He charges me £90,00 + VAT (an allowable business expense) and I have almost £300 owed to me by HMR&C in tax overpaid as well as being able to rest easy that I have not made any errors in declarations.

RHYSDAD

kate2510 wrote: »

Great Scott!! Look for another accountant!! I am semi retired and draw two small pensions and a reduced state pension - I am also a self employed book-keeper for about 6 hours per week on average. I keep receipts for my allowable business expenses and provide details of these and of my invoices to my clients to my accountant who posts my tax return on line in January. He charges me £90,00 + VAT (an allowable business expense) and I have almost £300 owed to me by HMR&C in tax overpaid as well as being able to rest easy that I have not made any errors in declarations.

Thanks for your reply. The trouble is that my wife can't ever get a definitive quote for work to be done. Half a dozen or so accountants refused to give any sort of idea to costs. Apparently they all kept saying 'How long is a piece of string'? when pressed for a figure to do her accounts.....
The thing is though that as she isn't earning enough to pay tax in the first place, does she need an accountant at all?

Cozworth806

Frankly if the gross figure is under the tax allowance then don't bother, put down the short form SA figures and send it in.
I would probably write something to the effect that she has chosen not to put business expenses down rather than not having any in the notes box though

Treading_Water

If the income is under a certain threshold (not sure what it is now but used to be £15000) you only need to put Net income anyway.
I would say that as long as she is comfortable with the return then she would be fine to do it herself.

Pennywise

Trouble with using a properly qualifed accountant/firm is that they have to do the job properly - they can't take the same kind of shortcuts that you could take yourself or that an unqualified/unregulated accountant could take.

Just dealing with the formalities (ID proof, know your client checklist, accounts prep checklist, etc) takes an hour or two each year, and that' before you start on the accounts/tax return. The smallest of businesses are being priced out of using a qualified/regulated accountant. All this is down to Govt/quango bureacracy and red tape.

If you're books are really so simple and if your income really is so low, then you're far better doing it yourself, cutting a few corners, along the way. Sadly, if you appoint a qualified/regulated accountant, their professional rules mean that they have to do the job properly, spending more time, and you have to pay for that.

Your alternative is using an unqualified/unregulated accountant - there are loads of people out there who know enough about accounts and tax returns to do the job but can charge a lot less because they don't have the insurance, regulatory fees, and other overheads. Usually I wouldn't recommend going down that route because chosing someone is a lottery and you wouldn't have any of the supposed benefits of regulation and quality control, but in your case, I can't see how anyone can put you in a detrimental position seeing as you're not liable for tax anyway.

margaretclare

I suggest that your wife enquires at the local Chamber of Commerce, who should be able to point her in the right direction.

When my late daughter ran her small business as a furniture restorer/French polisher, she had an accountant who visited all his new small businesses and he saved her a mint of money by reclaiming tax from her previous employment and showing her what she could claim on as a legitimate business expense.

In fact she never ever made a profit, only ever covered her expenses, which was sad. She wound it up after a year because she wouldn't go into debt.

tyllwyd

I don't understand when you say that your wife is not collecting receipts? Her accounts should be simple enough for her to do her own tax return, but even if she is earning under the personal allowance, she should still be keeping records of all the money in and out of her business. Otherwise, if the tax man did decide to ask questions, how could she prove what profit she had actually made? It needn't be anything very complicated, but I would have thought she does need a cash book showing money in & out, and receipts for anything she buys for use in the business. It's probably good business practice anyway - there is always a danger that she doesn't charge enough to take account of the materials she needs to buy, and ends up making a loss. And if her business did build up and she found herself over the tax threshold, she'd be in a much better position if her records were up to date.

max2009

I think the OP is saying his wife gets paid in cash which happens in most businesses like he mentions.

tyllwyd

max2009 wrote: »

I think the OP is saying his wife gets paid in cash which happens in most businesses like he mentions.

Oh, I see! Still, what I said still stands, even more so if she is taking cash. Years ago, I went to an Inland Revenue workshop and the woman running it said that they preferred to see a hand-written record of money in/out, because it was less easy to alter at a later date, and I'd have thought that was probably all the OP's wife needs for her business.

RHYSDAD

tyllwyd wrote: »

Oh, I see! Still, what I said still stands, even more so if she is taking cash. Years ago, I went to an Inland Revenue workshop and the woman running it said that they preferred to see a hand-written record of money in/out, because it was less easy to alter at a later date, and I'd have thought that was probably all the OP's wife needs for her business.

Oh she keeps books etc to show the money in/out etc and, of course, she has all her banking slips and statements. I guess i we were most concerned about paying a load of money to an accountant for such a small turnover. We are now keeping all her receipts, for year 09 -2010, just to show expenses etc. She is paid some cash and some in cheques. As for profit etc, we just put down her whole turnover etc for Tax credits and NOT gross profit. The gross wouldn't be much less than the turnover as it's a very low input business as far as materials are concerned. It's the skill and time her clients pay for.