When should you hire an accountant or bookkeeper for your start-up?

As an entrepreneur, you bear the weight of myriad responsibilities every day. Are you supposed to carry the burden of "accountant" as well? If your venture is huge, you might want to consider delegating the day-to-day finances to someone else. Is there a time when you should hire an accountant? Let's take a look at this.

If you possess a penchant for numbers and boast extensive experience in navigating the intricate landscape of figures, tax rates, HMRC declarations, and the like, you might consider overseeing your business's financial intricacies personally. Yet, even if numbers are your forte, it's likely that there will be other pressing matters vie for your attention in business growth. Entrusting financial matters to an expert could save you valuable time.

It's amazing how quickly a handful of figures in a spreadsheet can spiral into a maelstrom of expenses, invoices, purchase orders, bank statements, and a ceaseless influx of receipts. Therefore, while the desire to curb expenses may loom large, contemplate whether engaging an accountant might constitute a wise investment in your business's future.

The Distinction Between a Bookkeeper and an Accountant

Accounting and bookkeeping aren't the same thing. While both handle your business's financial affairs, their roles differ significantly.

What Does a Bookkeeper Do?

A bookkeeper diligently maintains precise and comprehensive records of your day-to-day financial transactions – encompassing payments, sales, bills, payroll, and the like. Their duties typically encompass:

  • Monitoring customer payments and invoices

  • Settling supplier bills

  • Administering payroll

  • Documenting cash expenses

  • Overseeing cash flow, including forecasting

  • Reconciling bank accounts

What Does an Accountant Do?

Conversely, an accountant possesses a broader purview of your business's financial performance. They achieve this by scrutinizing and analysing the information compiled by the bookkeeper. Typically, accountants handle the following:

  • Establishing accounting software and implementing processes

  • Validating the accuracy of bookkeeping

  • Crafting tax strategies and preparing tax returns

  • Providing consultations and counsel on financial decisions, tax ramifications, asset management, and formulating a financial strategy

  • Business planning

  • Addressing payroll matters

In the realm of startups and small enterprises, some bookkeepers may encompass certain accounting tasks, or accounting firms might offer bookkeeping as an additional service. Moreover, with the aid of contemporary accounting software, erstwhile intricate accounting tasks have become markedly more manageable.

Determining the Need for an Accountant

There's no hard and fast rule about when you should hire an accountant. This decision hinges on the nature of your business, your aptitude for handling numbers, and the time and resources at your disposal.

For some entrepreneurs, securing a capable and reliable accountant stands atop their to-do list. For others, this need arises later in their journey. Irrespective of the path you choose, it's never premature to assess your circumstances and contemplate the opportune moment to engage an accountant.

Here are some indicators suggesting it might be the right juncture to consider hiring an accountant:

  1. Assistance with Business Planning and Setup: Seeking an accountant's aid before formalizing your business can be invaluable. Crafting a business plan necessitates collating vital numbers and financial projections, presented in a professional manner. Accountants possess the expertise to effortlessly generate professional reports and forecasts, lending gravitas to your business plan. They can also counsel you on optimal business setup and financial management, including the most suitable legal structure – whether sole proprietorship, limited company, partnership, or another option.

  2. Financial Strategy Guidance: Amidst the whirlwind of activities, guidance regarding budgets and finances proves invaluable. An accountant can assist with tax deductions, maximizing expense allowances, and identifying available support schemes and initiatives. A proficient accountant remains abreast of the latest developments in small business finance, legal alterations, compliance, and everything in between. Their expertise not only preserves and augments your monetary resources but also bestows the assurance that someone adept is steering your financial ship.

  3. Numerical Challenges: Acknowledging one's limitations is the hallmark of sagacity. If numbers are not your forte, why grapple with spreadsheets and calculations? Delegate this realm to a skilled expert. Procuring the services of a trusted accountant, preferably recommended by reliable sources, ensures accurate financial management. Regular consultations with your accountant are imperative; despite your numerical aversion, understanding your business's financial pulse is non-negotiable.

  4. Time Constraints and Other Priorities: The incessant demands of day-to-day business operations often overwhelm a solitary individual. Detailed financial tracking and analysis compound this stress. Entrusting this responsibility to an experienced accountant liberates your time. Scheduled updates with the accountant provide reassurance and allow you to focus on core business activities, fostering product/service development and customer engagement.

  5. Escalating Complexity: The business landscape evolves. Initially manageable transactions burgeon with growth. Sales multiply, necessitating staff recruitment and attendant payroll concerns. New tax implications emerge, complicating matters. Engaging an accountant means surrendering this intricacy to a professional. They adeptly navigate the optimal approach for your business's tax liabilities, identify exemptions, manage HMRC paperwork, and process tax returns. This arrangement not only engenders financial order but also ensures compliance with essential tax, VAT, and National Insurance obligations.

Is DIY Accounting Ever Viable?

Seasoned entrepreneurs, veterans of the business launch phase, unequivocally assert: "Absolutely not." However, this doesn't categorically imply every fledgling business mandates an accountant from inception.

Nevertheless, our counsel is to enlist a professional accountant's expertise at the earliest opportunity. Initiating your journey on the right financial footing, under an accountant's sagacious guidance, can forestall future expenditure of time, effort, and money.

Yet, for those constrained by financial exigencies, striving for self-sufficiency in accounting is not impossible. Here are some tips to maintain control over your business's finances:

  • Select Appropriate Accounting Software: Thorough research into suitable accounting software is paramount. Investing in an accountant's assistance during the software setup ensures a correct trajectory from the outset.

  • Meticulous Record-Keeping: Fastidious maintenance of receipts and records is obligatory. Every transaction, irrespective of magnitude, warrants documentation.

  • Regular Account Reconciliation: Reconcile accounts methodically, ideally on a monthly basis, to ascertain accuracy and rectify discrepancies promptly.

  • Streamline Invoicing and Purchase Orders: Implement a structured system for generating purchase orders and invoices. This ensures meticulous tracking of receivables and payables.

  • Prompt Client Billing and Follow-Up: Timely billing of clients is pivotal. Implement a proactive approach, including regular follow-ups, to expedite payment from tardy clients.

  • Maintain Balance Sheets: Cultivate a habit of maintaining balance sheets. This practice tracks funds flowing in and out of your accounts, fostering financial transparency.

  • Generate Basic Financial Reports: Summarise income and expenses through rudimentary financial reports. This practice offers a snapshot of your business's financial health.

In conclusion, the decision to engage an accountant is contingent upon your unique circumstances. While the financial outlay might seem daunting, the expertise and peace of mind an accountant provides.

Contact Zyla Accountants today to schedule a meeting about your business requirements.

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