I have been in the accountancy profession long enough to know that not everyone is a fan of spending their hard earned cash on using us to deal with their accounting needs.
However there are a few reasons why I think it is essential to use an accountant to take care of the accounting and tax leaving you to concentrate on running your business ……
Can you keep up?
Each year brings new tax changes, forms, systems, laws etc. Have you got the time to keep up with these changes to make sure that your tax returns and accounts are inline with the new rules?
How long will it take for you to find out what has changed from last year? Where will you get the information? How can you be sure that you haven’t missed something?
The Pesky Right Format
You must file your accounts with HMRC and Companies House in a certain format with things recorded in the right place.
There are free tools that you can use to file the accounts yourself. However from the feedback we’ve had from those that have tried to use them they don’t seem to be very straight forward unless you know what you’re doing.
Many try to use – some succeed and others fail. What do you do when it all goes wrong?
The Spend on Software
If the free system doesn’t work for you then there is the option of buying tax filing software to help you fill in your tax return and file the accounts. The software, along with the support provided, should be able to get you around any errors that the free systems may throw up although the software provider will likely expect you to have some knowledge of accounting and tax.
This type of software is what professional firms of accountants would use but they would spread the cost across all of their clients rather than you paying the whole amount yourself.
The “Two Tax Returns” trap
Did you know that a corporation tax return (known as a CT600) can only cover a period of one year – that’s 365 days?
In your first year of trading you may need two CT600 returns as your accounting period could be just a few days over one year.
When your company is formed Companies House allocate the year end as the end of the month in which the company is created.
For example, if you create your company on 3rd March 2019 then it’s first year end will be 31st March 2020.
If you started to trade from the date that you formed the company, the first accounting period runs from the date of incorporation to the end of the month following the first anniversary of the year end.
The first accounting period will be 3rd March 2019 to 31st March 2020 – that’s more than a year.
Fines and Penalties
And what if you get it wrong – HMRC do not allow ignorance as an excuse. They generally say that every individual or business is expected to keep records that allow them to provide a complete and accurate return. HMRC also expects them to check with their agent (the HMRC term for accountants), or HMRC, to confirm the correct position, if they are not sure.