Have you started a business and wondered whether you need an accountant yet?
Trying to manage the finances yourself and questioning if it's costing you more time, effort, and money than it's saving?
Not every business is likely to need the same level of accounting support from the outset.
If you're a sole trader with straight forward income and expenses then you may be able to manage the finances yourself in the early days. If however, you have a limited company, a multi-owner business, you employ staff, or you're a founder seeking investment, then you're likely to face more complex responsibilities earlier in your journey as a business owner.
Perhaps the better question isn't whether you need to hire an accountant, but whether professional support could help you make better decisions and avoid preventable problems.
We've written this guide to explain the key moments when hiring an accountant is likely to be valuable and what you can expect to get help with. Here are some quick links to the various sections we cover for you:
You should consider hiring an accountant when you're facing decisions that impact on your legal structure, tax position, need for funding, or financial systems. Don't just look for an accountant when a filing deadline is approaching. For many founders the best time will be just before you start trading, or soon afterwards.
We'd suggest that, at the latest, you seek professional support when you:
Consider the following as signals that you're likely to need professional advice:
1. You've yet to choose a legal structure
The structure you select will impact on the amount of tax you have to pay, your degree of personal liability in terms of debts and claims, and how much administration you'll have to undertake.
2. You're forming a limited company
Running a company brings additional accounting, tax, and filing responsibilities that you'll likely need systems in place to manage.
3. Doing the bookkeeping yourself is taking time away from growing the business
If the financial administration of your business is consuming time that could be better spent winning customers or enabling growth, then you may need to consider the opportunity cost of continuing to do everything yourself.
4. You can't decipher what the numbers are telling you
Recording transactions is one thing. Understanding what your cash flow, profitability, and performance are telling you about your next decision is another.
5. You're approaching a tax or regulatory deadline
VAT registration, employing people, and year-end filings can all introduce new responsibilities and requirements where mistakes and delays can prove costly.
6. You're seeking funding or about to make a major investment
Profit forecasts, cash-flow projections, and reliable financial information can help you assess whether an investment is affordable and demonstrate the strength of your plans to any potential funders.
7. Your business has become more complex
More customers, taking on employees, and additional revenue streams mean your business is evolving. The financial processes that worked in the beginning may no longer be fit for purpose.
A sole trader is likely to have relatively more straight forward financial affairs, this means many of them are able to handle much of the record keeping and processing themselves. But if you're a sole trader, don't discount taking on a professional, their support can still be invaluable to you for:
The essential thing to think about isn't the complexity, or lack thereof, of the bookkeeping, instead it's whether you, as a sole trader, have the time to manage it properly.
It's really important that you know that directors are responsible for a limited company's accounting and filings, and that remains the case even when you have an accountant prepare and submit them on your company's behalf. As a general rule private companies need to adhere to the following:
1. Financial duties
2. Registration duties
3. Tax responsibilities
Not only do you need to get these things correct from a compliance perspective, you need to ensure you're not missing anything, and that it all gets filed on time. Fail to do this and you risk potentially expensive penalties and fines.
Sure, an accountant is useful as they can help you complete all the necessary forms. But their true value is likely in applying their knowledge and experience to help you set up systems and controls to ensure all the above run more smoothly, accurately, and on time.
The lesson is the bigger your business becomes, the more sophisticated the filing and reporting requirements are likely to get, so you're more likely to need professional advice as you scale.
As a founder you may be quite capable of doing the bookkeeping and accounts yourself. However, you need to ask the question as to whether this is sensible use of your limited time? Might it not be a poor commercial decision to be spending so much time on business administration?
Instead, ask yourself what is an hour of your time worth? Could you instead spend it converting opportunities into customers, up-selling, developing your products or services, or moving the business forward?
How you spend your time is up to you and will naturally be influenced by what you enjoy and where your skills lie. Just be sure to consider the opportunity cost. Could that hour generate more value elsewhere in your business than it saves by doing the accounting yourself?
This is a common problem we see amongst entrepreneurs in the early days. They're bootstrapped and try to do as much as they can on little to no budget. They make a good fist of things in the various different business areas but that can only get you so far. There comes a stage with growth where it's no longer feasible.
On the financial side of things, warning signs often include:
Bookkeeping tells you what happened. Financial insight on the other hand helps you decide what to do next. At this point in your journey it's likely no longer about record keeping, it's about obtaining the necessary performance data to help you make better quality decisions.
You set up your business, you're trading and maybe start making money. From the offset you knew you'd need advice but to keep things as lean and efficient as possible you did the bookkeeping yourself. It's an understandable and common scenario.
Maybe hiring an advisor is something you keep meaning to do, but never quite get round to. After all you're trusting someone with the essential information, data, and processes of your business potentially. The problem is that the longer you wait, the greater the potential for relatively small issues to become more difficult, time-consuming and expensive to rectify.
Potential consequences can include:
| Choosing the wrong legal structure to trade from | Lack of cash-flow visibility |
| Missing registrations or deadlines | Avoidable restructuring costs |
| Poor-quality or even missing records | Missing out on funding and finance applications |
| Unexpected tax bills | Loss of time and money investing in systems where they didn't exist |
| Not reserving money for taxation |
None of these problems are inevitable. But the longer they're left unaddressed, the more difficult and expensive some can become to put right. Professional advice is often most valuable before a decision is made, rather than after a problem has arisen.
Often, yes.
Employing staff, leasing premises, buying equipment, or borrowing money can change your costs and cash requirements considerably. An accountant can help you model what that's likely to look like along with the impact before you commit. That's likely far preferable to simply recording what happened afterwards.
A good accountant should be able to help you in the early stages of your business with the following:
If your relationship with your accountant only comes to life at the year-end then many opportunities to improve decisions during the year may have already passed!
Consider the stages diagram below courtesy of Shirlaws. At the earliest phase of your business, 'start-up' you'll probably need help with structure, setting up record keeping, tax, and basic financial controls.
Once your business reaches a major investment point at the first brick wall, the questions start to shift towards forecasting, working capital, finance, hiring and management information.
The level of support you need should therefore evolve with the decisions you and your business face.
Do I legally need an accountant?
Not necessarily. Most business aren't legally required to appoint an accountant albeit that depends on circumstances. You're still responsible for meeting your accounting, tax, and filing obligations. An accountant can help you manage those requirements whilst also helping you make better-informed financial decisions.
Does a sole trader need an accountant?
No. If you financial affairs are straightforward, you may be comfortable managing much of the bookkeeping yourself. An accountant is useful when you need help with tax planning, VAT, Making Tax Digital, cash-flow forecasting, and deciding if you need to incorporate.
Does a limited company need an accountant?
An accountant isn't generally a required appointment in a limited company. Running a company however, brings various accounting, tax, and filing responsibilities. As a director, you're responsible for fulfilling these obligations even if you hire an accountant to prepare and submit information on your behalf.
Can I do my own bookkeeping but still use an accountant?
Yes you can. You can manage your day-to-day bookkeeping while using an accountant for end of year account, tax, forecasting, and advice. You'll need to be specific from the outset in agreeing who is responsible for what to as to avoid duplication of tasks, gaps, and potential unnecessary costs.
When should I appoint an accountant?
Ideally you should speak to an accountant before you start trading, or make important decisions about your business structure and financial systems. You should also consider advice when registering for VAT, taking on employees, seeking funding, making significant investments, or if managing the finances yourself becomes too time consuming.
How much does an accountant cost for a start-up?
The cost depends on your business structure, complexity of your operations, and the level of support you'll need. Basic compliance is likely to cost less than a service that includes bookkeeping, management accounts, and regular ad-hoc advice. Be sure to ask exactly what's included in any quote and what will cost you extra.
What should an accountant do for a new business?
An accountant's role is to help you develop sound financial foundations. This may be choosing the most appropriate legal structure, setting up accounting systems, managing your tax obligations, preparing annual accounts and forecasts, delivering management information, understanding cash flow, and helping you interpret financial performance.
Should I hire an accountant before registering a company?
It can be really beneficial to speak to an accountant before you before registering your company. They can help you consider whether incorporation is commercially appropriate, how the business should be structured and what accounting, tax, and administrative responsibilities you could be taking on.
What information will an accountant need from me?
This all depends on the work they'll be doing. Typically they'll need details about your business structure and set up, income, expenditure, bank transactions, invoices, expenses, payroll, and previous tax information. For a new business, they'll also want to understand your plans, ambitions, expected turnover, and likely funding requirements.
Is accounting software enough without an accountant?
For some businesses it can be straightforward, especially in the early days and stages. Software can record transactions, automate processes, and help maintain financial records. But it can't replace judgement. An accountant can help you interpret the numbers, challenge your assumptions, and apply their experience of advising clients who've faced similar situations. This can help you better understand the financial implications of the options and decisions in front of you.
The content of this post was created on 22/01/2015 and updated on 07/09/2026.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.