For the majority of business owners, dealing with monotonous accounting figures isn’t what they imagined when setting up the company in the first place. However, it is a compulsory part of the job and required by the HRMC for tax purposes. Without accurate accounts in place, you’re liable to make poor decisions that will cost the business in the long run.
Naturally, many people who set up a company may not necessarily be experts in finance or the accountancy side of things. Although DIY accountancy software or specialised templates can be found online, it still doesn’t negate the cost in time and effort that regular bookkeeping requires.
If you’re thinking of starting a small business or are in the early stages of development, here are a few reasons why do-it-yourself accounting may actually become a hindrance instead of saving time and money.
Liable to Make Mistakes
The predominant reason for maintaining accounts is for your tax returns and ensuring every detail is recorded for the HMRC. This can cause problems for inexperienced business owners however, and any mistakes on the return forms can be costly in the future.
With mounds of complicated guidance notes to sift through on corporation tax, PAYE and VAT before you even begin, it’s no wonder Companies House has reported a rise in the number of accounting rejections they’ve had to issue in recent years.
Hiring a professional accountant will prevent this from happening and save you from facing possible hefty fines. In addition, there are certain tax breaks and deductions which you may not be aware of that only an experienced auditor may point out.
Better Ways to Spend Time
Simply put, the more time spent concentrating on time-consuming accountancy spreadsheets is the less time spent on your actual business. Although you may save money with the DIY approach, you are still misusing your time on an area which can better spent elsewhere.
You shouldn’t sacrifice the initial ideas you had for the company when starting up. By burying your head in complicated accountancy matters, these ideas will be neglected and your business will suffer as a consequence.
For budding entrepreneurs, there’s no shame in asking for help when setting up a business and helping it grow. In fact, you should be actively seeking the guidance of professionals with expertise in different fields to help your company achieve the best results possible.
Hiring a qualified accountant has many advantages, not least the financial support provided throughout the year. Not only will they maintain meticulous records by detailing every financial transaction, but will also be extremely useful when filing the dreaded tax return. This advice can save you money by becoming tax efficient, as well as reducing the possibility of mistakes and the consequential fines.
In addition, an accountant will lay out financial projections in front of you. This will provide a clearer picture of how well the business is performing and which areas can be improved upon, as well as the expected profit margins.
If you enjoyed this post, you may also be interested in our Guide to Setting Up your Small Business and Does a Small Business need a Business Plan?