Many small business owners know they should probably have an accountant, but aren't sure what one would actually do for them. Here's what a small business accountant does, how the work differs for sole traders and limited companies, and how to tell when it's time to get one.
When you start a business, you quickly discover how much of running it involves numbers: invoices, receipts, tax returns, VAT and deadlines. At some point most owners ask whether they need an accountant, and what one would actually do for them. The answer depends on your business, but the best small business accountants do far more than fill in forms. Here's a clear guide for small businesses in Bristol and across the UK.
What does an accountant do for a small business?
At its simplest, an accountant makes sure your business meets its legal and tax obligations accurately and on time. A good one also helps you pay no more tax than you need to, understand your numbers and make better decisions. The work usually falls into four areas: compliance, bookkeeping, tax planning and advice.
Compliance: keeping you right with HMRC and Companies House
- Preparing year-end accounts, and filing them with Companies House if you're a limited company
- Preparing and filing your Self Assessment tax return
- Calculating and filing your company's Corporation Tax return
- Preparing and submitting VAT returns under Making Tax Digital
- Running payroll and reporting it to HMRC in real time
- Filing your company's annual confirmation statement
Bookkeeping and software
Many accountants will also keep your books for you, or set you up to do it yourself with cloud software such as Xero or QuickBooks and check your work regularly. Accurate, up-to-date bookkeeping makes every other job quicker and cheaper, and gives you a real-time view of how the business is doing.
Tax planning
Tax planning is where an accountant can add the most value. That might mean choosing the right business structure, making sure you claim every allowable expense and capital allowance, deciding how to pay yourself from a limited company, or timing a big purchase. None of it is about aggressive schemes. It's about using the rules as they're intended.
Advice to help you grow
The best accountants for growing businesses look forward as well as back. That can include cash flow forecasts, budgets, management reports and advice on big decisions such as hiring or borrowing. For businesses that need senior support, some firms also offer an outsourced finance director.
How it differs for sole traders and limited companies
For a sole trader, an accountant will usually focus on bookkeeping, allowable expenses and your Self Assessment tax return, plus Making Tax Digital for Income Tax if your income is over the threshold. A limited company has more to file: statutory accounts, a Corporation Tax return, a confirmation statement, payroll for directors, and often dividends and the directors' personal tax returns. That's why accountants for limited companies usually charge more than they do for sole traders.
Do you legally need an accountant?
No. There's no legal requirement for a small business to use an accountant, and some sole traders with simple finances manage on their own. But as a business grows, the cost of mistakes, missed deadlines and unclaimed allowances tends to outweigh the fee. It's worth getting an accountant if you're setting up a limited company, registering for VAT, taking on staff, or simply spending too many evenings on paperwork.
How much does a small business accountant cost?
Costs depend on your business structure, how many transactions you have and which services you need. Most small business accountants now charge a fixed monthly fee, which makes the cost predictable. Our guide to fixed fee accountants explains what's typically included and what to ask before you sign.
Choosing a local accountant in Bristol
Cloud software means you can work with an accountant anywhere in the UK, but many business owners still prefer someone local who understands the area. If you're looking for accountants in Bristol, LN Accountants is a CIMA-qualified practice with over 20 years of combined experience and more than 250 clients served. We work with small businesses and limited companies across north Bristol, South Gloucestershire and North Somerset, and right across the UK. Explore our services, or get in touch for a friendly chat about what your business needs.
Frequently asked questions
What does an accountant do for a small business?
An accountant prepares and files your accounts and tax returns, handles VAT and payroll if you need them, and makes sure you meet HMRC and Companies House deadlines. A good one also helps with tax planning, cash flow and advice to grow the business.
Does a small business need an accountant?
There's no legal requirement, but most growing businesses benefit from one, especially once they become a limited company, register for VAT or take on staff. The fee is often outweighed by the tax saved and the mistakes avoided.
Can an accountant help me pay less tax?
Yes, legitimately. An accountant makes sure you claim every allowable expense and allowance, choose the right business structure and pay yourself tax-efficiently, all within the rules.
Should I choose a local accountant or an online one?
Either can work well, because cloud software lets accountants support clients anywhere. Many owners like having someone local who understands their area, combined with the convenience of working online.
