How An Accountant Can Help Your Business Succeed

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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.

We’d be lost without own accountant and see them as a vital part of our business. Throughout this article, we’ll draw on our experience to provide you examples with what our accountant has done for us.

What does an accountant do?

Professional accountants can 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 can prepare your financial records. They can record your sales, assets, stocks, loans, and personal income tax.  
  • They can categorise your invoices and expenses and take care of your bookkeeping.
  • An accountant can also draw up your taxes and make sure they are filed on time. Plus, they can inform you of any deadlines for paying them.  
  • They can do your financial reporting, taxation, auditing, PAYE payroll (if you have employees), corporate finance, and VAT registration and payment.  
  • They can 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 maximise your profits!

But of course, it’s up to you just how much or how little you let them get involved in. For our business, we take care of our own bookkeeping since we use good accounting software.

This saves us some money on our bills, but does require a little more of our time.

Once a year, we ask our account to prepare our accounts. They access our accounting software and generate the required accounts. We then have to sign them off before they are filed with HMRC.

We then take care of making necessary payments to HMRC ourselves. We also handle our own Payroll but we do regularly consult with our accountant throughout the year to ensure we are operating in the most tax-efficient way.

This is where our accountants have really added value to our businesses.

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How can an accountant benefit my small business or start-up?

Accountants help small businesses

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.

We regularly consult with our accountant. Sometimes it may be a specific tax-related question, such as the most tax-efficient way to extract profits from our company.

Sometimes we have had specific questions around a rule or law and how it might affect our business, such as when I wanted to bring my wife into the business and pay her a salary.

Occasionally, it might be a question about cashflow. For instance I once asked our accountant for his advice on whether we should invest our excess cash into a business savings account, or withdraw it and pay personal tax on it before investing it into a personal savings account.

In some cases, our accountant could answer by email. Sometimes they requested a call or meeting.

Of course, each interaction did cost us money and it was added to our annual bill. However, the hourly rate we pay for such advice is minimal compared to the advice and recommendations we received in return.

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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.

Accounting software has come a long way since the days of Excel spreadsheets. Specialized bookkeeping software now exists, including online services such as FreeAgent or Quickbooks.

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.

In our experience, relying solely on accounting software is OK if you’re a small, relatively straightforward business. However, almost all businesses will benefit from at least some input from an accountant.

The penalties for getting things wrong can be high so we’ve always at least paid for an accountant to double to check the figures and accounts our software has come up with.

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Avoiding accounting mistakes

Avoid 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.

Even for us, bookkeeping is one of our least preferred tasks. It’s not where our core skills are and so it never feels a good use of our time.

Like us, 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 HMRC. 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.

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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.

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Where can I find a professional accountant?

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 our best online accountant recommendations.

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.  

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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 updates on a weekly or monthly basis.

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.

Our accountant lives locally to us but we have never even been to his offices! We conduct all our communication with him via email or telephone.

When he needs us to sign something, he posts us a copy and we sign it and send it back.

Despite this, we like knowing that if we ever had a more complex problem, we could always pop to his office for a face-to-face meeting as it’s only 30 minutes drive away.

How does your accountant like to communicate?

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?

Our accountant wasn’t the cheapest available to us but that wasn’t our primary concern. It was more important to us to find an accountant we trusted than finding one that was the cheapest.

Of course, your position may be different but you should try and look on hiring an accountant as an investment in your business, rather than a cost.

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.

We only pay our accountant once a year, once he has prepared and submitted our annual tax returns. He adds on the cost of any requests for help we have made through the year to give us one simple bill.

This works for us as we don’t have too many requests and our bill is relatively small, but of course, if you have a larger bill, you might prefer more regular invoicing.

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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.

We have certainly found using an accountant has benefitted our business. It has freed up more of our time doing what we do best – creating content like this to help people like you succeed!

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Author
Business4Beginners has been advising new businesses owners since 2013. The founder, Paul Bryant, has created, grown and sold several successful businesses and remains the editor and fact-checker of all content published on the site.
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