One thing that many small business owners and even freelancers who just earn a little on the side worry about is whether or not to hire an accountant. Some avoid it all together and try to manage their accounts themselves. Others avoid accountants until the week before their tax return is due, only to find that they’ve made a huge mess of their finances up until this point and their accountant has an enormous task trying to sort things out and avoid a costly fine.
Some business owners hire an accountant straight away, have regular meetings and know that their accounts are in great shape all year around. These people have less financial worries and have no sense of impending doom when it’s time to file their taxes. Still other business owners aren’t quite sure whether an accountant is worth the money or not.
Well, in truth, unless you’ve studied an NEC Online and have some formal accounting training yourself, which could save you an absolute fortune and be well worth the investment, hiring an accountant is one of the easiest ways to save money. Yes, there’s a cost, but hiring a professional accountant could save you thousands every year. Here are just a few of the ways an accountant could save you money.
Accountants Help you Avoid Fines
The first and most important way that an accountant saves you money is by ensuring that you avoid what can be hefty fines. If you miss the deadline to fill your tax return, miss payment due dates or file incorrectly, you can face penalties and find yourself in trouble with the tax office.
This might seem simple, but these dates aren’t always the same. Filing online has a different deadline than filing by post. There are varying payment dates, and sometimes, getting it right is much harder than you think—especially if you haven’t done it before. Many people find themselves so stressed out when it comes to preparing their tax returns that they make silly mistakes and get themselves into trouble. Hiring an accountant can be cheaper than just one of these fines.
They Set up Systems
Many new business owners or freelancers struggle to find an efficient way to keep track of their income. They don’t know what to record, they don’t know how to send invoices, and they don’t know what can and can’t be declared as a tax-deductible expense. Not having a clear system makes things a lot harder than they need to be. This can leave you confused, spending money that you don’t need to and losing even more.
An accountant doesn’t just send your tax return. They’ll also help you to set up systems and offer you advice on how to keep a better track of things, how to earn more, and how to manage your money better. Even if you just hire someone for a short term, they could help to save you a lot of money for the years to come.
Accountants Know Tax Deductions
Tax-deductible expenses are one of the most confusing things for new businesses. Many incorrectly believe that when they declare something as an expense, they get the money back. This isn’t the case. If you buy a computer for your business, you don’t get back what you spent. You just take the amount off your taxable income at the end of the year so that you pay less tax. Basically, if we say the tax is 20%, the saving means that you pay 20% less for all business purchases.
But, knowing what you can and cannot declare can be difficult. Not declaring enough can mean that you pay much more tax than you need to. Declaring things that you shouldn’t or not keeping your receipts or recording your expenses correctly can mean that you face a fine and find yourself in trouble.
An accountant will ensure that you declare everything that you can. This can include things like utilities, even if you work from home, entertaining, food and drink, internet costs, stationery, heating, charity donations, equipment and machinery, office supplies, travel costs, building repairs, insurance and almost anything else that is for your business. An accountant will be able to make sure you are getting it right and give you more information on what you can and can’t declare.
Your Time is Valuable
Remember, your time is money. All the hours that you spend recording income and expenses, filing your return and managing your money is time that you can’t spend earning money elsewhere. Hire an accountant to give yourself more free time to make money.