Reply to: Honestly, how difficult is it to keep your own accounts?

[sy8111]

Your suggestion is absolutely valuable to people who want to do self-accounting. One more point I want to make is that, although basically we should compare time value we spend on self-accounting (monthly rate x 1 month) with time value we deserve (hourly rate x hours in a month), we also notice that the time we spend on accounting is in our spare time.

Some people may think value of spare time and value of professional time are quite different, and if they don't do accounting they sit there watching soap or big brother. They may find that piece of time is not so valuable and can exchange for accountancy fee saving.

So it also depends on how you view your spare time.

I am very new to contracting, and even though I have a bit of accounting knowledge, I would not try doing it myself. The moment you work through your limited company, the liability of completing all tax matters is upto you anyways.

What I would suggest is as follows:

1) Get a list of documents you need to prepare quarterly, and annually.
2) Get a list of supporting documents that you need for the above, and a list of agencies/authorities, you need to file those documents with.
3) Get a list of sources you can trust, to get most updated formulae for calculations of various taxes.
4) Start calculating all the taxes yourself and see if the final figure matches what your accountant suggests.
5) If not, ask your accountant, why? Most of the professional accountants would be more than happy to explain why not.
6) If your figures matches to that of your accountant's for a few months, figure out the time taken by yourself to complete all the formalities and derive what it costs you as per your hourly rate.
7) Finally, ask yourself what the motivation is behind doing everything yourself.
8) If the motivation is money, then add to the cost calculated in step 6, the fees of accountant to do you Self Assessment at the end of year + Fees of accountant in case you need consulting + Some money put aside for penalties in case you mess up things (This can be your savings if you dont need it).
9) Then compare the costs, and see if it worth it? Mind well, time taken to fill out forms can vary hugely between individuals, and it can only be you, who knows how long does it takes you.

Hope this helps.
Rasesh.

[rd409]

I am very new to contracting, and even though I have a bit of accounting knowledge, I would not try doing it myself. The moment you work through your limited company, the liability of completing all tax matters is upto you anyways.

What I would suggest is as follows:

1) Get a list of documents you need to prepare quarterly, and annually.
2) Get a list of supporting documents that you need for the above, and a list of agencies/authorities, you need to file those documents with.
3) Get a list of sources you can trust, to get most updated formulae for calculations of various taxes.
4) Start calculating all the taxes yourself and see if the final figure matches what your accountant suggests.
5) If not, ask your accountant, why? Most of the professional accountants would be more than happy to explain why not.
6) If your figures matches to that of your accountant's for a few months, figure out the time taken by yourself to complete all the formalities and derive what it costs you as per your hourly rate.
7) Finally, ask yourself what the motivation is behind doing everything yourself.
8) If the motivation is money, then add to the cost calculated in step 6, the fees of accountant to do you Self Assessment at the end of year + Fees of accountant in case you need consulting + Some money put aside for penalties in case you mess up things (This can be your savings if you dont need it).
9) Then compare the costs, and see if it worth it? Mind well, time taken to fill out forms can vary hugely between individuals, and it can only be you, who knows how long does it takes you.

Hope this helps.
Rasesh.

[sy8111]

More difficult than 1.1/2 hours of my time a month, which is what my accountant costs.

Is it really worth doing it yourself?

Personally I feel using accountant involves more than just sitting their waiting for them to do their work. I have to keep communicating with them by email, phone and post or email required data. Also, I still have to maintain copy of all information myself. So I feel that I still need to spend a couple of hours every week or month with accountant hired.

I am thinking staying with them for 1 year and do accounting myself as well. I can do it all alone after everything is clear.

[d000hg]

Why not TRY doing your own accounts for a year WHILE still using your accountant? Compare the results, see if there's more to it without losing the safety net.

[IR35 Avoider]

who are they?

SJD?

Crunch Accounting

[css_jay99]

Using an accountant or not, I think it is important that people should at least learn some book keeping and accounting skills.

After all running a business is not just about services you output but also about how to interpret accounting data, effectively manage your resources ............

.... Maybe if the RBS boss & other Fat Cats knew this, we tax payers might not be paying such a hefty price


css_jay99

[DeludedAussie]

I'm paying £70 a month to a highly automated accountant (seem to recall that the name gets moderated out if I mention who they are) and am keeping things very simple with my new company. Once up and running, there is zero paperwork. Once a month I enter my invoice information into their web-based accounts system, and click a button to email the invoice to the agent. Once a month I record my salary in their system and record their monthly invoice (emailed to me) as an expense. Once a quarter I confirm (within the system) that the records are up-to-date, and they file the VAT return online. At all times I can see the exact status of everything, VAT owed, Corporation tax owed, money available for dividends, etc.

who are they?

SJD?

[IR35 Avoider]

I'm paying £70 a month to a highly automated accountant (seem to recall that the name gets moderated out if I mention who they are) and am keeping things very simple with my new company. Once up and running, there is zero paperwork. Once a month I enter my invoice information into their web-based accounts system, and click a button to email the invoice to the agent. Once a month I record my salary in their system and record their monthly invoice (emailed to me) as an expense. Once a quarter I confirm (within the system) that the records are up-to-date, and they file the VAT return online. At all times I can see the exact status of everything, VAT owed, Corporation tax owed, money available for dividends, etc.

[monkeygeorge]

More difficult than 1.1/2 hours of my time a month, which is what my accountant costs.

Is it really worth doing it yourself?

We all put different values on things, it's very much a personal thing, I've looked at what's involved and it really is very simple stuff. I'm in a position where I can spare an hour or two a month so for me it makes no sense to pay someone to do it.

However, I will pay £10-£15 a week to have my dry cleaning done. To other people who are happy to iron themselves that sounds ridiculous, but because I hate ironing and it takes me ages, I personally consider it's worth paying for.

[escapeUK]

Honestly, how difficult is it to keep your own accounts?

More difficult than 1.1/2 hours of my time a month, which is what my accountant costs.

Is it really worth doing it yourself?

[pcitshop]

a good accountant

a good accountant not only keeps things inline as far as compliance is concerned but also helps in business development and growth. I am an accountant with great love for IT, if i can be of any help plz do let me know. I wrote a short article on how to do book keeping a while ago, have a look, it will give you good starting point to learn about book keeping

[Mod] Hi pcitshop,
If you belong to an accountancy please read the T&C's and ask Admin to rename your login myname@myco, then you can post your answers on the board, as the other accountants do.

Thanks [/Mod]

[Maslins]

Granted the Corporation tax, VAT etc are additional but at the end of the day it's just inputting some figures onto a form.

You're right, but only to the extent that an IT guru just clicks a few buttons to fix your PC.

It's knowing what to do, when, and how. As others have said, if you've got plenty of time to Google it all (obviously you can only Google the questions you know to ask, not the ones you don't even think of), or ideally a mate with accounting knowledge, there's no reason why you can't DIY.

[monkeygeorge]

HMRC CD ROM is really only useful to do your payroll, it does a good job with this and it is easy - it works by you telling it how much salary you want. I would suggest that if you are unaware of what it does and how to use it you might not be ready to go accountant free as payroll is one of the easiest jobs.

What part of the CD ROM does payroll? I understood you use it for P14 and P35 etc. My brother's an accountant and he quickly went though the payroll with me, it really does look very simple:

Use the the HMRC tables to work out the tax based on your tax code, but basically salary is fixed each month, add on your expenses to give your Nett Pay. Subtract this and any company expenses from your nett invoice total to give your profit, then subtract 21% for CT to give your available nett profit.

The difficult thing is knowing what needs to be done, after that you're following the same routine each month.

Whilst I do not know what rate you are on, is doing it yourself really worth the hassle and stress? I pay my accountant £75 per month and it is so stress free, if you are paying more than that PM me and I will let you know about mine.

In my experience a little knowledge can be a dangerous thing, if you are happy with what they do for you and it is a reasonable fee than I would stay with them.

I have found an accounting charging the same as what you're paying (inc VAT) but even then, it just doesn't make sense to be paying that amount of money for what should take 15 minutes each month. I spend about that time compiling my expenses and preparing invoices anyway so I really don't think it's hassle or stress. I just think you need to be organised and patient. Is that naive?

Granted the Corporation tax, VAT etc are additional but at the end of the day it's just inputting some figures onto a form.

The annual accounts are a bit more involved and I probably will need to use an accountant for that. I know someone who pays around £200 for that which seems reasonable for an annual fee.

[Waldorf]

Due to recent price increases I've been motivated to look elsewhere myself but before committing to a cheaper acocuntant, I wanted to look at doing my own accounts.

I've installed the HMRC Employer CD ROM, but I want to know if that will do the basic monthly stuff, ie: calculates salary and available profit based on invoice amounts, expenses and subsistence etc. Does it produced payslips and dividend vouchers etc?

Can anyone help, and is there a good online tutorial?

Thanks.

Whilst I do not know what rate you are on, is doing it yourself really worth the hassle and stress? I pay my accountant £75 per month and it is so stress free, if you are paying more than that PM me and I will let you know about mine.

In my experience a little knowledge can be a dangerous thing, if you are happy with what they do for you and it is a reasonable fee than I would stay with them.

[zedAccounts]

I've had some bad experiences with accountants over the past year and to be honest, don't really trust what my current one is doing. I'm pretty sure things are getting bad as I've had my first phone call from the IR asking for late Tax/NI payments. This is something I'm paying my accountant to do and is the first time I've had a phone call of this nature.

I've bought myself a couple of books on bookkeeping and accountancy (just waiting for delivery) but I'm wondering how much of an arduous task this could be and if it's worth just looking around for a better accountant. But I would be saving about £80 a month by doing it myself.

Anyone got any advice? Do you do your own books? Is it worth buying some software to help me out? Sage Instant Accounts is only £100 and can be put through as a company expense.

Thanks in advance for any help.

I too refuse to put my trust and time in accountants. So I taught myself to keep my own accounts and read up on taxation issues. It's not that difficult, but it will need some investment of your time in the first few months. Once you become confident it's really easy. I've written my own spreadsheets in the past and then a Windows desktop application to manage my accounts. This can be found by googling zedAccounts. Good luck.

ZED.