Most directors do not fully realise their obligations when they create a registered company. Alongside a sparkling website, you may find that a good accountant has a very important role in ensuring success in your business.
Every cent coming in and out of your business counts when working for yourself. Keeping on top of all this is just one of the many hats you now need to wear. For some reason though, despite the skill involved, most business owners see accounting as “just another expense”. Or worse, something that they can do without altogether.
However there are many valid reasons for investing in a good accountant. Good accountants can help you grow your business in ways you could never possibly imagine (well, quickly anyway). Here are the top five promises we make when people sign up:
So why do we need accountants?
1) We will save you valuable time
Use of efficient procedures
Time spent doing your books is less time spent on important stuff.
‘Important stuff’ are the things that add value to your business, like:
- investment in resources
- marketing/social media
Additionally, you will not beat an accountant’s experience in efficiency. An experienced accountant will know all the shortcuts that can save hours and hours of time and frustration. Accounting and bookkeeping are even more difficult if you do not know how to get full use out of:
(i) cloud accounting
(iii) tracking technology
You could manage to learn entire new systems, but this is no guarantee that all the work you have done is factually correct or accurate. You could be doing it completely wrong, which will mean that someone will have to UNDO your mess.
Undoing an accounting mess involves identifying, deleting, and then recording things in the right place.
This task that is actually about three times more time-consuming than getting it right the first time.
Familiarity with tax systems
Good accountants also have a good understanding of how Revenue and the Companies Registration Office work, because we use these services every day for our clients. Therefore, an accountant knows nearly by sight which boxes need to be filled and which can be ignored.
They will also know how to navigate to where information needs to go. If you did these things yourself, you will never be fully sure if you have actually completed what was required of you.
Due to economies of scale accountants also get (up to 35%) discounts on software and faster support services.
Most accountants pass these discounts on to their clients as an incentive to get onboard. There is usually an array of technologies and apps that (good) accountants use to get the job done more efficiently and effectively.
Increasingly, accountants are becoming more high-tech, and people often forget that Excel is also considered “coding”.
2) We will make sure you don’t underpay or overpay tax
Pay the correct amount of tax
We often hear people expressing delight at the thought of paying less tax because of their accountant’s advice. This leads people to believe that paying for an accountant will mean paying no tax.
We’re not sure where this idea came from, but please let me remind you that you will always pay tax on profits in some form.
However, the point I’m trying to make here is, it’s bad to overpay on tax, and equally it is bad to underpay it. The right accountant will ensure that you are paying the correct amount of tax.
If you pay too much tax, then you will obviously be left with less money. But if you pay too little tax (by not calculating it correctly, or incorrectly claiming tax-allowables) then you are open to the risk of penalties. This will also have the effect of reducing your business profits.
A good accountant will be able to ensure that you pay just what your legal minimum is (called tax avoidance). Tax avoidance is completely legal and in a lot of cases, morally justifiable (tax incentives on pension contributions for instance). It is tax evasion that is illegal and will land you in hot water.
The Pareto Principle
Most accountants will not try and find every reason under the sun to help you avoid all the taxes you can – this is a waste of time. Like everything in life, most savings come from the smallest actions. Two or three major changes will usually be enough to help you avoid overpaying perhaps 80% of the tax you can legally avoid.
The most common ways of doing this involve advising you
- on whether you should incorporate or remain self-employed,
- finding ways to get the balance right with dividends/salaries (efficient use of tax credits), and
- how to pay less tax when selling shares/your company in Capital Gains.
A good accountant will let you know what you can claim and what not, so that you pay only what’s necessary.
3) We will ensure that you won’t lose money to fines and penalties
If you haven’t found out how to make your bookkeeping processes efficient, you may get fed up with it, forget, and try catch up before the deadline. This means you are being taken away from your business. It means increasing the risk that you will file late and receive penalties.
Having an accountant to rely on makes sense
For others, having an accountant makes sense so they do not need to worry about looming dates. They do not even need to be familiar with the latest legislation. It ensures them that they never miss a tax deadline.
For instance, VAT fines usually start at €4,000, for reasons such as:
(i) failing to register as an accountable business;
(ii) failure to charge VAT appropriately;
(iii) failure to keep proper books and records;
(iv) failure to comply with invoicing standards.
There are also penalties incurred if you are late submitting your annual accounts (Annual Statements, B1 Annual Return) – this doesn’t include the fines if you are late, or submit your forms incorrectly for your sole-trader tax return, VAT return and corporation tax. Your accountant will keep on top of your deadlines so you don’t have to.
If you have just opened your first company and become a company director for the first time, read this article to find out what dates you need to be aware of.
4) We will help you grow your business
Accountants will do the bookkeeping regularly, so that you can see your results at a time when you can still do something about them (if you’re not turning profit for instance, then you can raise your prices/renegotiate supplier costs etc).
This in turn will help grow your business. You should be regularly (at least every quarter, or at most every week, but ideally every month) getting Profit and Loss statements, some KPIs to understand the key information and profit drivers from this (what gets measure gets done), and a forecast of cash flows for the next two months. Measuring cash flow is extremely important for young businesses who may need other sources of finance to keep their business going until profit can be made. This is usually referred to as “runway” (i.e. “when will our runway end?”)
At First Accounts, typically clients are allocated their own dedicated accountant, so from day one you will work with an accountant who will understand the ins and outs of your business and take great pride in seeing your business succeed.
5) We will help you sleep better
Every business owner gets those niggly feelings, or a weight on their shoulder, when they know they need to be proactive on something. Sometimes it’s the website that needs updating, blog posts written, the shop cleaned up, or reporting taxes. The only difference is, a backlog of tax returns could land you at best with a penalty but at worst, the possibility of losing your business, getting a fine that will take years to pay off, and possibly even your name in the paper or some jail time (it’s all possible, and we have seen it happen to people coming to us for help).
Getting a Chartered Accountant is important
Tax is complex. Even if you do it yourself on time, you still can’t be sure that you have done it correctly. Even if your chartered accountant isn’t sure and makes an error, the tax authorities will most likely assume that it was a genuine mistake, and even if it leads to a penalty, your (chartered) accountants are covered by insurance, and are answerable to their professional body. For instance, First Accounts is answerable to Chartered Accountants Ireland, and in order to get our practice licence each year, we need to go on Continual Professional Development, update ourselves on the latest Anti-Money Laundering directives, be monitored by their Quality Assurance team, and finally, get Professional Indemnity Insurance by an approved insurer.
Why not lift that weight off your shoulders and get a professional who will do it better and quicker? I can fix the wheel on my bicycle, but probably not as quickly as the bike mechanic. Having to remember to:
- prepare your company year-end accounts
- prepare abbreviated company accounts where appropriate
- sort out your personal tax return
- prepare corporation tax computations and Returns,
- prepare VAT calculation submissions
- liaise with Revenue
- deal with Companies Registration Office and sort your payroll (PAYE/PRSI)
is a burden that can all be avoided with the right accountant. Your accountant will prepare everything you need, saving you money and bringing you peace of mind, while allowing you to get on with running your business. This is not an expense, this is an investment in your business.
Get the accountant your business deserves today.