How to invest your money is difficult when setting up a business. Managing your money is a completely different, and more daunting matter.
When I set up as a freelance writer, my first investment was in a specialist startup accountant. Why? Because I simply did not have time to research, understand and maintain the financial demands of setting up and running a business. Although, I soon realised that an accountant provides more than just a bookkeeping service. Here’s an outline of the services on offer:
- Setting up a business
An accountant will answer all of the tax, legislative and financial questions you may have when setting up a business. From advice on the most tax efficient way of operating to organising your company formation to opening a bank account, they will advise you on the best way to work, based on your personal circumstances.
- A dedicated advice service
This financial advice is an ongoing service. A good accountancy firm will offer you ongoing advice to support your business and a dedicated accountant. Make sure they give you a direct means of contacting your accountant by supplying their personal email address and direct telephone number. This support should be unlimited and always make sure your contact has completed or is nearing completion on one of the following qualifications: AAT, ACCA, ACMA, ATT or CTA.
Ongoing bookkeeping is a must-have accountancy service. Try to find an accountant that offers unlimited access to your company’s books through an online accountancy portal. Such portals offer a single point of entry for your incomings and outgoings and present your financial information in one central location. Having this up-to-date information, at a glance, will help you to better manage your money and financially plan for the future.
- Managing HMRC
An accountant will handle general queries and correspondence with HM Revenue and Customs. This includes completing personal tax requirements, as well as advice and calculations for PAYE payments and VAT returns and payments.
But is an accountant worth the money?
We’ve covered the services and associated benefits of hiring an accountant, but are they really a worthy investment for your business?
Let’s do a quick calculation. Let’s assume that the average accountant costs around £100 per month and your hourly rate is £50 per hour.
This means that hiring an accountant is effectively worth 2 hours of your time per month. Do you think you could maintain your business’s books, file all the relevant paperwork to the HMRC and keep on top of all the tax and legislative changes in just 2 hours every month?
I know I couldn’t. And even if I could, I would prefer to spend those 2 hours investing my time in what I love, my business.
Choosing an accountant
If you decide to hire an accountant, there are many options available. I chose to work with contractor accountancy firm Nixon Williams because of the depth of services and specialist knowledge they offered for a fixed monthly fee.
It all comes down to your business and individual circumstances, but bear the following facts in mind:
- Choose based on services
Make sure you choose an accountant based on the services they offer, and not their fees. While it may be tempting to choose the cheapest option, this could come back to bite you later. Some accountants will charge extra for an out-of-hours service, or services that go outside of the remit of your agreement. Make sure you fully understand the services on offer from each accountant on your shortlist.
- Choose based on your industry
Try to find an accountant that understands the nuances of your industry and company. For example, if you are a self-employed IT contractor then look for accountants with a proven track record with similar clients who are working solo in the IT industry. It is always useful to ask those working in the same industry for recommendations.
- Choose based on your preferences
Do you want to access your financial information through an app or a real person? Or both? Personally, I chose an accountancy firm that offered both - a dedicated personal accountant that I could talk through any questions I may have, with an online portal so I can access my business’s financial information 24/7.
When it comes to managing your money, having a professional there to help you can be the support you need when running your own business, knowing that your money is in good hands, and letting you focus on the important things.
This article is written by Gemma Church, the “freelance writer who gets tech”, mum of two young boys and technical writer for accountancy firm Nixon Williams.
Nixon Williams is one of the UK’s leading specialist contractor accountancy firms, with over 20 years’ experience, operating since 1995. Nixon Williams offers fixed fee accountancy packages for freelancers, contractors, consultants and locums. If you are looking for an accountant with specialist knowledge in your industry then please get in touch.