Do I need an Accountant/Bookkeeper?
In a word, No.
There are no legal requirements to for you to have an accountant/bookkeeper. There are some things you ought to consider before making this decision, though, as HMRC will levy considerable penalties if you do not follow the law.
Are you confident that you know the rules?
Failure to follow the rules can lead to penalties from HMRC, and they can go back through your affairs for up to 20 years if they feel you have deliberately avoided tax.
More commonly what happens is that people under-declare their expenses as they are not sure what to claim and err on the side of caution. Do you know how to claim expenses for using your home to run your business, or the best way to claim business expenses for your vehicle?
Do you like keeping your accounts?
For some people, like me, this is a fun part of the business, although my own are always the last to be done..!
Would you like to keep your accounts up to date but are not exactly sure how? You could look for a support package where you do the work, but it is checked by a bookkeeper/accountant on a regular basis with feedback to give you the confidence that you are correct. They also can give you tips on how to streamline your accounts. Would cloud accounting be a good option? Maybe there are apps that can automise some of the tasks.
Could your time be better spent elsewhere?
Building your business, improving your work/life balance? The average small business spends around 8 hours a month on their accounts – this is a vast generalisation – but how much time do you spend? Is it a mad rush every January? Do you end up spending evenings and weekends on them?
Would real-time insights help build your business?
Keeping your accounts up to date can really help you plan to estimate tax and national insurance due. So you know if you can afford that big purchase for your business or that once in a lifetime holiday. You can see quickly what is working and bringing in a profit and what is losing you money. You can go through your expenses and see what is needed, or can be changed to reduce them.
A good bookkeeper/accountant will report and discuss these insights with you.
20 % of business start-ups will fail in the first year, 50% within 5 years. There are many reasons for this – number one is simply an unrealistic business idea. But the reason just behind that is lack of financial planning – with this in place, the chance of success doubles.
So, no, it is not obligatory to have a bookkeeper/accountant.
The question you should ask is:
Will the value they add to your business through financial planning and keeping you compliant with the taxman outweigh their cost?