Do I Need To utilize an accountant for my company accounts?

May 16, 2012 · Posted in Accounting 

Company accounts – a bane or a boon?

Of all the things you need to do when running your own business, company accounts are usually the one thing that people really struggle with – after all, they take your attention away from doing the things that you really enjoy. If you want to manage yourself or your business to the best of your ability though, keeping proper accounts can be the strongest weapon in your business armoury.

When company accounts are a legal requirement

The simple answer to this is no, but you need to ensure that you understand the legal implications. Basically speaking, if you’re a freelancer or contract worker who is registered as self-employed you have no legal obligation to keep company accounts; if your business has been registered with Companies House as a limited concern though, the law says you must create a profit and loss record for every year of trading. This legal responsibility also concerns partnerships that consist of several companies, when one or more of them are limited.

While the above may be true though, any accountant worth their weight will advise you to keep accounts regardless of your legal position. Every business or freelancer has to file a tax return at the end of the financial year, and keeping proper accounts makes this job a whole lot easier than sorting through everything at the last minute. You can make it even easier still, by using an accountant to do this for you; for a fixed fee they will usually update your accounts on a monthly basis and complete your return too, taking the pressure off of you.

Other benefits of keeping company accounts

Even if you’re self-employed, your accountant can make sure that you benefit from their help and from keeping official records. Your company accounts will allow them to talk you through your business performance and help you to grow your business and profit margins. By having this reference of your income and outgoings, your accountant should be able to offer advice on limiting your tax payments at the end of the financial year.

Keeping proper financial records can also help you on a more personal level. Many freelancers face real obstacles when it comes to borrowing money because of the perceived lack of security with this way of working. If you want to take out a mortgage or a loan, you’ll often need to provide accounts for the last 3 years in order to qualify.

Without having company accounts available to you, it can also be difficult to judge your liabilities and budget effectively; for example, if you don’t know where you stand financially, how do you know when you’ve become liable for VAT registration? Regardless of your legal position, having properly maintained company accounts will enable you and your accountants to make the best possible business decisions, and help you to keep more of the money that you work so hard for.

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