What size of turnover do you need to have before you need to get an accountant?

carrot-cake_2

I would also like to add......don't expect an accountant to be able to save you more than their fees! You may be disappointed. It all depends on whether you qualify for certain benefits and schemes.

We get customers coming in all the time saying they've heard from their mate that we can save them from paying this or to dodge tax 'legally'!

What gets me is that people are quick to set up a business with pound signs in their eyes but when it comes to paying out for PAYE, Tax, Accountancy fees etc they don't want to part with their money.

If you're going to start a business you need to take responsibility and accept that sometimes you need to pay for things the businesses that pay what they need to and are careful for the first 5 years are the ones that thrive. Those that take out a big wage and divdends, buy a house, nice car as soon as they have a lump sum but then avoid paying their bills are the ones that take a very quick nosedive!

carrot-cake_2

emsywoo123 wrote: »

Huge mistake. An accountant will (should) always save you more than they cost. Unless you are one. In which case don't bother

Completely untrue

CKhalvashi

carrot-cake wrote: »

Completely untrue

Not completely untrue.

Out accountant, through the course of several mergers/acquisitions over the past few years, has been worth her weight in gold, and is a specialist in the industry we're in. In the last 5 years alone (I worked with her for 8), I'd estimate she's saved us £5m in tax as we've grown from £50k-ish turnover, to £8m last month alone (£63m on last annual accounts).

But biggest waste of money is an auditor, but that may just be my opinion

carrot-cake_2

CKhalvashi wrote: »

Not completely untrue.

Out accountant, through the course of several mergers/acquisitions over the past few years, has been worth her weight in gold, and is a specialist in the industry we're in. In the last 5 years alone (I worked with her for 8), I'd estimate she's saved us £5m in tax as we've grown from £50k-ish turnover, to £8m last month alone (£63m on last annual accounts).

But biggest waste of money is an auditor, but that may just be my opinion

Yes and although your accountant managed to save YOU money, this isn't the case with EVERYBODY. It all depends on lots of different things. What I'm trying to say is that you shouldn't base your decision on getting an accountant solely on the belief that they can save you money just because someone has told you they saved them money. Because you may be disappointed when it doesn't happen and obviously going to blame your accountant and thinking they are useless.

Wywth

carrot-cake wrote: »

Completely untrue

Now if anything is completely untrue, it's this post :cool:

Pennywise

Depends on what you want the accountant to do. If you can't be bothered or are incapable of keeping proper book-keeping and tax records, then a high proportion of your "accountancy" fees will relate to basic admin tasks. If that's the case, then it is wholly unrealistic to expect that an accountant will save more than their fees and that's your fault!

BUT, if the accountant is spending most of their time on higher level matters like tax planning, financial advice, business development, etc., then your benefits are likely to be far higher than their costs.

You also have to look beyond how much they save in tax. For example, how much would your fines/penalties be if you do it yourself and miss a deadline, or there are errors in your tax returns, or you find yourself using the wrong VAT scheme etc. You also have to look beyond a year at a time - some advice or services will span the entire life of your business, or maybe even your entire personal life - so there may be a huge saving in year 1 or year 10 and little in between. Also, all the potential benefits of using an accountant when buying or selling a business - potential for better negotiation if you're armed with the facts - again, not just tax but higher sale price or lower purchase price.

In my practice, I'm happy and confident in saying that for the vast majority of my clients, their accountancy fees are exceeded by the money they've saved arising from the advice/services that I've given to them. But, most of my clients have been trained to keep good records so their fees for the simple accounts/tax preparation are low as a result.

If you just hand your accountant a bag full of screwed up paperwork, or a haphazard attempt at Sage, or a home made spreadsheet, then it's a fair certainty that the accountant (or more likely a junior) will have to spend hours on book-keeping, an admin task, for which their costs won't produce a return for you.

Acc72

pinkypoopydoo wrote: »

I may be biased, but a good reliable accountant or bookkeeper is a basic essential to most businesses, even with a much lower turnover of £500K.

Tight control over all fiscal aspects of your business are vital. They don;t just "do the books" (or at least a good one doesn't), they can help with planning, budgeting, stock control management, debt control, the lot. You buy a whole package, not just someone to produce a trial balance once a month.

I would just like to add to the above - the the OP, you need to be sure what you want before you go looking for it

From my own personal experience, most accountants in practice are good at doing the mechanical accounting type stuff, but do not have a clue about business planning, day to day financial management etc.

Some think that they do, by most do not - this is partly because most have never actually worked in a business.

Pennywise

Acc72 wrote: »

I would just like to add to the above - the the OP, you need to be sure what you want before you go looking for it

From my own personal experience, most accountants in practice are good at doing the mechanical accounting type stuff, but do not have a clue about business planning, day to day financial management etc.

Some think that they do, by most do not - this is partly because most have never actually worked in a business.

Depends entirely on the person. "Some" accountants just sit in their offices poring over paperwork, accounts and tax returns.

Others get heavily involved with their clients' affairs, attending their premises regularly, preparing forecasts and business plans, sitting in management meetings, etc.

If the latter, then they're probably far better and more experienced than someone who's "worked in a business" as they'll have a much broader range of business experiences over numerous different industries and a range of different business sizes.

It all depends on the accountant themselves - that's why it's so important to choose properly rather than making assumptions based on stereotypes.

In my case, in one particular "practice" job where I worked for 5/6 years, I had a client portfolio of less than 10 clients where my role was "surrogate financial director", where I visited them at least monthly, for some clients it was weekly, and I was very heavily involved in the business - including attending meetings with the bankers, investors, suppliers & customers, I sat in on internal management and development meetings, I gave financial training to their in-house staff. For those 10 or so clients, I was part and parcel of their organisation. They were too small to have an in house qualified accountant, but needed one due to growth and business complexity. I gained far more experience and skills in those 5/6 years than I would have done in 10 or 20 had I worked in a single business.

Now I have my own practice, I can share those skills and my experiences with all my clients. Don't assume that just because someone has worked in an accountancy practice all their working life, they don't have business skills. That's quite an assumption - often valid, often wrong.

That brings us back to choosing the "right" accountant, which will depend on your needs. Eg, if a prospective client has an in house accountant and just wants the "mechanical" side of the accounts and tax returns doing, then that's something I decline. But, for small and growing firms who don't really know what they want, that's the work I like because it's a mix of mechanics and a mix of tax planning, business development, growth, possible succession planning, possible preparation for sale, etc., which is interesting and rewarding for me, but also and more importantly just what the client needs, even if they don't know it.

nomunnofun

1) I do not need an accountant because I am content in the knowledge that I know what I am doing and, if I were to employ one, would regard it as nothing more than an unnecessary expense.

2) I have an accountant whom I trust to prepare my accounts and tax returns. I trust that I will pay the correct amount of taxes and, for a fee, can carry on running my business without the hassle and worry that I may not have submitted everything correctly.

3) I now have an accountant. I used to do everything myself but made a complete mess of it with the result that I have - paid too much tax/VAT / paid too little tax/VAT / am being investigated/ have too little time to concentrate on my business.

Most fall into one of these three categories.