When should I get an accountant?

When should you appoint an accountant (and how late can you leave it)? And what are my deadlines?

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Here's what we normally suggest to people with a new Sole Trade or Limited Company (it's got a fair bit of detail, but most people tell me it's helpful to have everything written down with enough detail to actually make sense!).

You don't need an accountant straight away

First of all, well done for thinking about compliance/accounting this early. In practice, you do not need to appoint an accountant straight away. You can work on the business and get it up and running first.

However, it is good practice to understand what your future compliance processes will look like, knowing associated costs, and what your future obligations are going to be. This will save you time overall.

However, sometimes you have immediate obligations

Most commonly this is if you start paying someone a salary, store your goods in a country different to the domicile of your business, or hit one of the VAT thresholds.

Here's what's worth knowing

Done right, your accounting is a source of insight for your business that can help drive strategic decisions. Done poorly, it is at best a compliance exercise and a time-consuming one at that. Either way, there are broadly five compliance services you have to understand:

Bookkeeping

All transactions in your business need to be classified into specific accounting categories. This process is bookkeeping.

When do I have to do it?

You have to do it in order to start preparing your accounts. If you are a Limited Company, the standard required is higher and universally we recommend the use of bookkeeping software such as Xero. For Sole Traders a lower standard is required and we can do the requisite bookkeeping as part of the Accounting service (below).

When should I do it?

Bookkeeping is a source of insight, and if completed on a monthly basis will give you a clearer picture of the state of your business' finances. If you want this level of insight or if you want to always be as time-efficient as possible, then start bookkeeping from the beginning. Otherwise, we recommend:

  1. Get business running first and just make sure you store a clear digital copy of all your expenses sensibly, e.g. a Google Drive
  2. Once you have tested your business fundamentals, get in touch and we can backdate the bookkeeping. The costs is the same either way, but this way you get to test your business before committing.

Accounting

Now that you've completed your bookkeeping for the year and all your business activity is summarised (in a trial balance) we can work on your preparing your annual accounts. As part of our accounting service we also include all advice required, because we prefer you to be happy to ask questions at any time, than risk having to fix something at year end that timely advice could have prevented.

When do I have to do it?

If you are a Limited Company your year end will be a year after your incorporated, and you first deadline 9 months after this. Pro tip: this date is not fixed in stone, and if you were dormant in the beginning then we can shift the accounting period back by the same number of months you were dormant (this saves you money on accounting fees). Note, from HMRC's point of view, you will be considered actively trading once you buy goods for sale or, if you don't hold inventory, fulfil your first dropshipping order.

For Sole Traders your tax year runs from 6 April to 5 April the following year, and your deadline for filing is 31 January the year after that.

When should I do it?

We aim to get your accounts prepared roughly 3 months after your year end as this gives ample time to complete any bookkeeping. There is no good reason to leave it to the deadline (there's no impact on when you pay)!

VAT

VAT will only apply to some businesses and in certain scenarios, but you should know what these scenarios are so that you do not get a surprise VAT bill.

When do I have to do it?

If you exceed any VAT thresholds. There is a domestic threshold of £85,000 per rolling 12-month calendar period (only count VATable sales towards this total, i.e. exclude sales outside of the UK and EU/EEA). There are distance selling thresholds to each country in Europe that vary by country (between €30,000 and €100,000). If you exceed these you have to register in the country and in the UK. The threshold is zero if you store goods in another European country, so if you store and ship goods from France for example, you must register for French VAT. This is why any non-UK company storing goods in the UK has to register straight away.

If you are exclusively a dropshipper and your goods are shipped to the customer from outside the UK/EU/EEA, then you won't hit any of the above thresholds and therefore do not need to register for VAT.

When should I do it?

Straight away! There is no flexibility on VAT. As soon as the obligation exists you have to register and submit returns. You have to option of voluntarily registering, i.e. even when you are not obliged to do so. Most commonly this occurs if one of your suppliers will only transact with VAT registered entities.

Payroll

If you pay a salary to someone (contractors do not count), then you need to report on a monthly basis to HMRC.

When do I have to do it?

As soon as you pay a salary.

When should I do it?

Straight away! There is no flexibility on Payroll.

Self Assessment

As an individual there are some circumstances where you need to self assess to HMRC and tell them about your income during the personal tax year.

When do I have to do it?

Your tax year runs from 6 April to 5 April the following year, and your deadline for filing is 31 January the year after that. If you are a Sole Trader, then your Self Assessment is filed as part of us doing your Sole Trader accounts. For everyone else, the most common reasons are:

  • you've received dividends exceeding the Dividend Allowance (currently £2,000 per tax year)
  • you've made trading revenue exceeding the Trading Allowance (currently £1,000 per tax year)
  • your income exceeds £100,000
  • you receive rental income

Visit HMRC's Self Assessment checker to put in your details and check for yourself.

When should I do it?

We aim to get your Self Assessment prepared roughly 3 months after your year end. There is no good reason to leave it to the deadline (there's no impact on when you pay)!.

So when should appoint an accountant?

The above should give you some context for the factors to consider. The answer is you can delay as long as you want subject to coming onboard with enough time for your accountant to file before your deadline; the total price you pay does not change depending on when in the period you come onboard.

In reality, it comes down to personal preference and cashflow:

  • If you want to access advice from the beginning, sign up for just the accounting package and add any other services later only when you need them
  • If you want to be efficient from the beginning, then also sign up for the bookkeeping service
  • If you want to test the waters first, or cashflow does not allow it, then work on the business to begin with but stay mindful of the obligations and deadlines described above.

How do I get started?

Use the Instant Quote feature to get an idea of pricing and to send us a message and we can take it from there.


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