To Have Or Not To Have – That Is The Question.
One of the most frequently asked questions I hear, principally from newly qualified practitioners is “Do I need an Accountant?” The only response I can give is “Do I need a Chiropractor?”
The Revenue, by renaming the Tax Return system as self-assessment, have tried to indicate that this is really something that every citizen should be able to deal with themselves. They seem to ignore the fact that there are over 10,000 pages of tax legislation and that the rules change every single year. In addition, if you attempt to discuss matters with the Revenue, they will not necessarily give you every option and they very clearly do not live in the real world, as witnessed by the current legislative record keeping requirements.
I have had conversations with Senior Tax Inspectors who actually believe that everybody can record every single penny they spend. How often do you get to the middle of the week and try to figure out what happened to all the money that you had in your purse/wallet on Monday morning? Yet the Revenue now approach all enquiries into tax returns with the pre-condition that every penny spent will be covered by some form of written record.
I have had, for a number of years, a client who keeps superb records and prepares his accounts himself. In his view, my (virtually) “rubber stamping” what he has prepared and then submitting it to the Revenue under my firm’s banner, gives his figures added credibility with the Revenue and is therefore worth the fee. It is definitely the case that where a local office knows an accountant well, then they are likely to have more faith in accounts submitted by them.
You should also bear in mind that as a regulated professional, I am required to go on a preset minimum number of hours training every year, which means that I am up to date on current legislation, and also on ways around it where appropriate.
Over recent months I have taken on a number of new clients who were not claiming all of their business expenses, simply because they did not think of them as business expenses. There is an art in critically considering each item of expenditure and deciding whether it actually is for business or not. An example: when using a privately owned car for business, the claim is for the business proportion of the usage of the car. A trip to the local supermarket is normally regarded as a private trip – but if you buy one item for your practice, it is now a business trip. Are you claiming the correct percentage of business use on your car?
People frequently ask whether my fees will be less than the tax I save them – this is almost impossible to answer. The truth is that you cannot necessarily quantify an accountant’s service in that way. Very often, what my clients get from me is a different slant on how to run their business, and ideas of how to make themselves more prosperous. In addition, I regularly find that practitioners are leaving themselves wide open to problems in employment law, be it by the lack of proper contracts for staff, ignoring minimum wage regulations, incorrect PAYE treatment of staff wages, etc.
In summary, you do not need an accountant, but it is normally a good idea to have one. But you need to ensure two key factors:
· Do they really understand your business and how it works?
· Can you relate to them at a personal level?
If the answer to these two questions is ‘yes’ then you should be all right.