Is Your Accountant Claiming Expenses Specific to You?
Running a business in Liverpool comes with its unique set of challenges and opportunities. One of the most critical decisions you’ll make is choosing the right accountant. A poor accountant can cost you more than just money; they can jeopardise your business’s financial health.
Lack of Proper Business Structure
In the UK, the structure of your business-be it a sole trader, partnership, or limited company-significantly impacts your tax obligations and liabilities. A competent accountant will advise you on the most tax-efficient structure based on your business model.
Without this guidance, you might find yourself paying more tax than necessary or exposing your personal assets to business risks.
Inefficient Salary and Dividend Strategy
For limited companies, how you pay yourself matters. A balanced approach between salary and dividends can minimise your tax liabilities.
An experienced accountant will tailor this strategy to your specific situation, ensuring compliance with HMRC regulations while optimising your income.
Misunderstanding Allowable Expenses
Not all business-related expenses are deductible. It’s essential to distinguish between personal and business expenses to avoid costly mistakes. For instance, travelling abroad for leisure is not an allowable expense, but if you’re travelling for business purposes-such as meeting clients or attending industry events-those costs may be deductible.
According to GOV.UK, allowable expenses include:
- Office costs (e.g., stationery, phone bills)
- Travel expenses (e.g., fuel, parking, train fares)
- Clothing expenses (e.g., uniforms)
- Staff costs (e.g., salaries, subcontractor costs)
- Reselling goods (e.g., stock or raw materials)
- Legal and financial costs (e.g., insurance, bank charges)
- Marketing and advertising (e.g., website costs)
- Training courses related to your business
Conversely, personal expenses like holidays or commuting are not deductible. A knowledgeable accountant will help you navigate these distinctions, ensuring you’re not missing out on legitimate deductions.
Inadequate Understanding of Your Business
An accountant who doesn’t take the time to understand your business is unlikely to provide valuable financial advice. They should be familiar with your industry, business model, and goals to offer tailored solutions. This understanding is crucial for effective tax planning, budgeting, and financial forecasting.
Poor Communication and Support
Your accountant should be a proactive partner in your business’s success. If they’re unresponsive or fail to provide timely advice, it can lead to missed opportunities and costly errors. Regular communication ensures that you’re always informed and compliant with the latest tax laws and regulations.
Conclusion
Choosing the right accountant is more than just a financial decision; it’s a strategic move that can influence your business’s success. In Liverpool’s dynamic business environment, partnering with an accountant who understands your needs and industry is invaluable.
If you’re unsure about your current accountant’s performance or need assistance finding a qualified professional, don’t hesitate to get in touch.
