Wondering if you need an accountant for your small business? The short and simple answer might surprise you: No, it's not a legal requirement.
But is it the best choice for your business? Let's delve into the details of small business accounting and explore your options.
Every year, whether your company is operational or dormant, it's mandatory to submit your accounts. Your corporation tax statement or CT600, which discloses the total tax payable and all related calculations, should also be filed.
Both your annual accounts and corporation tax need to be submitted to Companies House and HMRC within a 9-month timeframe after your company’s Accounting Reference Date (ARD). Your ARD is generally the anniversary of the last day of the month your company was registered.
You can check the due date of your company accounts here: https://www.gov.uk/get-information-about-a-company
If this seems overwhelming, there are platforms like Mighty that can handle all these requirements for just £40 per month with no hidden charges.
If you're proficient in accounting, current tax laws, and year-end accounts preparation, doing your own accounting can save you money spent on professional accounting fees.
However, it's crucial to consider the potential drawbacks of this approach. The time it takes to maintain your accounts, ensure legal compliance, and stay up-to-date with changes in tax laws and regulations can also be considerable.
Remember, while HMRC provides basic guidance for tax filing, they won't offer personalized advice or actively help you optimise your tax situation.
Inaccurate record-keeping or misunderstanding tax laws can lead to serious problems, including penalties for non-compliance.
For small businesses with turnover under £250,000 and no employees (other than yourself), HMRC recognised software like Mighty can calculate and submit your tax returns for you.
It links to your bank account, automates your bookkeeping, payroll, VAT, corporation tax return, and yearly accounts submissions. Mighty also provides up-to-date tax advice that you can easily apply within the platform to save you corporation tax, with human support on hand to help if you ever have a question.
This is a great option for small companies - keep you fully compliant whilst saving you money on accounting fees, time and tax.
For larger and rapidly growing businesses, hiring a traditional accountant might be a better option.
They can provide expert guidance in case of rapid business growth, complex tax situations, or when planning to expand, sell or acquire another business.
This is especially important if your business deals with complex tax laws, such as operating in different countries.
Traditional accountants charge by the hour with rates ranging from £60 to £250 per hour. The cost for end of year accounts usually start from £800+ per year for the most simple businesses, and can go up to tens of thousands for complex companies.
Using accounting software like Mighty, on the other hand, costs around £40 per month and includes all your bookkeeping, taxes, and end of year accounts.
It also includes targeted tax advice and expert support so is perfect for small companies, freelancers and contractors.
The decision for your small business isn't just, "Do I need an accountant?" but "What's the best solution for me?"
You can do your accounting yourself but be sure to consider your understanding of accounting principles and tax laws against the time investment and risk of mistakes.
For small businesses, accounting software like Mighty can be ideal and all you need -automating bookkeeping, payroll, and tax return tasks, and saving time and money.
However, larger or rapidly growing businesses dealing with complex tax situations might benefit from a traditional accountant, despite the higher costs.
To explore if Mighty is right for your small business accounting needs, book a call with us or try it for free.
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