What do online accountants offer small businesses?

Are you a small business owner? If so, unless you want to spend all your free time drowning in admin, you’ll need an accountant. For ease and convenience, it makes sense to find an online accountant who specialises in small business accounting.

But which time-consuming responsibilities can they take off your hands?

First, what counts as a small business?

The umbrella term ‘small business’ includes various forms of self-employment including sole traders, freelancers, individual contractors, subcontractors and limited companies. So long as you employ fewer than 50 staff and have an annual turnover of less than £10 million, you’re a small business.

Small business accounting services are sometimes called SME accounting services – SME meaning ‘small and mid-size enterprises.’

Do all small businesses need accountants?

There’s no legal obligation for small businesses to use an accounting service, but it’s a smart choice for many reasons.

Using online small business accounting offers plenty of benefits, including:

• Assurance that you’re compliant with HMRC
• Cash flow and asset management advice
• Business growth and forecasting guidance
• Tax efficiency – no more overpaying
• Better position to secure loans and raise capital
• Pandemic proof – no need to travel and meet in person
• And finally – they save business owners countless precious hours!

Which services can an online accountant offer a small business?

Here are just a few of the services online accountants can offer:

1. Business Set-Up

Whether your small business is as a sole trader, limited company or partnership, an online accountant can guide you through the nerve-wracking process of starting out.

Whether it’s registering with Companies House, setting up employees on payroll or making sure you’ve got the right insurance in place, leave it to an accounting service to make sure your business plan is watertight.

2. Bookkeeping

Bookkeeping is basically the act of tracking, logging and providing proof for every penny that flows in and out of your business. It’s a necessary evil – and one that can take ages!

Chances are that you won’t have a bookkeeper on staff – this is usually far too costly for a small business.

Instead, a trusted online accountant can handle your bookkeeping using HMRC-compliant software, ensuring your records are complete, up-to-date and substantiated.

3. Self-Assessments

Many self-employed workers – including sole traders and those in a business partnership – must submit a self-assessment tax return every year. This includes submitting business records from the previous year and retaining bank statements and receipts. If records aren’t accurate, HMRC can hit you with a fine.

An online accountant can work with you to ensure your self-assessment is up-to-date, accurate and squeaky clean – offering serious peace of mind. Further, most accounting services offer a one-off solution for those simply looking for a little year-end help.

4. Year-End Accounts Preparation

Each year, a limited company must prepare a detailed set of accounts to be published on Companies House. These annual accounts detail the current state of a business and will include things like total spend, total profit, money owed and details of all assets and liability.

These accounts must be available for stakeholders such as shareholders, customers, investors and creditors to peruse – and they must be on time and correct down to the last number.

Accounts preparation is a huge task – but fortunately, one that an online accounting service can do for you.

5. VAT Returns

Small businesses making over the £85,000 annual threshold must register for VAT on goods and services and submit VAT returns every 3 months. In some cases, registering for VAT is a good business decision even under this threshold – but you’d be forgiven for having no idea whether this is the case for you.

Further, from April 2022 when Making Tax Digital (MTD) goes live, all VAT-registered businesses will need to complete digital tax records and returns using HMRC-approved software.

When it comes to VAT, there are so many rules and regulations to navigate, it makes sense to let the pros handle it.

6. Payroll Services

Any business which has employees must have a payroll, which usually means PAYE.

The responsibility lies with the business owner to ensure that employees get their entitlements such as sick and maternity pay, as well as make their NI contributions and pay the correct tax. Running PAYE includes registering with HMRC, using payroll software to keep records and make deductions then reporting to HMRC each month.

Luckily, your online accountant can run payroll on your behalf every month and save you the headache.

7. Subcontractor Tax Reclaim Under CIS

If you’re a self-employed subcontractor in the construction trade, the contractor you work for is obliged to withhold tax – up to 30% – on the money you receive under the Construction Industry Scheme (CIS). You then need to claim any money you’re owed back afterwards.

All contractors must register under CIS, while subcontractors can choose whether to do so. An accountant can advise you on how best to approach your CIS obligations, and make it easy to reclaim what you’re entitled to.

Don’t get caught out – look for an accountant who charges a flat fee rather than a percentage of your refund.

8. IR35 Help

Contractors who operate via a limited company are at risk of falling foul of IR35 guidelines.

There have been some big changes to IR35 regulations in recent years, resulting in contractors losing the ability to set their own IR35 status across both the public and private sectors.

Understandably, this has caused uncertainty and stress within the industry, with contractors at risk of incorrect categorisation and being sent the wrong tax bill.

You’ll need an online accountant specialising in IR35 regulations to walk you through your contract and assist should HMRC launch an investigation into your IR35 status.

9. Advice on How to Grow

Part of an accountant’s role is to give expert advice to clients on how best to approach expansion and business growth.

They’re not only trained to keep you tax-efficient, but they can also help you apply for funding, manage risk, identify which areas of your business are most and least profitable and give advice on how to keep your cash flow healthy during periods of growth.

10. Whatever Else You Need!

All businesses are different, and the type of accounting support you need may be unique to yours.

In such cases, a bespoke accounting solution is what’s needed. A good online accounting service should offer you a tailored package to suit your requirements, and priced so you only pay for the services you’ll use.

To Sum Up

Overall, handing over the responsibility of your business accounts to a professional small business accountant means you stay compliant, save precious time and get the expert know-how you need to grow your small business. For more information, please contact our friendly team!