As any business owner knows, starting a business is expensive, and keeping costs down is crucial. So the question of whether or not to use an accountant always needs answering.
To answer that question, we first need to know what it is that an accountant should do for your business. There are many accountants who simply file tax returns for their clients. The normal process goes something like this:
· Sometime after year end, you bring a large box of receipts, invoices and bank statements to your accountant
· Your accountant muddles through it as best they can, putting together accounts and tax returns that meet the minimum requirements.
· You pay them the annual invoice and you say goodbye to each other for another year.
As you can see, the only ‘value’ the accountant is providing is ensuring that you comply with HMRC.
But there’s good news – accountants can, and should, do so much more.
WHAT AN ACCOUNTANT SHOULD BE DOING WHEN YOU’RE SETTING UP
Even before you set up your business, speaking to a professional will help. In fact, during these early stages is probably the most important time to be working with someone who has experience in setting up businesses. They should be doing this:
1. Determine the best structure for your business. They’ll discuss with you the pros and cons of being a sole trader, limited company, partnership or limited liability partnership.
2. Discuss the key assumptions behind your business plan, and adding financial insight into the business plan.
3. Advise on the most suitable bookkeeping and accounting software to use.
4. Register the business with HMRC for all relevant taxes, and Companies House where applicable.
5. Set up your accounting software to prepare your business to start trading.
6. Set up a chart of accounts for your business.
7. Give advice on any common tax pitfalls you should look out for.
8. Set up a payroll to ensure you pay for PAYE requirements.
WHAT AN ACCOUNTANT SHOULD BE DOING WHEN YOU’RE UP AND RUNNING
Now you’re set up and ready to go. Your accountant’s role now changes slightly, to focus on helping you grow your company. They should be busy doing this:
9. Run your payroll monthly.
10. Ensure your bookkeeping is up to date at the end of each month.
11. Provide valuable and insightful analysis on the performance of your business, so you can increase growth and profitability.
12. Raise any cash flow issues with you, to make sure you can afford to pay taxes when they become due.
13. Send you monthly management accounts, to help you better understand your business.
14. Produce annual accounts.
15. Ensure that you are up to date with any Companies House filings.
16. Prepare and send all tax returns to HMRC.
17. Continue to discuss ways of minimising your tax bill with you.
18. Provide ongoing, ad hoc support and advice to you.
IN SUMMARY
In short, whether you’re a sole trader or a limited company, if you want the best for your business, finding a good accountant is a very good idea.
When choosing, find someone that wants to listen to you about the specifics of your business before giving advice.
If you want to discuss this further, give me a call on 0208 1333 921 or email me on oliver@nimbleaccounting.co.uk