How An Accountant Can Help Your Business Succeed
Whether you just started your new company or are running an established business, you will probably spend most of your day thinking about how to make it succeed.
With orders come mundane chores such as organizing your invoices, receipts, and taxes. The accounting side of running a business can be quite, well, taxing.
As your business picks up, it is easy to fall behind on your bookkeeping. There are deadlines you may be unaware of. Regulations which have changed. And you rightly worry that accounting mistakes can be pretty costly.
So, how do you know when it is time to hire an accounting firm or outsource your bookkeeping to a professional accountant?
What does an accountant do?
Professional accountants handle all of your accounting, bookkeeping, and taxation needs. They possess the required expertise and software. In the ever-changing world of accounting and taxation law and regulations, they stay informed about any changes, making sure you remain HMRC compliant.
Among other things:
- Accountants will prepare your financial records. They will record your sales, assets, stocks, loans, and personal income tax.
- They will categorise your invoices and expenses and take care of your bookkeeping.
- An accountant will also draw up your taxes and make sure they are filed on time. Plus, they’ll inform you of any deadlines for paying them.
- They will do your financial reporting, taxation, auditing, PAYE payroll (if you have employees), corporate finance, and VAT registration and payment.
- They will deal with all relevant government paperwork and administrative tasks.
All this will save you time, letting you focus on your business instead of dealing with mundane accounting issues. In short, accountants will maximize your profits!
How can an accountant benefit my small business or start-up?
Accountants offer much more than day-to-day accounting for your business. You should think of them as your business partner who will advise you on any issue regarding your business’ health and expansion.
Ideally, you will have talked to an accountant even before starting your business, as start-up business owners can be inexperienced about how a business functions.
For example, which company form is best for you? Should you be self-employed or is a Limited Company more appropriate for you? What does that entail in terms of taxation and social security?
Accountants will explain the differences between sole traders, partnerships, limited companies and match your needs to the best business arrangement. They will ask the right questions to help you decide the best setup for your business.
But even if you are running an established company, professional accountants can offer great business advice.
They can explain to you the puzzling jargon that can confuse even the most experienced business owner. They will save you time and effort in dealing with everyday issues. And they will help expand your business:
- Accountants can help you establish a business plan. Your business plan will set milestones and goals that your business can reach—and help you raise capital.
- Competent accountants can offer information regarding raising finance through loans, crowdfunding, or other types of financial opportunities.
- They can offer ideas regarding future expansion and new markets opportunities.
- They can offer advice about complicated issues such as Brexit or other concerns that may come up in the future.
What if I do my accounting myself?
Many entrepreneurs and small business owners prefer to do their finances on their own. Although this is in no way illegal or forbidden, being a small business owner does not automatically make you an accountant.
These are simple to use and loaded with helpful functions like letting you set up recurring invoices. These are sent automatically, nudging late-paying clients with automated reminders.
There are many reasons why you should use online bookkeeping services, as they can be a godsend for many business owners. They cover healthcare, VAT, banking, payroll, reports, and much more.
Avoiding accounting mistakes
Accounting mistakes are both costly and easy to make, due to lack of information or professional training.
For instance, categorising expenses can be complicated: how sure are you that an expense is really an expense rather depreciation of capital? Mistakes can be made when you input incomes, expenses and other items. A single initial mistake can render the final accounts erroneous.
For most people, bookkeeping is not a gratifying task, and even the best bookkeeping software can’t help make it interesting. Most business owners would rather focus on their company’s operations, their next product, or expanding to new markets rather than dutifully recording expenses and invoices.
As a result, many postpone their bookkeeping responsibilities for as long as they can manage. This can make them miss a deadline or let the whole process snowball into something unmanageable.
Bookkeeping is time-consuming; the opportunity cost for doing your bookkeeping yourself means that you are not focusing your time and energy into expanding your business, catering to your clients’ needs, or developing new products.
What if I don’t do any accounting at all?
Unfortunately, it is impossible to ignore accounting altogether. Even the simplest form of self-employment will require you to do some basic bookkeeping, i.e. income and expenses.
And not submitting your financial accounts by the end of the financial year can incur penalties with HRMC. It makes no sense to risk your entire business because of problems with the tax authorities when a solution is easily obtainable for a reasonable fee.
Fine, I need an accountant. Should I hire one?
While your business will hopefully expand enough to require a full-time team of accountants in the future, most startups and small businesses do not require a full-time accountant, especially at the beginning.
It makes financial and practical sense to outsource your accounting needs to an accounting firm or a professional accountant. Outsourcing accounting means you don’t need to train an in-house accountant or have to pay for one.
This will lower your costs in more than one ways: for example, you won’t need to invest in expensive software to take care of PAYE and other accounting tasks.
Where can I find a professional accountant?
Your business will develop much better if your accounting tasks are being handled by a professional. But where can you find an accountant?
Before you start looking, first think about your preferences: do you want your accounting firm to be local so that you can pop in for questions and face-to-face meetings? Or are you okay with an accounting firm which will do everything online and will mainly contact you by email or phone?
Once you are clear on your needs, you can search for an accountant in a number of ways:
- Ask colleagues and other businesses in your sector about their own accounting arrangements. They can give you an initial assessment of their accounting team. Firms in similar size and business will probably have similar accounting requirements, too.
- Post an Ad online or on relevant magazines, asking for specific qualifications and requirements.
- Search your LinkedIn contacts and appraise the proposals that reach you.
- Talk to government and business associations. They usually have a list of accountants you can get in touch with.
- Search online for British accountants: for instance, you can check accountant directories like Find UK Accountant or Accountant Directory.
What do I need to ask my prospective accountant?
Once you have your prospective professionals listed, you need to pick one. The first thing to do is, narrow down your list of prospective accounting firms or professionals to a handful who best match your business needs and your personal style.
You can draw this shortlist by:
- Checking their qualifications. For instance, do they have ICAEW membership—which means they also have indemnity insurance?
- Making sure they match your business needs. If you are a small business or a startup, it is probable that your initial accounting needs will be basic. You don’t need to employ an expensive accounting firm whose clients are multinationals with offices around the globe.
- Looking for relevant expertise. Your prospective accountants should be able to tell you about similar clients. It would be best if you could talk to other clients to get an honest opinion about the accountant in question.
Once you have your shortlist, it’s time to pick the right one for your business. Asking the right questions, no matter how mundane or basic they might seem to you, will help you choose.
Do they have the right experience?
Ask about their expertise, especially regarding similar-sized business with equivalent business aspects. Let your accountants know at which stage your business is: is it a startup or a settled small business? Are you expanding in the near future?
How responsive are they?
Ask about the person who will take care of your account. It is necessary to know who you can get in touch with for questions and follow-ups. Ask about their time availability, their responsiveness to your communication needs, and their personal skills.
Are they up-to-date on current rules?
Ask about their financial record-keeping. Financial and anti-money laundering laws and regulations change frequently. Accounting firms need to be up-to-date and informed.
How do they like to communicate?
Ask about their communication style: emails, phone calls, meetings, etc. Present your preferences. Ask whether there will be
Maybe you can make an arrangement for initial weekly updates but move these to monthly ones, once you have understood how your relationship with your accountant works.
Do they offer the services you need?
Let your accountant know about your needs. Do you employ personnel? Are you VAT registered? Do you have inventory? Do you make exports or work with foreign companies?
By letting your prospective accountant know about your needs, you will get the service package that meets your needs and you will pay for exactly what you need.
Are they within your budget?
A large part of choosing the right accountant for your business is cost. Do you have a budget within which you need to operate? If they give you a price, ask what this includes: for example, does it include PAYE?
Is there a limit to how many invoices this price covers? Are you being charged by the hour or by the month? Does the price include meetings and advising? What happens if your business expands?
What are their payment terms?
Finally, don’t forget to ask about your payment schedule. Will you pay them on a monthly basis? Think about your own cash flow. If you have a steady stream of projects which bring in money on a regular basis, paying your accountants on a monthly basis makes sense.
However, you might have a few large projects, which only pay you once you have reached specific milestones. If you are getting paid large chunks of money two or three times a year, you could arrange with your accountant to pay them once or twice a year, too.
Building a successful business
Building a successful business is not an easy task. Tasks you need to focus on include anything from developing new products to researching new markets.
That is why having people ease your workload makes sense in every way, especially since using a freelance bookkeeper in the UK has never been easier. So, follow the tips above and discover for yourself how an accountant can help your business succeed!