With the cut-off date for online self-assessment looming (31/01/2016) many small business owners are thinking about their business money management and submitting their tax returns.
[bctt tweet=”Hiring a professional to help you manage your money is something every business owner must decide upon eventually.”]
Whether you hire a professional to help you or not, you are not ever absolved of the personal, legal and financial responsibility of managing your business’s money legally, ethically and correctly. So, how do you know whether or not you should do it yourself, or hire a professional?
Let’s go over the choices:
DIY
Doing it yourself means that you will keep the day-to-day books for your business, keeping track of income and expenses, saving receipts, and getting them ready for you to do your taxes yourself. Doing it yourself can also mean that you do everything else yourself mentioned above, but then turn over the paperwork to a tax professional or a CPA (Certified Public Accountant) to do the rest.
Accountant versus CPA
Many people do not realise that you can be an accountant without having a CPA. The accountant usually has a degree in Accounting, and works in one or many specialities, such as payroll, in an accounting firm. CPAs are licensed and must pass a comprehensive series of tests to show that they understand tax-related laws, and they must also engage in continuing education. When you have a choice, choose a CPA over an accountant. All CPAs are accountants but not all accountants are CPAs.
Bookkeeper
A bookkeeper is someone who has been trained, and is licensed to perform the daily tasks of journal entry. A bookkeeper is sometimes doing everything from A to Z (referred to as a “full charge” bookkeeper) or sometimes specialises in specific aspects of bookkeeping such as accounts payable, accounts receivable or specific journal entries. More than likely a small business owner will want to hire a full charge bookkeeper. If you offer bookkeeping as a service in the UK you have to by law be licensed as an ASP (Accountancy Service Provider) We are licensed and our registration number is: 12721700
Links:
https://www.gov.uk/topic/business-tax/money-laundering-regulations
Questions to Ask Yourself
When you are choosing whether or not to do it yourself or hire a professional, you need to ask yourself the following questions.
1) Do I understand my rights and responsibilities? – If you’ve not bothered to read one single tax-related bit of information, or go to the HMRC website to look into information about business taxes, you should probably outsource.
2) Are my taxes simple and straightforward? Is my business very small, with no contractors, no special licensing required? – If so you probably can get away with doing it yourself
3) Do I like numbers and playing around with numbers? – Enjoying numbers, and enjoying learning about all the ins and outs of accounting rules, is a really important factor when determining if you’ll stick to keeping up to date with it. If you hate it, outsource it.
4) Do I understand tax laws? – As mentioned before, if you haven’t read anything about taxes, and you’ve never even done your own taxes, why would you now think you should do your business bookkeeping and taxes? Don’t do it. Hire a professional who can help you with your business money management.
5) Do I own property and other investments? – How complicated is your return?
6) How good am I right now with keeping the books up-to-date? – If you aren’t that good, just pass it over to a professional. It’s worth it.
7) Do I know without looking how much money I have right now in my wallet, or my bank account? – No? Well, don’t walk, run to your nearest CPA office and find someone to help you get back on track.
8) Does my business have super specialised rules regarding deductions? – Many rules and regulations change fast and often due to politics. If you’re not willing to spend a substantial amount of time keeping informed, go hire a professional.
As you can see, it’s likely best that you hire a professional to help you with your business money management, expenses and taxes. Remember that the more time you spend doing tasks for your business that do not earn you income, the more your income will go down. When you can hand off tasks to others, you can boost your income enough to cover it. Plus, you can let go of some stress in the process.
