Hiring an accountant vs DIY finances for startups

As a founder launching a new business, you’ll be wearing a lot of hats on a daily basis. But does “accountant” need to be one of them? With so much on your plate, it’s wise to think about whether or not you can, or should, be in charge of managing the day-to-day finances of your business. When is it the right time to hire an accountant? You’re about to find out. 

If you’re a numbers whizz with lots of experience dealing with figures, tax rates, HMRC declarations and all that jazz then you might be happy to look after the business finances yourself. But, even if numbers are your strong suit, chances are you’ve got a lot of other sh*t to take care of to grow your business – and delegating the finances could free up valuable time.

It’s also amazing how quickly a few numbers in a spreadsheet can turn into a whirlwind of expenses, invoices, purchase orders, bank statements, and endless receipts. So, although you might be trying to keep costs down, think about whether the price of an accountant might just be a smart investment for the future of your business.

Do you need an accountant? Or a bookkeeper? Or both?

You might not have even realised there’s a difference between an accountant and a bookkeeper. But there are. They’ll both deal with the finances of your business, but what they look after is quite different. 

What does a bookkeeper do?

A bookkeeper is responsible for keeping an accurate and detailed record of your day-to-day financial records – payments, sales, bills, payroll, etc. Their responsibility starts and ends there. Typically a bookkeeper would looked after tasks such as:

• Keeping track of all customer payments and invoices
• Paying supplier bills
• Managing payroll
• Recording cash expenses
• Managing and forecasting cash flow
• Reconciling bank accounts

What does an accountant do?

An accountant, on the other hand, has a much broader overview of your business’s financial performance. They’ll achieve this by reviewing and analysing all the information that the bookkeeper has put together. Typically, an accountant will look after the following:

• Setting up your accounting software and establishing processes
• Reviewing and confirming the accuracy of bookkeeping
• Tax planning and preparing tax returns
• Consultation and advice on financial decision making, tax implications, asset management and planning a financial strategy
• Business planning
• Payroll issues

For startups and small businesses, some bookkeepers will often cover some accountant tasks – or accountancy firms will offer bookkeeping as an add-on service. And with the help of modern accounting software, previously complicated accounting tasks have become a lot easier to do.

When do I need an accountant?

There’s no hard and fast rule of when you need to hire an accountant. It will depend on the nature of your business, your personal skills in dealing with numbers, and the time and resources you have available. 

For some founders, getting a competent and trustworthy accountant is one of the first things on their to-do list. For others, it comes later down the line. Whichever route you go down, it’s never too early to assess your situation and consider when the right time might be for you to bring an accountant on board. 

With that in mind, here are some indicators that could mean it’s time to start looking for an accountant…

1. You need advice on how to plan or set up your business

Even before you officially have a business you might want to seek the help of an accountant. Preparing a business plan involves pulling together important numbers and financial projections, and showcasing them in a professional way. An accountant will be experienced in whipping up professional reports and forecasts relatively hassle free, which will add gravitas to your business plan.

An accountant can also offer advice on the best way to set up your business and manage your finances, including the most appropriate legal structure for your company. They can clearly explain the implications, benefits and drawbacks of the various legal structures and advise on which would suit you best – be it sole trader, limited company, a partnership or other option.

To find out more about legal structures, check out our guide: Should I be a sole trader or limited company?

2. You’d like help with your financial strategy

With so much going on at once, it’s understandable that you might need some help figuring out which way to go with your budgets and finances. This is where an accountant can be super useful. From helping you with tax deductions and making the most of your expense allowance to knowing what schemes and support are available for your business. 

If you pick a good accountant, they should be on the ball and will know all the latest developments in the world of small business finances, law changes, compliance and everything in between. Not only can their knowledge both make and save you money, it’s also a massive emotional boost knowing that someone is there helping you get the financial side of the business into shape.

3. You’re not great with numbers

Let’s face it, some of us are horrible with numbers. And that’s totally fine. If you know you’re rubbish with spreadsheets and calculations, leave it to someone who’s a master at that stuff. Why spend time stressing when you can simply hire someone to take that pain and frustration away and leave you to get on with what you’re good at. 

Just make sure you hire an accountant you trust, ideally from a strong recommendation. And always ask them to talk you through the business finances on a regular basis. You might not be good with the details of the numbers but you still need to know what’s going on with the accounts of your own business. 

4. You don’t have time / you have other priorities

This is probably one of the biggest reasons to hire an accountant. You simply don’t have the time with everything else that’s on your to-do list. The day-to-day running of your business is often more than enough for one person to deal with, so adding detailed financial tracking and analysis on top of that is a headache you don’t need. 

Instead, let an experienced accountant work their magic and take that responsibility off your hands. Have regular catch-ups to make sure you’re happy that things are going in the right direction and then leave them to it.  

Remember, time is money and do you really want to be spending your hours scrabbling through receipts, bank statements and invoices? Didn’t think so. You’ll be more valuable to your business if you spend time working on the core of your business instead, developing your products/services and connecting with customers. 

5. It’s getting complicated

Things can start off pretty smoothly at the beginning, with a limited number of business transactions to worry about. But then hopefully the business starts to grow, the number of sales increase, you start hiring, there’s payroll to think about, other tax implications crop up, and before you know it you have financial Rubik’s cube to deal with.

Bringing an accountant on board means you can pass that bundle of accounting joy over to them to sort out. They’ll be able to work out the most efficient approach for your business tax liabilities, they can highlight any exemptions or support schemes, deal with HMRC paperwork, and process your tax returns.

You can’t put a price on the feeling of knowing your finances are in order and you’re legally compliant for all the necessary tax, VAT and National Insurance requirements. Goodbye accounting stress, hello calm financial control.