Big business and big fees. It's a common perception of accountants, particularly if you watch Hollywood movies, but how about smaller businesses. Are there any benefits to investing in the services of an accountant if you run something like a local shop or service company?
The first thing to realise is that accounting firms come in all sizes. You have the large organisations that support major corporations, smaller practices with a few partners and the independent accountants who specialise in supporting smaller local businesses and sole traders. The larger firms can offer a range of experts that specialise in different aspects of accounting and are able to deal with large and complex businesses, and they will charge high fees to reflect this service. Smaller businesses don't need such a level of expensive support, however, as the smaller amount of money flowing in and out of the business means the way it needs to be managed is also that much simpler. That being the case, what can an accountant do for a small business that will make engaging their services worthwhile?
1. Bookkeeping advice. Keeping track of all the day to day transactions allows you to account for the money coming in and out of the business. There are different ways to keep your books, depending on the type and size of the business, and an accountant can advise on which would suit a particular business best. Choosing the right one can save you time and make sure you claim all the expenses you can to reduce your tax bill. If you really have a problem doing this yourself, many accountants will be able to offer this service as well.
2. Cashflow Advice. If you get your cashflow wrong you can actually got out of business. It's all well and good having orders in the pipeline for the coming year, but if you haven't got cash in the bank to pay the bills that are due right now, you're still in trouble. An accountant can help you plan properly to check your cashflow is keeping up with expenses, and if it isn't, to spot the problems early enough to give you a chance to head them off.
3. Personal financial advice. The whole point of being in business is to make a good living from it. An accountant can advise you exactly what you can take from the business and when to ensure you get the most from your hard work.
4. Cost Control. Every business has overheads and bills to pay. An accountant can look at the way your business is running, see where the money is being spent and advise you on ways to keep those costs to a minimum.
5. Business Planning. Accountants are involved in many types of business and see them at all stages, from start-ups to long established corporations. Because of this they are able to bring a wealth of experience to look ahead at how your business could develop, and provide guidance on how to manage your financial growth.
6. Tax Planning. Tax regulations change all the time as each budget brings a new round of politically motivated updates. Accountants keep up to date with all these changes and are able to advise you on how they affect your own particular business. It may be a change on the rate that means you have to put more money aside, or it could be a new allowance you can take advantage of. Either way, you could save money by avoiding a penalty for not being able to pay on time, or by benefiting from a change you may not have been aware of.
7. Annual reporting and returns. These are a legal requirement and you will be fined if you are late submitting them, or don't actually bother. The fee an account charges for completing the returns on your behalf is much less than it will cost you if you get this wrong.
8. Knowing where you stand. A clear picture of your financial situation allows you to make sensible and timely decisions. Many people need help with reading their financial statements, such as Profit and Loss and Balance sheets, and making good choices and plans based on what they tell you is crucial to the prosperity of a business.
9. Business Structure. As businesses change and grow, the way they are structured have a big influence on the tax that becomes liable and how much the business owner can take as an income. There are pros and cons to being a sole trader, in a partnership or trading as a limited company, and which is best for you will depend on the kind of business you run and where you plan to take it in the future. An accountant will provide you with the facts and information to help you decide which is best for your own circumstances.
10. Time Saving. Running a business is a big commitment. Getting the finances right is crucial, but it does take time. If you are a top class salesperson you are far better using your time to bring in more business than sitting at a desk with a calculator working through the books. In the early days you may find that money is so tight you feel you can't afford the investment needed to work with an accountant, but think carefully about this. For all the reasons stated above an accountant can help you make the most of the money you do make, and it will free you up to make even more of it.
It is rare to find the money you spend on the services of an accountant is not more than repaid in the ways they can keep on the right track, minimise the tax you pay, and keep you from making costly mistakes.
The first thing to realise is that accounting firms come in all sizes. You have the large organisations that support major corporations, smaller practices with a few partners and the independent accountants who specialise in supporting smaller local businesses and sole traders. The larger firms can offer a range of experts that specialise in different aspects of accounting and are able to deal with large and complex businesses, and they will charge high fees to reflect this service. Smaller businesses don't need such a level of expensive support, however, as the smaller amount of money flowing in and out of the business means the way it needs to be managed is also that much simpler. That being the case, what can an accountant do for a small business that will make engaging their services worthwhile?
1. Bookkeeping advice. Keeping track of all the day to day transactions allows you to account for the money coming in and out of the business. There are different ways to keep your books, depending on the type and size of the business, and an accountant can advise on which would suit a particular business best. Choosing the right one can save you time and make sure you claim all the expenses you can to reduce your tax bill. If you really have a problem doing this yourself, many accountants will be able to offer this service as well.
2. Cashflow Advice. If you get your cashflow wrong you can actually got out of business. It's all well and good having orders in the pipeline for the coming year, but if you haven't got cash in the bank to pay the bills that are due right now, you're still in trouble. An accountant can help you plan properly to check your cashflow is keeping up with expenses, and if it isn't, to spot the problems early enough to give you a chance to head them off.
3. Personal financial advice. The whole point of being in business is to make a good living from it. An accountant can advise you exactly what you can take from the business and when to ensure you get the most from your hard work.
4. Cost Control. Every business has overheads and bills to pay. An accountant can look at the way your business is running, see where the money is being spent and advise you on ways to keep those costs to a minimum.
5. Business Planning. Accountants are involved in many types of business and see them at all stages, from start-ups to long established corporations. Because of this they are able to bring a wealth of experience to look ahead at how your business could develop, and provide guidance on how to manage your financial growth.
6. Tax Planning. Tax regulations change all the time as each budget brings a new round of politically motivated updates. Accountants keep up to date with all these changes and are able to advise you on how they affect your own particular business. It may be a change on the rate that means you have to put more money aside, or it could be a new allowance you can take advantage of. Either way, you could save money by avoiding a penalty for not being able to pay on time, or by benefiting from a change you may not have been aware of.
7. Annual reporting and returns. These are a legal requirement and you will be fined if you are late submitting them, or don't actually bother. The fee an account charges for completing the returns on your behalf is much less than it will cost you if you get this wrong.
8. Knowing where you stand. A clear picture of your financial situation allows you to make sensible and timely decisions. Many people need help with reading their financial statements, such as Profit and Loss and Balance sheets, and making good choices and plans based on what they tell you is crucial to the prosperity of a business.
9. Business Structure. As businesses change and grow, the way they are structured have a big influence on the tax that becomes liable and how much the business owner can take as an income. There are pros and cons to being a sole trader, in a partnership or trading as a limited company, and which is best for you will depend on the kind of business you run and where you plan to take it in the future. An accountant will provide you with the facts and information to help you decide which is best for your own circumstances.
10. Time Saving. Running a business is a big commitment. Getting the finances right is crucial, but it does take time. If you are a top class salesperson you are far better using your time to bring in more business than sitting at a desk with a calculator working through the books. In the early days you may find that money is so tight you feel you can't afford the investment needed to work with an accountant, but think carefully about this. For all the reasons stated above an accountant can help you make the most of the money you do make, and it will free you up to make even more of it.
It is rare to find the money you spend on the services of an accountant is not more than repaid in the ways they can keep on the right track, minimise the tax you pay, and keep you from making costly mistakes.
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