You’ve finally set up your dream business and your beautiful jewellery is starting to sell. But managing the jewellery accounting and finances can be tough to handle, especially for new starters. So when is the best time to invest in an accountant? Read our helpful guide for tips and help when it comes to accounting for small businesses.
Accounting For Small Businesses: Do I need an accountant?
As a sole trader of a small retail business, managing the accounts and finances can be a tricky process, and one you may need external help with. There are various pros and cons of handling your business with and without an accountant – that’s why we’re here to help you make the most informed decision that is right for you.
Jewellery Accounting Without An Accountant
Do you have time?
Firstly, an important factor to consider when bookkeeping for small businesses is time management. Do you realistically have the time to complete the accounts and tax returns on your own? If so, great. But if you’re not sure, try and estimate a valuation of your time in terms of money – think about how much money one hour of your time is worth, and take note of how long it takes you to complete your accounts. If this is working out as a loss for your business, you may need an accountant. Although you may see it as direct money coming out of your business, this investment could cost you less per hour than if you were to do it yourself.
Do you understand the complexity?
Jewellery accounting can be complex to understand, especially for a first time business owner. The legislation and procedures change regularly, nearly every year, which makes it hard to keep up to date with. This would involve dedicating extra time into researching the latest tax laws and rates to ensure you are completing your accounts correctly. Ultimately, you need to weigh up whether this time would be better spent running your jewellery business. , HMRC aren’t particularly lenient if forms are completed incorrectly, and do not accept ignorance as an excuse, which can often result in a rather large fine. However, if you are sure about jewellery accounting or have a background working with other accounts, you may find it easier managing your business finances on your own.
Liability & Tax
Whether the business is liable or not is also a factor to consider when accounting for businesses without help. If you choose to act as a sole trader, you need to be aware that your business automatically becomes part of your personal assets, meaning that if it were to fail, your personal assets could be at risk.
However, declaring your business as a limited liability company could prevent these problems – this means the debts belong solely to the company, which then operates as a separate legal entity. There are other options when it comes to declaring the legal status of your business in terms of financial gain or loss, which is where having the help and expert advice from an accountant can really benefit your decision making.
Taxes are also different for sole traders as opposed to a limited company, as the profit values differ. If you want to be cautious, you could start out your jewellery business as a sole trader managing your own finances, and then later convert to a limited company when your business is established, meaning you have a clearer idea of profits. Again, this is advice you usually receive from your accountant who will be established in this area, advising you on what the best option is for your company.
Jewellery Accounting With An Accountant
Although managing your accounts on your own could, in some cases, keep down costs, and mean you’re in total control of your company, it could also leave you overworked and stressed. You may think that nobody will know your business as well as you do, but sometimes a little extra help can help you avoid additional and unnecessary pressures.
Bookkeeping Services For Small Businesses
Your investment in an accountant doesn’t have to cost a fortune – there are very reasonably priced bookkeeping services for small businesses available to help you take control of your finances. The latest way of keeping track of business finances is by using online accountants. Although distanced, they can provide online or telephone support to you, and are often a cheaper way of accounting for small businesses.
If you feel more comfortable, you could hire an accountant for face-to-face business who you can develop a more personal relationship with. They can easily show you how much money you have made, what you can take from the business and how much money to leave aside for the taxman.
Whenever you’re thinking of hiring an accountant, check out their credentials carefully first, making sure they are reliable and dependable. After all, they will be handling your finances so you need to know you can trust them. If you’re not sure, ask them what accountancy body they belong to and if they have professional indemnity insurance.
Not only can they help you with finances, but accountants can also give you advice about your company’s legal structure, help with writing your jewellery business plan including forecasts and profit margins, alongside managing the payroll for your employees. Often, they use cloud-based accounting software which allows them to share your jewellery accounting data with you very easily. You need to base your decision on whether you believe you have the expert knowledge to complete the accounts successfully, the time to complete them, and whether or not it will add a significant amount of stress to handle. There is no correct answer, so just do whatever works best for you and for your jewellery business.
Perhaps you’re still looking for more jewellery based advice for your new handmade jewellery business? Visit our Business Advice Blog for more information today.