When do you need to hire an accountant?

As a start-up, managing costs is crucial. But skipping out on professional advice early on could cost your business in the long run. Find out more here…

The vast range of DIY financial management tools and the sheer amount of free guidance on accounting, finance and taxation, could tempt many a business owner to go it alone and not to use a specialist accountant.

But, like so many other methods that promise to save you money with a great headline rate, not relying on the professional advice and guidance of an accountant could ultimately cost your fledgling business a lot of money.

Do-it-yourself financial management – do the math

When you are weighing up the benefits and pitfalls of a specialist accountant, you need to factor in two costs, which could also be considered to represent two sources of potential savings.

A clear advantage of outsourcing your financial administration is that it saves time. If, for example, an accountant charges approximately £90/£100 per month, work out how many hours of your business’ time would it take to match this figure? Could you realistically complete all of your company’s financial admin in that timeframe? If not, then it could make more sense to hire in an expert.

But that’s not the only advantage, as Simon Curry, CEO of specialist contractor accountancy firm Nixon Williams explains:

“A professional accountant can optimise the finances of a start-up or contractor to maximise its returns. This is achieved by using their experience and knowledge of the necessary regulations and legislation in the small business sector to identify opportunities to completely avoid or partially mitigate certain charges.”

“This level of knowledge is built up by years of research and experience, which most business owners do not possess or have the time to match. If you do try to understand the vast landscape of business accountancy then you will most likely miss some valuable opportunities, and you could be devoting this time to your paying work instead of non-paying accountancy work, which makes DIY financial management twice as expensive,” Curry adds.

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Investigate the market

If you decide to employ an accountant, you need to ensure you are getting the most cost effective solution to maximise the return on your investment. This will involve some careful investigation into an accountant’s services and expertise. If, for example, you are setting up a business as a contractor, find a specialist contractor accountant.

No matter what your circumstances, here are some key questions to ask as you consider engaging an accountant for your start-up:

  • How regularly do they deal with start-ups and contractors and can they give examples of how they could save your business money?
  • How can they ensure your business is not inadvertently caught out by the legislation governing small businesses?
  • How much do they charge and what services do they provide?
  • How will the relationship between accountant and start-up be managed? For example, will you get a personal account manager and how often will contact be made?
  • What are you expected to provide in terms of accounts and record keeping?
  • Do they have any supporting information, such as qualifications and accreditations, to seal the deal?

Loyalty isn’t worth it

Finally, remember that an accountant represents a business relationship and this will need to be evaluated on a regular basis to make sure your business is best represented and your cost savings are maximised.

Curry adds: “A good accountant will keep up-to-date with the latest opportunities and developments within the tax and finance legislative space. If they do not, or your circumstances change, do not be afraid to move your business elsewhere as misplaced loyalty can cost you heavily going forward.”

The initial costs of hiring an accountant may seem a little high, particularly as you set up a business with all the associated other costs, but you need to be pragmatic about the DIY route and the associated costs here as well.

Cost savings can be made as you set up a company without detrimentally impacting the development of that business – but ditching a specialist accountant does not represent one of those savings.


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