What can an accountant do for a small business?

what can an accountant do for a small business

Table of Contents

Top Ten Things An Accountant Can Do For A Small Business

When setting up their dream small business, the last thing on most people’s minds is hiring an accountant. Entrepreneurs tend to be busy thinking about their new product or service, branding, sales and marketing, and how they will deliver their new service. They are probably not thinking about boring topics like financial systems, forecasting, and tax.

This article will look at the top ten things that an accountant can do for a small business and why every business needs to engage with a great accountant throughout the business’s life cycle.

1. Set Up The New Business

When you are considering setting up a new business in the UK, you have many choices of how to structure the business. The simplest way to set up your business is as a Sole Trader or self-employed. If there is more than one person involved, the equivalent structure is a partnership.

Most people will think of a plumber or a gardener, one man (or woman) band type of business when they think of this business style. These businesses can employ people, but often they don’t. An accountant can give you great advice on whether this is the best idea for your business or whether the disadvantages of this type of business mean that you should set up as a Limited Company. We have a great article here on Sole Trader vs. Limited Company.

Still, one of the main disadvantages of a Sole Trader business is no legal separation between the business and the people. For this reason, we would advise most people apart from the smallest businesses set up as a Limited Company.

Depending on the decision, there will be a seemingly endless list of tasks to do to get started. Not great when you are busy setting up your new business. A good accountant can take over at this point and do most of the heavy lifting. They can set up the company, set up a business bank account, register for all the necessary taxes. You will start on the best footing from day one, happy with the knowledge that all statutory and tax requirements are sorted.

2. Set Up A Fantastic Cloud Accounting Software System

UK Businesses have a legal obligation to keep financial records from day one. Whether you are starting up or already have an existing business, a Cloud Accounting system is the way to go in the 21st Century. These systems have the advantage that the data is kept securely in the cloud for you and backed up at all times. They make collaboration between business owners and Xero Accountants so much easier than in the past as all parties can have online access to up-to-date information at all times.

The market leader in the UK Cloud Accounting market is Xero which has over 2 million users worldwide. A good accountant will be able to set this up for you, advise on its use and do all the processing should you wish. Xero is an incredible bit of software, not least because of the Xero App Marketplace, which lists hundreds of other pieces of software that integrate with Xero. With these additional apps, you can customise it for various payment systems, industries, and specialist use.

3. Keep Out Of Trouble With HMRC And Companies House

At every stage of the life cycle of a business, there are multiple filings to be made. To set up the business as a Company will take multiple filings to Companies House and HMRC. Once up and running, there will be monthly filings such as Payroll, quarterly filings such as a VAT return, and multiple annual filings including Statutory Accounts, Corporation Tax, Payroll Year-End, and P11ds.

Each one of these filings must be accurate, or the business could face penalties. Accountants can help by taking care of all of these filings and making sure that they are submitted correctly on time every time.

4. Keep The Staff Happy

When a business starts to take on staff apart from the legal issues, including employment contracts, many financial aspects will need to be addressed. There is nothing more guaranteed to irritate your team than not getting paid the right amount of money at the right time for all their hard work.

A good Payroll Service from your Accountant will ensure that payslips are sent out quickly, and the payments to the staff and HMRC are all made on time. Since 2012 it has been a legal requirement to automatically enroll the employees in a workplace pension. Hence, a suitable scheme needs to be in place and administered. At Sutherland Black our Payroll Service will do all of this for you.

As Benjamin Franklin said, “in this world, nothing is certain except death and taxes.”

5. Save Tax

Benjamin Franklin’s statement is undoubtedly true; however, a good Tax Accountant can make sure that a business only pays what it is due and provides great tax advice for the business and the business owner. It is also established in UK law that it is legal to organise one’s taxes so that the liability is as low as possible, as long as all the tax laws are followed.

There are many ways of saving tax that a good Accountant can discuss with you. Any business can save tax by using allowances such as those for Capital purchases and Research and Development spending to their maximum benefit. Suppose the business is trading as a Limited Company.

In that case, there are other ways of ensuring the owners can reduce their tax burden. Some examples are splitting their shares with a spouse and ensuring that their salary and dividends are structure correctly.

6. Save Time

It is often true that the first time you do something, it takes a lot longer to do it than if you are doing it regularly. Some of the financial tasks involved in running a small business are time-consuming. If they are done infrequently, they can seem like you are doing them for the first time every time you do them.

Accountants have developed many ways of speeding up financial tasks by using automation and specialist software to ensure they are done as efficiently as possible. What might seem like a job that could be done in-house to save money might be much more efficiently done by a specialist. Examples of this time saving can be seen in Bookkeeping and Payroll, both of which can become time-consuming and stressful when done in-house.

7. Assist With Cashflow

Cash is the lifeblood of any small business, especially if it is growing. A business that runs out of cash to pay staff and suppliers is doomed to failure. There are many ways that an accountant can help a business with its cash flow. The most fundamental is by helping the business keep its financial records up to date at every moment to make sure the owners have complete visibility of their income and expenses.

An estimate of the future business finances can be calculated once this base financial information is established and used to forecast the owner’s cash flow. If there is a shortfall in money for capital investment or working capital, the Accountants can assist by creating a business plan to assist in helping the business raise cash.

8. Help With Business Growth

Along with cash flow forecasts, a good Accountant can help you grow your business. Through the use of the latest technology, it is now possible for any size of business to have sophisticated financial reports. These reports can identify areas for cost savings, show which products are the most profitable, and assist the owners in pushing the business forward.

Monthly reporting for the owners is essential for keeping track of unnecessary spending and showing which areas of the business to focus on. Businesses with poor quality financial reporting tend to grow more slowly as they do not know what is happening inside their business.

9. Allow The Business Owners To Do What They Do Best

The most successful businesses tend to have owners who are passionate about their product or service and can see a gap in the market to exploit. Think of Steve Jobs or Richard Dyson. However, some small business owners get bogged down in financial matters rather than doing what they should be doing for the business.

The owner’s time would be much better spent having a vision of the product or service they are selling and communicating its benefits to the outside world. They are probably unique in being able to do this type of activity, and they can pay an Accountant to take care of a lot of the financial necessities.

10. Assist In Getting The Most For The Business When It Is Sold.

Every business comes to an end sooner or later. Whether it is closed down, passed on to the next generation, or sold, a good Accountant can help get the most value for the owner. Ideally, the owner will discuss plans with an Accountant a few years before the disposal as there are many things that the owner can do to make the business more attractive to a potential purchaser. The owner can restructure debts, cut non-essential costs, or maybe part of the business could be closed.

When it comes to the actual transaction, the Accountant can advise on the structure of the sale. When the business is sold or shut down, the way that it is done can massively affect the funds that the owner walks away with. Good advice is just as crucial at the end of the business life cycle as at the start.

Get In Touch with Sutherland Black

We hope you have benefitted from these ideas of how an Accountant can help a small business. If you would like to discuss how we can help in any of these areas, please do not hesitate to get in touch. We will organise a no-obligation meeting with you and give you advice on your next steps.

John McLaughlin Chartered Accountant Scotland

John McLaughlin

Sutherland Black are plain talking accountants based in Scotland. We’ll support your business growth and goals. Talk to John today for friendly yet expert accounting advice.

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