By Glenn Collins, below, Head of ACCA UK
Does every business need an accountant?
The common thread of most successful businesses is understanding their finances. Owning and running a small business comes with a lot of responsibility, tight time demands and for the most part, even tighter budgets. Many small businesses sadly fail before they’ve begun, in part, due to a lack of financial understanding.
While there is no legal requirement for small businesses to have a qualified accountant manage their finances, it can be tricky to keep on top of ingoings, outgoings and legislative requirements like tax returns, when juggling the day-to-day running of your business. We would recommend that those who are self-employed hire an accountant to help. An accountant will give you time back which can be precious when self-employed. Essentially, my advice is hire an accountant before you realise you need an accountant.
What can an accountant help me with?
An accountant can help you with much more than just filing tax returns. They can become your trusted business advisor, helping with the development and growth of your business. Even for those who view themselves as being very business-savvy, an accountant can help identify your blind spots, help you avoid making financial mistakes and support the growth of your business.
For example, when you are starting your business an accountant will help you to understand legal and taxation issues, they can create a business plan for you and educate you on what you can expect when starting your business. They can also help you to manage your growth smartly. A business that grows too quickly without its finances in order will run out of cash very quickly. Regular meetings with an accountant can help you to understand which parts of your business are helping you to make a profit and advise you on next steps to manage and continue stable growth, for instance advising on different sources of finance available in the marketplace.
Another area an accountant can help with is understanding and navigating regulatory changes. When trying to build a business you will have little time to keep up to date with and monitor for changes in policy and regulations. An accountant will stay on top of these for you, giving you back sacred time and making sure your business adheres to the latest requirements.
Can’t I just use an app for this?
Not if you want to build a successful business. In the early stages of growing a business it may be easy to manage finances online but as you grow this will become more complicated and harder to manage as outgoings and income increase. Your accountant may well become a strategic part of your business. Apps can’t give tailored advice or guidance on how to navigate certain business decisions and growth, and we know that growing a business isn’t a one-size-fits-all approach.
However, that’s not to say technology isn’t helpful in managing finances. Pairing the right software with business needs is invaluable and there is a wealth of purpose-built small business accounting software that can work in tandem with accountants to achieve maximum financial efficiency for your business.
What do I need to do before hiring an accountant?
There are a number of things you should take into consideration before hiring an accountant:
- Seek recommendations
Speaking to other people in your network or who have similar business interests can be a good first step to getting in touch with an accountant. They may work with someone they swear by or have knowledge of an accounting firm that will suit your needs.
- Make sure they’re qualified
One of the most important factors that must be considered when looking for an accountant is to ensure you are searching for those that are professionally qualified through an accountancy body such as ACCA. Those who are qualified have a wealth of work experience, knowledge and also ethics codes that they must adhere to. Alongside this they are required to maintain their skills, knowledge and development through training so choosing a qualified accountant is crucial.
- Meet with any potential accountants
Before deciding on an accountant to support your business it is important to meet with them and get to know them. You need to prepare as you would for any business meeting and head into this with a clear understanding of what your priorities and goals are so that you can offer the accountant and their firm an overview of your business needs and how they can help you. This is also a good time to ask about their experience and make sure that it is relevant to your business and goals.
Questions you may want to ask include:
- How many clients does the accountant have?
- What are the response and advice times you can expect to receive?
- What is their estimate of fees?
- What expertise can the accountant supply?
- Is it possible to speak to existing clients of the accountant?
You must also make sure that you decide on costs and payment ahead of selecting an accountant. It’s also helpful to decide if you require an accountant who is based nearby or one who you can connect with online.
And as a final point, it’s important to know if you will get along with your accountant. This seems such a small detail but it will matter as your business grows and you are working closely together.