What does a small business accountant do?

More than year-end accounts

Many people picture an accountant as someone who appears once a year, takes a folder of paperwork and hands back a set of accounts. That is part of the job, but it is a small part. For a small business, a good accountant is closer to a part-time finance function, keeping you compliant, keeping your tax efficient, and helping you understand what the numbers are telling you.

The exact mix depends on your business and how much you want to hand over. A sole trader might only need a tax return prepared; a growing limited company might want bookkeeping, VAT, payroll and regular figures all handled. Below is the full range, so you can see where you fit.

Compliance and filing

The foundation of the role is keeping you on the right side of HMRC and, if you are a company, Companies House. This is the part with legal deadlines and penalties attached, so it is where an accountant earns their keep first.

• Year-end accounts. Preparing your annual accounts from your records, in the correct format. For companies this means statutory accounts filed at Companies House.
• Tax returns. A Self Assessment return for sole traders and directors, or a Corporation Tax return for companies, prepared, checked and filed on time.
• Companies House filings. The confirmation statement and other filings that keep a company's public record up to date.
• Deadline tracking. Knowing what is due and when, and chasing you well before it falls due rather than after.

Getting this right matters. A late company tax return or set of accounts attracts fixed penalties, and repeated lateness escalates them, so reliable compliance is the first thing a good accountant delivers.

Tax and planning

Beyond simply calculating what you owe, an accountant makes sure you pay the right amount, no more than you have to, within the rules. That falls into two halves.

Getting the return right

This means claiming every allowable expense and relief you are entitled to, applying allowances correctly and avoiding the errors that trigger HMRC enquiries. For many small businesses, a correctly prepared return already saves more than the fee.

Looking ahead

Good tax planning is about the decisions you make before the year ends, not after. How you draw money from a company, the timing of larger purchases, pension contributions and the structure of your business all affect your tax. An accountant who knows your situation can flag these in good time.

Bookkeeping and payroll

These are the ongoing, month-to-month services that keep a business running smoothly, and many small firms hand them over to free up their own time.

Bookkeeping

Bookkeeping is the day-to-day recording of sales, purchases, expenses and bank transactions. Done well and kept current in cloud software, it gives you a live picture of your finances and makes everything downstream, from VAT to accounts and tax, faster and cheaper.

VAT

If you are registered, an accountant handles your VAT returns, makes sure you are on the right scheme and keeps you compliant with Making Tax Digital. If you are approaching the registration threshold, they will tell you when you need to register.

Payroll

If you employ anyone, including yourself through a company, payroll involves calculating pay and deductions, reporting to HMRC in real time and managing workplace pensions. It is fiddly and deadline-driven, which is why it is so often outsourced.

Advice and decisions

This is the part that distinguishes a good accountant from a filing service. Because they see your numbers regularly, they are well placed to help you make decisions, and to answer the questions that come up when you run a business.

• Whether and when to move from sole trader to limited company.
• How much you can take out of the business, and the most tax-efficient way to do it.
• Whether you can afford to take on staff or invest in equipment.
• What your cash flow will look like in the months ahead.
• How the business is really performing, through management accounts.

Having someone to ask before a big decision, rather than finding out the tax consequences afterwards, is one of the most valuable parts of the relationship, and it is hard to put a price on.

Do you need one yet?

There is no legal requirement to use an accountant, even as a limited company. The question is whether it is worth it for you, and that usually comes down to time, risk and complexity.

You will likely benefit if you are spending evenings on admin instead of your business, if you are unsure your tax is right, if you have become VAT registered or taken on staff, or if you have moved from sole trader to a company and the paperwork has grown. Many owners find that the time saved and the tax handled properly more than cover the fee.

If you are weighing it up, the simplest next step is to talk it through. Request a consultation and we will give you an honest view of whether, and how, an accountant would help your business.