Do I really need an accountant?

cheekykid

Am starting a new business and I want to know if i really do need an accountant? ill be registered as self employed and I wish to know if i can do my tax returns alone without having someone who will most likely charge me silly amounts.

Do accountants know more than what what I would find out if i begin learning the subject? I mean other than the stuff you read online about what you have to do are there any other hidden alleys that allow you to pay less tax? what is the benefit of having an accountant other than saving you time?

Am a bit confused as to whether i really need an accountant or not.

Money_Grabber13579

The problem might lie in knowing what expenses you can or can't claim. Is it going to be a company? In that case you will need an accountant to file accounts.

An accountant will help you with VAT, if necessary, and also how to minimise your tax liability. If it's complicated and you do it wrongly, you could end up being fined.

cheekykid

Money_Grabber13579 wrote: »

The problem might lie in knowing what expenses you can or can't claim. Is it going to be a company? In that case you will need an accountant to file accounts.

An accountant will help you with VAT, if necessary, and also how to minimise your tax liability. If it's complicated and you do it wrongly, you could end up being fined.

Its not a company just 2 people business. Am wondering if accountants do know "legal" tricks in how to save you money

slipp_digby

i would think if your business idea is not going to change much after year one, you could employ an accountant in year 1, get all the systems in place you need, get advice on which expenses are allowable and then do it yourself from there on?

Pennywise

cheekykid wrote: »

Am a bit confused as to whether i really need an accountant or not.

It is arguable whether anyone "needs" any professional anymore. Do you really need a mechanic to service your car? Do you really need a plumber to add a new radiator to your home? Do you need an IT firm to install the latest version of Windows or set up your home wireless network? The truth is that anyone can do virtually anything themselves these days.

The real question is whether YOU have the time to research and the ability to digest and implent the information you can easily find on the internet? And do you have the time and ability to keep yourself up to date with the changes that seem to happen 2 or 3 times a year?

There are thousands (maybe millions) of people who do their own accounts/tax returns and thousands (maybe millions) of people who engage an accountant. There are people with tiny incomes and incredibly easy tax returns who use professionals because of the "peace of mind" and confidence that things will be in order. Conversely there are millionaires who do it all themselves.

What I would say is that if you decide to go it alone, then you have to accept the adverse consequences of your decision if it all goes wrong and you end up paying too much tax, missing a few tricks, getting fined for missing a deadline you knew nothing about, find your bank won't give you a loan/mortgage because your accountants aren't "signed off" by a qualified accountant, etc. It comes down to a matter of risk assessment - you have to consider the implications of the risks against the "reward" of saving yourself a bit of money. Only you can decide which way you want to go.

Seeing as most good accountants give a free hour long meeting for potential new business clients, I'd say you'd be foolish not to go to say 3 accountants for a free meeting - you'd get a few ideas, a bit of relevant information, and you'd have made contact with three people to help you decide who you liked best and who said the right things - then you'll also have some quotes as to their fees - you may find that they aren't as expensive as you thought after all. Like all professionals, accountants quickly become costly when things go wrong - i.e. sorting out tax returns that were submitted wrongly by amateurs, untangling incorrect business structures, making sense out of poor book-keeping, etc - if you work "with" your accountant and use them properly, their charges will be less and you'll get more out of the relationship.

PlutoinCapricorn

My feeling is that unless you are required by law to use a professional account and/or the volume of records is too much for you to deal with, it is best to do it yourself. There wll be some learning to do, but if your affairs are simple there is not much that an accountant could tell you that you could not discover for yourself.

orangeslimes

I work for an accountant who recently had got a new client who had done his own accounts for years - by our estimate he could have paid £7000 less tax over the last few years if he had claimed all the expenses he was entitled to (he was a tradesman of somesort so nothing very complicated)
It is possible to do it yourself - but if you get a (good) accountant it will make your life a lot easier then trying to muddle through by yourself.
also if you phone HMRC the advisors are only trained to read out information - they don't necessarily know much about tax, and the tax system isn't exactly simple.
I think the advice about going to some free consultations is good.

PlutoinCapricorn

Have a look at Lewie's thread in the Cutting Tax section: his accountant did not claim for his van. He needs to make a big effort to get some refunds.

Even if you make use of an accountant, it is always worth making some spot checks.

Alison_B

I decided to use an accountant when I started my business. I am a sole trader but I wanted to make sure that I had the ground work in place from the beginning - i.e. what I can claim for a room in my house where I work from, telephone, electricity etc. I didn't want to suddenly start claiming for these once I was more established and needed an accountant.

Percybridge

Pennywise wrote: »

The real question is whether YOU have the time to research and the ability to digest and implent the information you can easily find on the internet? And do you have the time and ability to keep yourself up to date with the changes that seem to happen 2 or 3 times a year?

Thank you for this. I am just wondering how difficult people find it to research and keep up to date.
A friend's son is thinking about starting a gardening business, and is finding it difficult to do all of the research into what he can or cannot claim for.
He has also looked into bookkeeping online (you recommended a couple in another post I did) but found them overly complicated and I think he said you had to pay quite a lot to use them anyway.

Thanks again Pennywise for this useful post (and for the previous links)

KatiePrice

We are newly self-employed and were in the same position. Do we employ an accountant or not? There is advice out there - Business link not that good (in my opinion) but we did attend a workshop organised by HMRC at our local tax office. Maybe we got lucky and spoke to a "down-to-earth" tax man, but he was really helpful and basically told us what we can and can't get away with tax-wise.

We decided to do the "accounting" ourselves and (upto now) not come across any problems - partnership and individual tax returns done, as well as NIC and payroll things as we employ 1 person.

Contact HMRC via the website - search for workshops and then select the area of the UK you live.

Hope they help you as they did for us!