How Accountants Can Save Your Business a Fortune

You can’t ignore your accounts and doing so for even a short period of time can damage your business. The books are essential not just for your tax but for knowing how the cashflow looks, which is often the biggest problem businesses face.So how do you choose the right accountant for you? Here’s our guide.

Accountants vs. Bookkeepers

You might hear ‘accounting’ and ‘bookkeeping’ as if they mean the same thing but they don’t. Here’s the difference. Bookkeepers record and organise financial data, whilst accountants interpret that data.

  • A bookkeeper records all of your revenue and costs, but an accountant prepares that information as a tax return or financial statement.
  • The bookkeeper will look at all the facts (the income and expenses) and put them into order. What your accountant will do is take a view about how to then best manage your finances and tax planning based on how your business works.

Using cloud based software, you can quickly share all your information, so we’d recommend that you do that even if it’s just for once a year accounts to be done.

Why hire a professional?

In short, Save Time, Tax and Mistakes. A professional accountant will save you significant time and energy – hours that you could be re-investing in your business.

Are you a tax expert? Most people would have to say no. An accountant however has the specialist knowledge to help you reduce the amount of taxes you have to pay and create a tax-efficient financial plan for your business going forward.

And by the way, mistakes are costly too! HMRC issue fines for corrections. If you’re using the right accountant, you should never be in this position.

How an account helps your business to grow

Before you start your business

A solid business has a solid grasp on its finances and you need to be realistic when you first set up. An experienced accountant will be able to offer the advice of years of working with businesses similar to yours, so are in an ideal position to help you put together a feasible financial plan. Don’t forget that includes things like pricing and securing equipment!

It also means that you start the accounts records correctly. An error however small made repeatedly could create a huge problem later down the line. Plus, you’ll have more time to focus on what you do best, which is getting the work in!

During the Start-Up phase (up to 2years):

Your accountant will turn into your go to person in your early years to guide you through the various tax demands, cashflow forecasting, and to support you with grants and funding evidence. It’s well worth having a professional on hand as you’re learning the ropes.

At this stage you could also be choosing accounting software which a good accountant will be able to advise on.

When you’re thinking about recruiting

If you haven’t done it by this stage, it’s crucial when your business reaches the point of expansion to hire an accountant. You’ll need a payroll system and advice on employee benefits.

The bigger you get, the more likely you are to be audited and an accountant can help you to prepare for this.

Exiting your business:

One piece of advice we were given was you should know how you want to end your business when you set it up. It may seem a long way off but your business needs to be in shape to sell or pass on. An accountant will advise you how to maximise the business value and advise you on pensions, retirement plans and personal investments.

Conclusion

Accounting software alone may suffice for smaller operations, however, the risks of mistakes and lack of time are real! An accountant will stay on top of your finances saving you significant time and money. They’re also there to give you the benefit of their experience – worth it just for that we’d say!