As your business grows, you’ll find yourself dealing with increasingly complex accounting tasks. Your responsibilities might go from filling out your yearly tax return to handling payroll and making financial projections.
While at first, these things can seem complicated, in many cases, it’s possible to develop your knowledge to the point where you can comfortably handle your own accounts. So, what accounting challenges might you face, and when do you need to hire an accountant?
These are some of the accounting activities you might be responsible for as your business grows. You can develop the skills and knowledge to carry out many of these tasks proficiently by taking the short AAT Bookkeeping course.
Maintaining basic records
You are legally required to keep accurate records of all your ingoings and outgoings, as well as your assets and liabilities. This includes records of your invoices and payments, your income, your expenses, and your business investments.
As long as you submit accurate and timely information to HMRC, it doesn’t matter who does this, and many business owners do it themselves. Take a look at our blog post about what financial information you need to record when doing your own accounts.
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Managing cash flow
When you have only a few clients, keeping track of invoices is simple enough. However, with a mushrooming client base and more suppliers than you can shake a stick at, keeping your cashflow in check requires adopting an effective system.
This involves forecasting cash flow based on expected costs and payments, planning for anticipated eventualities, and even learning to negotiate with suppliers. Find out more about doing this in our guide to cash flow forecasting.
Developing your business by growing a small team means becoming responsible for paying wages. Thankfully, a choice of payroll software packages makes this perfectly manageable for business owners.
As your business grows, you’ll need to have a robust business plan in place, and this is reliant on a well-considered business budget. While the phrase “business budget” sends some small business owners running for the nearest accountant, there are significant advantages to doing it yourself. You know your commercial objectives better than anyone else, and your budget is closely interlinked with them. This means you have the best insight into what funds need to be available for what areas of your business.
When to hire an accountant
While doing your own accounts is perfectly feasible in most cases, there are times when you may need to hand them over to someone else.
Time is money: Most people decide to do their own accounts in order to save money. However, if the time it would take you to do your own accounts is more valuable to your business than the cost of hiring an accountant, it might be worth getting some help from outside.
For example, let’s say you would normally make £150 per hour, and you take five hours to complete a task that a professional accountant would charge £150 for. It would then cost you £750 to complete the task, £600 more than having an accountant do it.
However, this is just an example. You may become extremely efficient at doing your own accounts, or find time to do them alongside your normal workload.
Legal requirements: There are certain activities that only qualified accountants can undertake. If you run a limited company with more than £6.5 million annual turnover, and £3.26 million in assets, you will probably need to include an auditor’s report in your annual statutory accounts. This requires the services of an accountant who is a registered auditor, and is external to your company.
To develop your skills and knowledge so that you can handle your own accounts, take a look at our accounting courses.