Week 41: A trip to the Accountant's
Happy Monday everyone or whatever day it is that you may be reading this. For me it falls on a Monday as I like to write my blog a week in arrears about the previous week. I am two thirds into the year and this will be my ninth month of trading but feels longer for some reason. I have already received a letter from HMRC on filing my first set of accounts. Reason being I had registered my company a few months before I was actively trading. This makes me very sad and happy at the same time (yes it's very possible to feel both sets of emotions simultaneously). Sad because I didn't earn anything this year but happy cause it's my first ever tax assessment for my very own company (I will be paying tax for my own venture and not for someone else’s). For this assignment you will need to speak to a professional and make sure your set-up is right from the very start.
We met with our accountant for the first time and it was a free (woohoo) initial consultation to discuss the nature of our business and plans, so they can assess if we are the right fit. It is a two way process so feel free to vet them as well. If you feel they are too broad or may not be familiar with your business model then feel free to speak to a few accountants before you settle on one. It is a big decision as they will be looking after your finances and you want to make sure your financial affairs are with someone that knows their trade. Lucky for me they do have a few buy to let’s, (BTL) property landlords, on their books so this made me very comfortable. At this stage there was no income to discuss however, there were plenty of outgoings. My accountant did say we would have to send across proof of all the expenses we had incurred over the year/s and he would get our account up and running. Being the control freak that I am, I had already had this covered via Excel spreadsheet, my accountant was impressed and of course I was smug.
Tip: Have a bucket ready to puke, because trust me, you will need one when you tally up all your expenses, mine came in a little under £10k. Stress cortisol anyone??
In a jiffy I was able to send him my spreadsheet and all my records as I had everything organised in neat folders from the onset. Organise all your invoices in a separate folder so you can locate them at a glance. You can also group these invoices further by categorising them with subheadings. For example, I created folders for regulars such as monthly G-suite, social media as well as ad hoc marketing and yearly compliance. Because I was organised from the very start I didn't find this task daunting as most of it was already done. I specifically remember from self-employed friends saying:
...“wait till you have to do your own accounts, it's such a nightmare and so time consuming”...
I am so glad I had learnt from somebody else's mistakes and took heed from the very start. Believe me it doesn't matter how organised you think you are you will still get caught out somewhere as there is just so much to do and for those who run around like a headless chicken may I just remind you this is not college, you will not get away by doing your work in a rush on the bus like how you used to do your homework (memories anyone?). The industry is very unforgiving as fines and deadlines are very transparent. For my accountant he's fees are quite reasonable and has quoted us £250 plus vat as its a new business with not much paperwork to do. Now you can save this amount by doing your self assessment yourself but from all the horror stories I heard I wasn't interested in having a relationship with the HMRC department and all the documentations that will no doubt be going back and forth. Besides, dating should be fun hahaha. For this reason I opted to pay and have my lovely accountant deal with them as he is far better equipped than I.
Tip: Know your weaknesses; being the savage I am I will get into an argument and no doubt struck off the register hahaha. So why take the risk. (I have flaws by the way).
Avoid penny pinching and look at the bigger picture. £250 is not that much in fees. Learn to value your time as this can be spent more appropriately on other functions.