How Much Should You Be Paying For Your Accounting?
Many entrepreneurs will grow and evolve to the point they need someone else to manage their finances. An accountant isn’t just a luxury; in most cases, they are the most cost-effective and important way to manage your business finance.
How much you should be paying for your accountant will depend on a few factors, like how many employees you have, the number of creditors and debtors you have, and things like inventory.
While there isn’t a magic formula for exactly what you should be expecting to pay for an accountant, there are some rough guidelines that can point you in the right direction.
How Much Would You Expect to Pay
Accountants are highly trained and knowledgeable professionals. They understand how you can maximize your profits, reduce any tax you owe as well as make sure that you are registered for any credits, perks, and relief. On that basis alone, they are worth more than their weight in gold.
- If you have a small company, with between 1-3 employees and directors, then you should expect to pay no more than $628 (£500) per year for your accounting.
- For an SME, you should be expecting to pay between $628 – $12357 (£500 – £1000) per year. You should expect a charge of £10 to set up each payroll run too. On top of that, $5 per payslip (£4) on each run.
- For a VAT registered business with between 3-10 employees, you should be expecting to pay $1257 (£1000).
There are many variables when it comes to the amount that you should be expecting to pay.
Something that you should also consider is that a good accountant will have a degree from a recognized institution. Alongside their education, they will have many years of experience and, in some cases, with a business that does something similar to you. An accountant has the ability to consult with you and give you the financial data for you to make decisions going forward.
What Does an Accountant Do
Accountants in basic terms, examine and prepare financial records. They ensure that all of your business records are accurate and that your taxes are paid correctly and on time. Accountants can improve your financial operations and help you run your business more efficiently. Here are a number of tasks that an account performs:
- Making best-practice recommendations to the management
- Improve business efficiency in terms of finance
- Perform inspections on account books and accounting systems
- Ensure that records and statements comply with laws and regulations
- Prepare tax returns, compute taxes owed, pay taxes promptly
- VAT registration and management
- Payroll management
- Balance sheets, profit, and loss
When Should You Hire an Accountant?
Many small business owners and freelancers attempt to put off hiring an accountant. However, it is better to get into good money management habits as early as possible in your business. Finance management is something that doesn’t come naturally to everyone but is an absolute must.
For a single person, business accounting should be considered in the early days. When you outsource your accounting and other admin tasks, you free yourself up to work on your business. The time that you would be spent sorting through your receipts could be spent on securing new clients and working on new products.
Do you have a lot of expenses and income to manage? Many small and medium businesses have many more expenses and income streams than they had originally thought, and even more magically appear in the last week before their taxes are due.
Consider if you have the time to do your own accounting, or indeed it would be more preferential to hire an accountant who can dedicate the time that you can’t.
How Do You Find A Good Accountant?
The same way that you hire team members. Look for qualifications, good reviews/recommendations, and, when possible, has a chat in advance. Online searches can help, but keep in mind that you are going to be targeted for ads from accountancy firms – this doesn’t necessarily mean they are the right ones for you. You can start your search by seeking referrals from other small companies, or small business networks that you are part of. A good accountant can revolutionize your business processes and give you total peace of mind that your taxes and finances are always in good order.
The bottom line is your bottom line. An accountant will improve your financial process, keep your money managed well, and means that you don’t have to spend your business working hours or free time preparing accounts – with an accountant, it’s all taken care of.