If you run a business, you’re legally required to:
- Keep accounting records, including PAYE (Pay As You Earn) records if you have employees, and VAT records if you’re VAT registered. This will involve regular bookkeeping work.
- Submit an annual tax return to HM Revenue & Customs. This will involve the preparation of financial statements.
- Appoint an auditor to carry out an annual audit of your accounts, unless the company is exempt
If you’re a limited company, you have to file accounts with the Registrar of Companies.
You could decide to do some of this work yourself – but many businesses prefer to employ an accountant for at least some of it. For example, you might not have the time or necessary skills available in-house to do all the accounting work yourself. There is also a legal requirement to employ a qualified accountant for certain tasks.
In addition to basic accounting functions, many accountants also offer other services, such as start-up business and management systems advice.
Before choosing an accountant, you should consider the size and complexity of your business – your business may be small, but if the systems and organisation are complex then you will need an adviser who is able to assist with more than basic bookkeeping. Or you might need someone who understands a particular type of business or industry. You should also consider what other services your business may need from an accountant.
It is recommended that you look for someone who has professional accounting qualifications. Anyone can call themselves an accountant or bookkeeper even if they don’t have any professional qualifications. But if any laws are broken or if bad decisions are made, then you, not your adviser, will be liable.
It is also advisable to ensure that potential advisers have professional indemnity insurance. If there are any problems with the work the accountant has done, you could be able to claim for any financial loss suffered as a result of the accountant’s advice.
Accountancy is a complex area and there are many accountancy associations to choose from. Some offer specialist services such as bookkeeping or preparing draft accounts, while others can offer guidance on specific business issues.