How Small Businesses can Budget for Accountancy Costs
Posted: Jun 10, 2016
It is easy when starting a small business to spend the initial investment funds on all the fun things like a new website, new products, advertising and marketing literature. But what happens when you start to approach your first year-end and your accounts are in a mess?
Some small businesses don’t use an accountant in the first year and just struggle on trying to do the accounts themselves. This might be fine if you have a straightforward business such as a consultancy with limited amounts of stock and maybe just a few clients, but for a retail business, for instance, trying to do the accounts without professional help could be asking for trouble. Remember that not understanding accounts properly is not an excuse and the tax authorities can fine you for not submitting correct accounts or not submitting them on time. So the best advice for a small business is to invest in professional accounting services.
Corporation tax is not as straightforward as income tax and there are numerous claims for expenses and tax reliefs that you are entitled to that you might miss out on. Equally there are many expenses that you cannot claim for so you don't want to mistakenly add items to your expense claim that are not allowed on company tax returns.
So sooner or later most businesses will start to see the benefits of using a chartered accountant but accountancy fees are not cheap so how do you control costs in this area?
Fortunately, perhaps as a result of the long global recession that we have just emerged from, many chartered accountancy firms now offer afixed fee accountancy service so that you can decide exactly what level of service you need at the beginning of the year and budget accurately for the fees by paying monthly.
You might need just a very basic service such as the preparation of year-end accounts and to have your tax returns submitted. If you have a larger or growing business you might also require regular reviews and detailed tax advice but you can usually decide the most appropriate level for your company and know in advance what the cost will be.
If you need any extra help during the year, the majority of accountants will allow you to upgrade your fixed fee accountancy plan or they will simply charge you a one-off fee for the additional work. So there is always flexibility to cope with changing requirements as a business changes; but do check this with any accountancy firms you are considering employing.
Of course, sometimes you cannot anticipate exactly what help you will need, especially new businesses that are not yet well-established so it is always worth talking to several accountants to get advice on what level of fixed fee accountancy service would be appropriate for your particular circumstances. This type of service may not be suitable for every business, particularly one with complex financial affairs or one that needs regular telephone or face-to-face support and advice.
Talk to a reputable chartered accountant who will be able to offer advice on whether your business is paying too much tax and deal with any concerns you may have.
The author has written and published articles on a wide range of topics including Small Business Advice, Tax and Accounting, Interior Design, House Renovation and Project Management.