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Hiring an accountant can be a confusing business. There’s plenty of numbers and tax codes you need to be able to provide, and that’s even before you’ve figured out what your business actually needs. Rather than struggle with the terminology when you’re searching for a new accountant, learn some of the basics and find out exactly what you need.

Bookkeeping

Bookkeeping is the practice of recording all your business transactions. Both limited companies and sole traders will need to keep records, so this is a must for everyone. Bookkeeping acts as the foundation for the rest of your accounting, so it’s important to be accurate.

You can either do your bookkeeping yourself with accounting software (or a spreadsheet), or you can outsource it to an accountant. If you’re clueless about how bookkeeping works it could save you time and money to outsource. However, if you’re more number savvy and have the time to complete your own books, you’ll save money by maintaining records yourself.

Payroll

For limited company with employees, understanding payroll is vital. You’ll need to sort out a PAYE scheme for your employees or outsource. Outsourcing payroll can be a huge weight off the mind, especially when you’ve got the rest of your business to run.

Whatever you decide to do it’s your responsibility to ensure a PAYE scheme is set up so your employees get paid. If you don’t you risk a hefty fine from HMRC.

For more information about payroll, you can see our guide here.

VAT Registration

Whether you’re a sole trader or limited company, you may have to register for VAT. Even if you don’t need to become VAT registered it could be more tax efficient for your business – so it’s well worth looking into.

If your business has a turnover of over £82,000 then you have to register for VAT, without a doubt. However, voluntary registration is an option. Many voluntarily register for VAT for different reasons, either to avoid fines or to boost your business’ credibility with a VAT registration number.

You can find everything you need to know about VAT registration in TAP’s nifty guide.

Self Assessment

If you’re a sole trader or a limited company with more complicated tax affairs, you will probably have to fill out a self assessment tax return. Currently this requires completing an annual tax return that tracks your expenses for the year and allows you to claim business expenses.

However, it was recently announced that from 2020 tax returns will have to be filled out four times a year, and all online. If you want to read more about the changing self assessment you can head to HMRC’s ‘The end of the tax return’ guide.

IR35

A term that you might come across if you’re a contractor is IR35. It can be pretty complicated to get your head around, so getting professional advice about it is recommended.

In short, IR35 is a piece of tax legislation that aims to catch out contractors who are working as limited companies in order to avoid paying the National Insurance contributions and Income Tax that permanent employees pay. If you are found to be caught out by IR35 you’re described as a ‘disguised employee’ and will have to pay back all the tax you should have paid with interest.

It is possible to continue working within IR35, but you should speak to an advisor first. Give us a call or email info@theaccountancy.co.uk if you need a chat about IR35.

Cloud Accounting

If you want to do your accounting yourself but you don’t live in the Stone Age of spreadsheets, there is plenty of cloud accounting software you can check out.

The Accountancy Partnership’s own cloud software, Pandle, is designed to make cloud accounting easier for the everyday business. You can find out more about Pandle over on the website.

Speaking to an accountant will give you a better understanding of what your business specifically needs, but at least now you’ll have some idea of what they’re going on about!

Need more advice on what you should know before hiring an accountant? Speak to one of our advisors on 020 3355 4047.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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VAT Returns

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Bookkeeping

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