Did you know that as a self-employed individual in the UK you are not legally required to engage an accountant to prepare and file your tax return on your behalf? The clue is in fact in the title “Self Assessment tax return”. So even though you don’t legally need one, why do millions of people still choose to use one? What are the benefits of having an accountant, and how can you spot a good one? Well, let us tell you more….
Have you ever searched for a holiday and decided to save that £400 by opting to go self-catering instead of all-inclusive? Yet when you are there you end up spending £600 on food and drink, thereby costing you more overall? Well if you have done this then you wouldn’t be the only one. The term is called “false economy”. The idea that because something initially looks cheaper that it will be cheaper overall, when in fact it ends up costing you much more.
The same philosophy can be applied to accounting. You can opt to save the £342 it would cost you to get an accountant to prepare and file your Self Assessment tax return by doing it yourself, but what happens if it ends up costing you £500 more in tax? This is a very common scenario. Your brain tricks yourself into thinking you’ve saved money, but overall you are in fact £158 worse off.
A good, experienced accountant knows exactly what you can and can’t claim against your self-employed income and will be able to use necessary reliefs and rules to ensure you pay the least amount of tax legally possible. They have been through extensive training and testing to get qualified, so trust their expertise.
When you engage with a properly qualified and experienced accountant you will start to benefit from all the added value that comes along with finding a good one:
- They will give you invaluable business advice and guidance which is specifically tailored to your business.
- They will share their business experiences with you and advocate your business to others.
- They will introduce you to other business owners in order to help you expand your all-important business network, which is vital to sustaining your business in the long term.
Unfortunately, the term “accountant” is not a legally protected term, which means that anyone can call themselves an accountant without being properly qualified. Before engaging in a relationship with an accountant we would always recommend you ask them what professional association they are qualified with and regulated by. No properly qualified accountant should be offended by this question, and in fact their professional certification should be displayed in their office somewhere visible to clients.
The most common accounting associations are as follows:
- ICAEW – The Institute of Chartered Accountants in England and Wales
- ACCA – Association of Chartered Certified Accountants
- AAT – Association of Accounting Technicians
Engaging with a qualified member of one of the above associations gives you greater reassurance that the advice they give you is accurate, and in your best interests, since they are regularly audited by their respective association. You also have the security that if your accountant does, for example, cease trading due to death or serious injury, the professional association involved will ensure that your accounting and taxation matters are properly dealt with by an equally qualified and experienced individual.
Changes to the law
Qualified accountants are required to maintain CPD (continued professional development), which means that when the Government change the tax rates and thresholds, or bring in new rules, regulations or reliefs, your accountant will know about them. They will know how to deal with them, and if any of the changes affect you, they should be communicating them to you in a timely manner, which ensures that you are always on top of the ever-changing law.
The finer points
A good accountant will always be on top of chasing you for your records and accounting information. No good accountant will leave it until the last minute to request information from you, which means that you are never in fear of missing a deadline and incurring HMRC fines or penalties.
After reading all of these wonderful things about what you can expect from a good accountant we feel like we need to put the cherry on the cake to seal the deal. Did you know that your accountants’ fees are also tax-deductible against your self employed income? Well, now you do… you’re welcome!
Here at Accounting Connections we are fully qualified and regulated by the ACCA. If you want to come and have a discussion with us about your personal circumstances and how we can help you with your Self Assessment tax return then please contact us on [email protected] or 01634 540340.