No, it's from a conversation elsewhere today. Do you think a small business owner (sole trader) still really needs an accountant? Do you think the lose more than they gain, or otherwise by having a bookkeeper alone?
No need for a sole trader to have accountant as they can prepare their own accounts and use these as a basis for doing their tax return
Benefits of having an accountant
1. Confident that accounts are being prepared by an experienced/qualified individual and all available expenses are being claimed
2. Confident that tax computation is being calcuated correctly from the accounting profit which forms the basis of the income for tax return.
3. Confident that all relevant parts of tax return are being completed.
4. Can take action against a 3rd party if it turns out your tax return is wrong and you have provided all the information to prepare to the accountant.
Drawback of having an accountant
1. Additional costs (but this will be tax deductible)
2. Delay in submitting your tax returns as accountant will need to prepare accounts which they might not necessarily start as soon as you give them the records.
Well if threats are to be believed, HMRC are going to investigate sole traders a lot more in the coming few years. So peace of mind would be a benefit if they had undergone a full investigation. The obvious drawback would obviously be fees.
Praps I should offer a 'checking service' for those who wish to do their own books and tax. I'd probably end up doing a lot of profit & capital allowances computations.
If you have a bookkeeper who has studied tax (as I know a lot of them had) then I don't think they need to pay out for an accountant.
Also, most information can be found on the Internet or at one of the HMRC offiices... Unless you need an accountant to sign off on the accounts for something then I dont think they're needed but the average sole trader.
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Please correct me if I'm wrong... I am only human sucking up knowledge... Sometimes bits leak out!
I am of the belief that for a sole trader a bookkeeper who is suitably qualified and experienced is sufficient, this came from a discussion today where it was suggested they'd be safer with an accountant. I just don't buy that any accountant is better than a knowledgeable and experienced bookkeeper.
I had virtually no instruction the first time I stood up in the old Commissioners and the client might have been safer with an old hand. Then again, the old hand needn't have been a C.A. just someone who knew the ropes. So yes, I agree, but the C.A. would possibly have sat in several times while someone senior presented a case.
I don't mind fair competition, but it really annoys me when some accountants use scare tactics to suggest that if you have a bookkeeper doing your tax return that the sky will somehow fall in.
Thats my mini rant for today.
Kris
-- Edited by kjmcculloch83 on Tuesday 11th of October 2011 06:24:46 PM
I just don't buy that any accountant is better than a knowledgeable and experienced bookkeeper.
Hi Kris,
Sorry, have to disagree on this one.
The level of training that accountants go through is considerably more than is required of any bookkeeping qualification.
Just take a look at the responses over on accountingweb and you'll see what I mean.
Don't get me wrong, I'm not saying that there is anything amiss with any qualification but the above statement is comparing apples and oranges.
On many occassions the bookkeeper is quite capable of doing the role fulfilled by the accountant but do you really not want to have an accountant behind you for when things go wrong?
One thing that nobody has brought out in the above discussion is HMRC's attitude when addressing an accountant as opposed to a bookkeeper or a business owner.
I've had problems myself in the past with over zealous application of one take of the rules by HMRC and have been awfully glad of having a chartered accountant in my corner to argue matters with HMRC.
The accountant didn't say anything to them that I hadn't but the fact that it came from a top tier accountant made an awful lot of difference.
back to the floor.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
My view is that when I have a sore throat I don't seek out a surgeon, I go to my pharmacist. He may not be as super qualified, but you know what, I don't need the qualifications of a surgeon.
Thats one arguement... But if you felt that you needed reading glasses would you go to the opticians or buy one of the pairs from poundland? (Touché!)
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think that's a little different though, the shop staff in poundland are in no way qualified. That's like saying an accountant, or a guy down the pub surely?
It's horses for courses, in my opinion. A sole trader doesn't automatically need an accountant but it's worthwhile a bookkeeper building a relationship with a good accountant.
I agree with Shaun comments regarding dealing with HMRC, even within the accounting profession all things don't seem to be equal. A former employer of mine had an appeal thrown out until he paid to have PWC involved and HMRC approach changed overnight.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Actually, I think that in some cases people do look at those as two legitimate alternatives! (lol).
And of course one other arguement in your favour that I've been thinking about. In many cases its not actually the qualified accountant that does your books. They may even have been subcontracted to a bookkeeper or used for training the office junior. But of course the client will never know that.
What you do have with an accountant though is the reassurance that your business always has artillery in reserve if ever it's needed.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
For the first barage, an HMRC officer is likely to have had little experience of preparing accounts and might only have rudimentary knowledge of double entry bookkeeping. They're aware of the HMRC interpretation of tax law; not the law itself. So yes, if you get into difficulties after that, then it is only right to give the client the best chances and peruse the yellow pages. On the other hand, the Revenue should peruse this forum when recruiting Enquiry staff :o)
What I don't want anyone to think is that I don't see the value in accountants, I definitely do (or I wouldn't be wasting my time trying to get my degree). What I have issue with is some of the scaremongering which goes on, albeit by a minority of accountants, which says if you don't use a chartered accountant terrible things will happen.
I don't want to go down the bad accountant bad bookkeeper road, we've been down it so many times before. I just think that there needs to be some clarification of the roles of each and when you need one, when you need the other and when either will do.
I know of people who have their accountants doing their bookkeeping and charging them £160 per month for something a reasonable bookkeeper could do for less than half. Thats the way of the world, and fair play to them if they can get it. I just hate when it is suggested we mere mortal bookkeepers are something between data entry clerks and the boy who makes tea for the person who makes the coffee.
I've been a bit disheartened by this thread. I feel that a small sole trader would not be willing to pay for the services of both an accountant and a bookkeeper. In my opionon a fully qualified bookkeeper is all that a small sole trader would need.
If people would still prefer to deal with an accountant (even for the smallest of entity) I'm beggininng to wonder why I'm studying ICB. I was planning to start up my bookkeeping business when fully qualified and offer a comlete service to sole traders. At the end of the day if I was running a small (not bookkeeping) business and after bookkeeper had prepared accounts they then had to be passed to an accountant I would probably go to the accountant in the first place.
Just out of curiosity, what would you think if the person was AAT qualified. Would you still think the sole trader needed an accountant?
Or how about ICB and ATT? Still need an accountant?
Elizabeth
-- Edited by betty121 on Wednesday 12th of October 2011 07:25:21 AM
-- Edited by betty121 on Wednesday 12th of October 2011 07:26:20 AM
The problem here is the definition of bookkeepers and accountants here. In many cases a suitably qualified bookkeeper could do everything a sole trader, or partnership for that matter needs. However, not all of them can, and sole traders probably think most bookkeepers cant. therefore i for simplicity many soletraders go to an accountants as they know what they will get.
However the real question is when does a bookkeeper stop being a bookkeeper and become an accountant. Although s a bookkeeper can not call themselves a chartered accountant they can do anything a chartered accountant can do other than audits. Just because someone calls themselves a bookkeeper, if they are doing detailed tax computations, doing ta saving stratagies and helping with tax planning, surely they are performing the role of an accountant, and thus, the client needs an accountant. Just because this service is provided by someone who calls themselves a bookkeeper, or belongs to a bookkeeping body, doesnt mean they dont need these services.
Also as a side note i am aware most bookkeepers will charge more than their usual charge out rate for self assessment (quite rightly), as they are providing a more technical service than bookkeeping.
We maybe also want to be aware it could be argued, that with the move file tax returns on line, and the simplicity of it, that some soletraders do not need a bookkeeper, never mind an accountant.
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
There is also the other side of the coin - some people will go to a bookkeeper in the hope of getting accounting work done at bookkeeping prices. And anyone can call themselves an accountant - even a dentist if they so wished. If they wanted to call themselves a Chartered Accountant then that's a different kettle of fish. And I can't imagine a dentist would want to go through that hassle.
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Never buy black socks from a normal shop. They shaft you every time.
