Do I need an accountant if I use cloud accounting software?

These days, cloud accounting software has made keeping on top of your business finances easier than ever. Packages like FreeAgent, Xero and Hammock connect to your bank account via Open Banking and make reconciliation practically automatic. You can add expenses on the go by scanning receipts on your phone. Indeed, good cloud accounting software will fill in most of your tax returns for you. Little wonder many people ask: “Do I need an accountant if I use cloud accounting software?”

Can cloud accounting software replace accountants?

It’s tempting to think that cloud accounting software can replace accountants. Indeed, it’s quite possible for any individual to use cloud accounting software to take care of their books and fire off a Self-Assessment Tax Return at the end of the year. If you do this, that’s fine – but you are likely to be missing out on some major benefits, not to mention tax savings.

What do you want from an accountant?

In the days of spreadsheets, big boxes of unfiled receipts and complicated software that only professionals seemed to understand, it made sense to use an accountant. They would be able to bring order to your records, fill in your tax return and submit it on your behalf. The time and hassle you saved made using an accountant a no-brainer.

Now that we have cloud accounting software that’s easy to use, lets you do your books on the go and gives you detailed insight into your finances at the click of the button, you may wonder why it’s worth paying an accountant.

The answer lies in what you actually want from an accountant.

More than just tax returns

Accountants do a lot more than just file your tax returns. Even if you’ve used cloud accounting software diligently throughout the financial year, there’s a lot it can’t tell you. In particular, it can’t take a broader look at both your finances and personal circumstances to identify tax breaks and allowances you may be entitled to. It can’t always identify if you’ve made a mistake in your accounts that could lead to a penalty from HMRC. So, if you submit that tax return without the help of an accountant, you could actually be losing money.

A good accountant tailors their services to you

Tax returns aside, there are many good reasons to use an accountant. When you have a good relationship with your accountant, they are able to help you and your finances in many different ways.

To illustrate, lets look at a few examples of the extra ways in which THP helps clients.

• You’re not sure whether you should trade as an individual or a limited company. We’ll advise you on the pros, cons and tax advantages of different business structures.
• Late payment is affecting your cashflow. No problem – we offer credit control
• Your buy-to-let portfolio is becoming less profitable. Try our Landlord’s Platinum Accounting Service for tailored support and free landlord software.
• You’re struggling with new payroll rules. Our outsourced payroll service makes sure your payroll is accurate and compliant, every time.
• The taxman decides to launch an investigation into your business. Tax Investigation Fee Protection covers you for up to £100,000 of accountancy fees as we help you through the investigation.
• You need a Grant Audit to draw down funding. Give us the information you need and you’ll have your Grant Audit within 48 hours.

Software knows what you tell it – but it doesn’t know you

Modern cloud accounting software is brilliant for businesses. At THP, we fully embrace it and even offer FreeAgent and Hammock to our clients for free. Indeed, when you use cloud accounting software, it cuts down on the time we spend on data entry and increases the time we can spend helping you to find legitimate tax breaks.

More importantly, it gives us more time to get to know you, your business and your financial goals. For example, we recently helped one client buy a £100,000 Porsche for use as a personal and company vehicle. The annual cost to the individual was £800 per year in Income Tax. The cost to his company was £301 annually in Class 1A National Insurance.

That’s a result no cloud accounting software can achieve!

So, do I need an accountant?

Whether you want an accountant is up to you. But once you take a wider look at what a good accountant can offer your business – from tax planning to helping sure you don’t miss out on unclaimed capital allowances – then it makes sense to find the best accountant you can. Cloud accounting software can make you life simpler, but when it comes to your wider financial goals and aspirations you need a real expert who’s got your back.