Entrepreneurs are the backbone of every successful business. In most cases, though, you’ll find an expert accountant behind them. Businesses can stay in control of their finances by using accounting software, while reducing business taxes and overheads. Even people who are talented at running a business may lack the time and expertise to also handle the accounts.
You should hire a specialist to handle your accounting when your business grows beyond a certain size, so that you can focus on running your business. You can, however, gain far more from an accountant than just freeing up your time. In addition to saving money, reducing risk, complying with regulations, managing growth and planning ahead, firms that hire good accountants often benefit from a wide range of other services as well. Since most of your big decisions as a business owner will have a financial component, it is only logical to discuss them with an accountant first. Learn more about what is book keeping in accounting.
Accountants are responsible for what?
Accounting can be a linchpin of your business in the following ways:
Making sure you pay the right amount of tax
Paying too much tax can get you into trouble with HMRC, but paying too little can get you into trouble as well. Consequently, when it comes to your business tax return, you might err on the side of caution. Accounting professionals are much more confident when it comes to calculating expenses and allowances, so they should be able to find significant savings – while avoiding costly mistakes.
An accountant stays current on tax law, so he or she knows how to reduce your tax bill legally. Tax-efficient strategies include using government incentives, allowances, expenses, offsetting losses, or changing the way you draw income from your business.
Improving cash flow
Cash flow management is an important part of business that is often overlooked by startups. No matter how profitable a business appears on paper, it can quickly run into trouble if it does not have ready cash to spend. You can increase investor and stakeholder confidence by having a good accountant ensure that your cash flow is strong enough to guard against risks.
Furthermore, you as a director may need to take additional funds from your business at times. A director’s loan can be used for this purpose – but these must be handled with great care, which is where expert accounting comes in.
Learn more about managing cash flow.
How to set up a business
It is common for business ventures to fail because the figures and forecasts haven’t been rigorously tested. Your accountant can help you lay a solid foundation for your business plan. In addition to offering an impartial second opinion, they should also be able to provide constructive feedback on key areas such as your business model. A business plan signed by your accountant is ready to roll – and will be more attractive to investors.
Accountants can also help you choose the right legal structure for your company – sole traders, limited companies, etc. Different options will have different financial implications, and some will be better for you than others.
You can reduce your workload by
You’ll need all your time to run your business as it takes off, rather than being distracted by finances. As your business finances become more complex, you’ll almost certainly need a specialist to handle them.
Accounting and bookkeeping
It is a legal requirement to report your business’ finances to HMRC, and bookkeeping is an integral part of doing so. In addition to providing both services, a good accountant can offer a variety of other services.
The government regulates larger businesses more heavily. Complying with these requirements can take up a lot of time, and mistakes can be costly. Alternatively, you can hire an accountant to handle this for you.
- Funding for growth
Most businesses will need additional funding at some point in order to grow. Getting financing from a bank or other source is a major hurdle – lenders and investors want to make sure they’ll get a return on their investment. A strong financial case will be presented to relevant stakeholders by your accountant.
Sudden growth without planning can be as problematic as too-slow growth, causing problems with cash flow, tax, employees and office space, for example. Unmanaged growth spurts can even reverse your progress. When growth occurs unexpectedly, a good accountant can help you turn it into what it should be: an advantage.
An accountant is a must-have for businesses over a certain size who must undergo a statutory audit. It is also important to keep your business goals on track with a voluntary, internal audit, even for a smaller business. As well as reassuring you that everything is running smoothly, this kind of audit prepares you for a statutory audit.
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