Whether you’re just starting a business or running an established one, you’ll spend most of your day thinking about how to succeed.
Orders include tasks like organizing your bills, receipts, and taxes. The accounting aspect of running a business can be quite challenging.
When your business starts to grow, it’s easy to stay caught up in accounting. There are deadlines that you may need to be made aware of. Regulations have changed. And you are right to worry that accounting errors can be quite costly.
How do you know when to hire an accounting firms or hand your books to a professional accountant?
WHAT DO ACCOUNTANTS DO?
Professional accountants handle all your accounting, bookkeeping, and tax needs. They have the necessary expertise and software. In the ever-changing world of Accounting Finance and tax laws and regulations, they stay informed of any changes, ensuring you remain HMRC compliant.
- The accountant will prepare your financial records. They will record your sales, assets, stocks, loans, and personal income taxes.
- They will sort through your bills and expenses and handle your accounting.
- An accountant will also prepare your taxes and file them on time. In addition, they will notify you of the payment deadline.
- They will handle financial statements, taxes, audits, PAYE payroll (if you have employees), company finances, registration, and VAT payments.
- They will take care of all government documents and related administrative tasks.
- All this will save you time, allowing you to focus on your business instead of dealing with the usual accounting issues. In short, the accounting will maximize your profits!
HOW CAN AN ACCOUNTANT BENEFIT MY SMALL BUSINESS OR STARTUP?
Accounting offers much more than the day-to-day accounting of your business. Consider them your business partner who will advise you on any matter related to your health and business expansion.
Ideally, it would help to speak to an accountant before starting a business, as startup business owners may need more experience running a business.
For example, what form of company suits you best? Should you be self-employed, or would a limited liability company be more suitable for you? What does this mean for taxes and social security?
The accountants will explain the difference between sole proprietors, partnerships, and limited liability companies and meet your needs for the best business arrangement. They’ll ask the right questions to help you choose the best setup for your business.
But even if you run an established business, professional accountants can still give great business advice.
They can explain confusing terms that confuse even the most experienced business owners. They will save you time and effort in solving everyday problems. And they will help you grow your business:
- An accountant can help you draw up a business plan. Your business plan will establish the milestones and goals your business can achieve and help you raise capital.
- A skilled accountant can provide insight into fundraising through loans, crowdfunding, or other financial opportunities.
- They can come up with ideas regarding future expansion and new market opportunities.
- They can offer advice on complex issues like Brexit or other concerns that may arise in the future.
Many entrepreneurs and small business owners prefer to manage their finances independently. While that’s by no means illegal or prohibited, being a small business owner doesn’t automatically make you an accountant.
Accounting software has come a long way since the days of Excel spreadsheets. However, specialized accounting software exists, including online services like FreeAgent or Quickbooks.
These are simple to use and packed with useful features like allowing you to set up recurring bills. In addition, they are sent automatically, motivating late-paying customers with automated reminders.
You should use online accounting services for many reasons, as they can benefit many business owners. These include healthcare, VAT, banking, payroll, reporting, etc.
AVOID ACCOUNTING ERRORS
Accounting mistakes are costly and easy due to insufficient information or professional training.
For example, cost classification can be complex:
How sure are you that an expense is not capital depreciation? Errors can be made when entering income, expenses, and other items. A single initial error can cause the accounts to end up wrong.
Accounting is not a rewarding task for most people, and even the best accounting software can’t make it fun. Most business owners prefer to focus on their business, their next product, or expanding into new markets rather than recording expenses and invoices carefully.
As a result, many people delay their accounting responsibilities for as long as possible. It can cause them to miss a deadline or make the whole process unmanageable.
Bookkeeping takes time; The opportunity cost of doing your bookkeeping means you don’t spend time and energy growing your business, meeting customer needs, or developing new products.
WHAT IF I DON’T DO ANY ACCOUNTING AT ALL?
Accounting must be completely ignored. However, even the simplest form of self-employment will require you to do basic bookkeeping, i.e., income and expenses.
And failure to deposit your financial accounts at the end of the financial year could result in penalties with HMRC. It makes no sense to risk your entire business for problems with the tax authorities when a solution is available at a reasonable fee.
OKAY, I NEED AN ACCOUNTANT SHOULD I RENT ONE?
While your business will grow enough to require a full-time accounting team in the future, most startups and small businesses don’t need a full-time accountant, especially during this early period. Outsourcing your accounting needs to a professional accounting firm or accountant is financially reasonable and practical. In addition, accounting outsourcing means you don’t need to train accountants in-house or pay an accountant.
WHERE CAN I FIND A PROFESSIONAL ACCOUNTANT?
Your business will grow much better if your accounting duties are delegated to a professional. But where to find accountants?
Before you start searching, think about your interests first:
For example, do you want your accounting firm to be local so you can go through the questions and meet in person? Or do you agree with an accounting firm that will do everything online and primarily contact you by email or phone?
Once you’ve identified your needs, you can find an accountant in several ways:
- Ask your colleagues and other companies in your industry about their accounting arrangements. They can give you an initial assessment of their accounting team. Companies of similar size and operations may also have similar accounting requirements.
- Advertise online or in relevant magazines. Qualifications and requirements are specific.
- Research your LinkedIn contacts and evaluate the recommendations that come to you.
- Talk to government and professional associations. They usually have a list of accountants you can contact.
- Search for UK accountants online: for example, you can check accounting directories like Find UK Accountant or Accountant Directory.
WHAT SHOULD I ASK MY FUTURE ACCOUNTANT?
Once you’ve listed your potential experts, you need to choose one. First, narrow your list of potential companies or accounting professionals to the few that best suit your business needs and personal style.
YOU CAN DRAW THIS SHORTLIST BY:
- Verify their qualifications. For example, are they ICAEW members, which means they also have indemnity insurance?
- Make sure they fit your business needs. If you are a small business or startup, your initial accounting needs will likely be basic. You don’t need to hire an expensive accounting firm whose clients are multinational corporations with offices worldwide.
- Find relevant expertise. Your potential accountant should be able to tell you about similar clients. It would be best to talk to other clients to get an honest opinion about the accountant.
Once you have your shortlist, it’s time to choose the right one for your business. Again, asking the right questions, no matter how trivial or basic they may seem, will help you choose.
DO THEY HAVE THE RIGHT EXPERIENCE?
Ask about their expertise, especially for similarly sized companies with comparable business aspects. Let your accountant know what stage your business is in:
Is it a startup or an established small business? Are you expanding soon?
HOW DO THEY RESPOND?
Find out who will handle your account. I need to know who you can contact for questions and follow-up. Please find out about their free time, ability to meet your communication needs, and personal skills.