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It is commonplace for business owners to think that they can go it alone and not only manage the business, but also keep track of their books. For some owners, this seems entirely possible. However, if you are an owner who is not good at monitoring every aspect of the business's finances, you should consider the help of an accountant.
Tight budgets and financial constraints brought on by a volatile economy cause many owners to cut back on extra spending. Often, eliminating the cost of an accountant's services is one of the first expenses to be dropped. The thinking is that the bottom line will improve without this additional investment.
However, one reason many small businesses fail is because they face financial difficulties with no way out. If a professional accountant had been around to keep an eye on what was being spent and what was coming in, perhaps their doors could have remained open. An accountant could have flagged potential problems before they became a reality.
Employing accountants, even on an outsourced, part-time basis, means that you will have someone keeping track of the financial circumstances in your business. Even in an unpredictable economy, having an accountant is a vital expense. Otherwise, you run the risk of financial ruin when you are unable to spot danger in advance.
The Role of an Accountant
The role of an accountant for your business does not begin and end during tax season. Nor does this role only consist of looking over books during other parts of the year. You can have a valuable experience by talking to an accountant even before you start a business.
An accountant can advise on whether you should have a partnership, limited liability partnership, limited company or a sole trade structure. Any legal or tax issues relative to your industry can also be brought to light. They can also help you plan for a future filled with success.
The importance of an accountant is more than just bookkeeping. Ultimately, an accountant will have a trusted role in your business as an advisor who will help you keep proper financial records. You may need to produce records for external HM Revenue & Customs, investors or your bank.
An accountant can also help in areas such as Corporation Tax, PAYE, VAT and Self Assessment. Whether you use an accountant a lot or just a little, never underestimate the importance of having one.
Benefits of Using an Accountant
The decision to hire an accountant to manage your business finances should be an easy one. To help you have an easy reference, here are a few benefits summed up to explain why using an accountant is right for your business.
You might be good with numbers, but you are not an expert. The skill of a qualified accountant is something to take advantage of for tax purposes. With their training and experience, they might be able to find legitimate ways that you can save money and pay less in taxes.
You can try to calculate how much you owe, but why risk it? There are penalties if your calculations are wrong. An accountant will have current legislation that is relevant to your circumstances. They will find the most efficient way for you to save and not get figures wrong.
An accountant can help you with forecasting your cash flow. They can offer advice on the best way to free up cash flow and find extra savings. Hiring an accountant is also good for budgeting expenses and expansion. They can advise on how to manage the growth of your business to maximise profits.
Accurate Financial Information
Very important to business is having accurate financial information so you can analyse performance. You can assess what has been achieved and how you can prepare for the future. Accuracy with accounts will prove advantageous with the bank manager if you need capital.
Managing accounts can be time-consuming and take you away from the day to day functions of your business. Using the expertise of an accountant allows you to save time and concentrate on what you are good at: running the business.
Employ a Part-Time Accountant
If you can't afford a full-time accountant, consider employing one on a part-time basis. Part-time does not mean less service. You will still have access to the financial guidance that will help your business remain solvent in a tight economy.
A part-time accountant can help your business in a number of ways. If you are a start-up, an accountant can chase customers for payment and manage bookkeeping. As your transaction volume increases, they can take on more demanding issues related to the growth.
Even as an established business, a part-time accountant can develop comprehensive financial controls. They will help you manage cash flow that is crucial to paying bills and payroll. Tax returns, annual financial reports and arrangement for financing can be added to their role.
Tips on Choosing an Accountant
Choosing an accountant is one of the most important decisions of any business owner. Here are some important points to consider when making the decision to employ an accountant.
The first place to start is with personal recommendations. Word of mouth is a great way to find a good accountant. Ask friends or colleagues that you trust if they can recommend someone to manage your business finances.
Along with trust, you want to find an accountant who is fully qualified. This means they will be either Certified or Chartered accountants with the qualification prominently displayed at their office or on their website. Knowledge of accounting software that your business uses is a plus. In addition, you want an accountant with commercial awareness of your business.
Talk about your business and ideas for growth when you meet with an accountant. If they understand your business, do not be afraid to tap into their knowledge. You want someone who is an appropriate fit for the size and nature of your business.
If you are hiring a firm, consider a small one for flexible service and personal support. This does not mean that you cannot get the same service from a larger firm that might have more experience and a wider range of services.
During separate interviews with several accountants, ask if they would give you any tax advice. You want to employ someone who is proactive in giving you sound ideas that will save taxes. Since your relationship with an accountant is vitally important to the health of your business, you need to have a good relationship.
If you are uncomfortable with asking finance related questions, you might want to keep looking. Not only should you feel comfortable with asking different questions, but you need an accountant who listens to what you have to say. They bring knowledge of accounting principles that must be matched with the structure of your business.
Getting along with your accountant means that you have an open and honest business relationship and you can trust their judgment. They should understand what you are standing and you should understand them.
Central to a good relationship with an accountant is what happens if you hire a firm. Will you deal with just one person or will they pass your business around to different accountants? How this is handled will have an effect on response times to your enquiries. Your business has key deadlines to meet and you will need an accountant who is sensitive to those deadlines and will respond accordingly.
A slow response is not a good sign when it comes to financial records, tax filing deadlines, etc. Furthermore, if you have a question, you will want to speak to your accountant when it is fresh in your mind. An acceptable timeframe is not too much to expect regarding financial matters.
Speaking of financial matters, another consideration for choosing an accountant is how much it will cost. Are you charged a fee every time you speak to the accountant? Or, do they have fixed fees? Make sure you know this before employing their services.
A good accountant will usually have existing clients who can tell you about their experience. Ask of any clients are available that you can speak with before making a decision. View their website for testimonials and also to get an impression of the sort of service you might receive.
Once you appoint an accountant for your business, they should send an engagement letter that sets out their commitment to your business. The letter should also set out your commitment to their services. Ask for standard terms to make sure nothing important is omitted.
Invaluable Service from an Accounting Professional
An accountant who knows your business inside-out is an invaluable asset. Their knowledge brings extensive resources on which you can capitalize. Most important is to make sure that you have a year round relationship with your accountant. This is a key business relationship that you want to get right now. Doing so may guarantee future pay offs for years to come.