How Does Accounting Help Small Businesses
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- 15-11-2022
How does accounting help small businesses? Find out more about what an accountant does for a small business and if hiring an accountant is right for you.
How Accurate Accounting Can Help Your Business
There are many ways that a professional accountant can service your company's accounting needs.
From providing in-depth insights into your company's financial health to managing your business bank accounts and generating detailed cash flow reports, certified public accountants are the wizards that take care of your business's balance sheet and help you save money.
With their expertise, you can also discover new growth opportunities and ensure you file your taxes accurately and on time. There are a few accounting options for owners of small businesses, depending on how involved you want to be in your business's finances.
When Should I Hire A Bookkeeper?
Of course, a few people can oversee accounting and filing tax returns themselves. However, this will take up a large amount of your time. The first alternative is to hire an in-house accountant. This will make things easier, but it is only financially viable for some small companies.
Finally, you can outsource your accounts to a professional small business accounting company, which is the most cost-effective method for small and growing businesses.
While you don't need to be a professional accountant to run a small business, having a few basic accounting skills in your back pocket would be good.
Being able to keep track of the money in your business has obvious benefits, but it also allows you to ensure your operations run smoothly.
But this article will take you through the main benefits of hiring a great accountant to help your small business.
What Does an Accountant Do For a Small Business?
Whether you have a business partner, own a limited company or are a sole trader, no matter the formation of your small company, accountants can prove invaluable for your business finances.
Naturally, for those who don't have any accounting or bookkeeping skills, then hiring an accountant is the most sensible thing to do for your company. But if you find your business expands rapidly, you can also benefit from the expertise of an accountant.
A growing business means more customers, which means increasing your operations and spending more time ensuring your business continues to work effectively. Therefore, hiring people to take some of the hassle off your hands as you grow can truly help.
Therefore, if your small business is on the up, you can definitely benefit from hiring an accountant. Most business owners feel they can get by using modern accounting software.
While this software is a useful tool for any company, you still need financial analysis skills to assess your cash flow and monitor how the revenue you bring in will affect your business plans for the future.
This, again, is where hiring an accountant comes into its own. They can oversee every aspect of the cash flow function of your small business. So, we've covered what an accountant is, but how exactly do they carry out their services?
Roles of an accountant
Every small business is the brainchild of an ambitious entrepreneur. But in most cases, these mavericks have a reliable expert accountant standing by their side. Accountants help you perfect your finances while simultaneously ensuring your business remains tax efficient.
Again, most small business owners will have excellent business acumen but may lack the necessary skills to carry out effective accounting. Once your business has grown beyond a certain size, having an accounting professional is incredibly handy to help keep track of your finances.
Besides keeping an eye on your cash flow, your accountant can help with various other elements of your business. From risk management to regulation compliance, financial planning, money saving and continued growth all fall under the remit of a hired accountant.
Almost all of the big decisions you'll make as a business owner will come from a financial position. Therefore, having an experienced accountant you can rely on for sound advice is the best way to ensure the health of your company and avoid costly mistakes.
Here are some other services an accountant can perform to benefit your small business.
Businesses don't want to pay more tax than they have to, but absolutely no one should pay any less than required by HMRC. The penalties for underpaying tax or even late payments can significantly affect your company.
Therefore, care and diligence in all areas of business tax are essential during the tax season.
Your accountant can calculate all your expenses, allowances and tax obligations, giving you a clear picture of what you owe to HMRC and where you might be able to make savings.
Alongside ensuring you pay the right amount of tax, your accountant will keep up to date with the latest tax laws and regulations, ensuring your business doesn't pay too much.
Your accountant can find legitimate channels to lower your tax bill, from allowances and expenses to offsetting losses, overhauling salary payment systems, personal finances and taking advantage of government incentives.
Cash flow is a vital and often overlooked element of running a small business. While your company may be profitable on paper if you don't have enough ready cash to cover unexpected expenses.
Your accountant can ensure you have enough cash reserves to cover potential risks, which acts as a fantastic marketing campaign for potential investors or stakeholders.
The expertise of a professional accountant is also essential for intricate financial arrangements, such as director's loans.
Most small businesses fail within their first year of operations. This is mainly due to improper forecasting when drawing up their business plans. But with an accountant by your side, you can lay the right foundations to grow your business.
They can provide a detached opinion, helping you see where to improve your dream business plans.
With a business model checked and approved by a good accountant, you give your business the best start in life, not to mention making it more attractive in the eyes of future investors.
Accountants can also help with the legal structure of your business, such as whether to form an LLC, partnership or sole proprietorship. Your accountant will inform you how each will impact your business's finances.
Once you've established your business, your accountant can take over a great chunk of the financial work, freeing you to focus on your operations.
Again, as your operations expand, you'll want a qualified accounting professional to handle the increasingly complex financial arrangements.
Bookkeeping is one of the most important financial aspects of any business. Professional accountants can service numerous essential elements of your company.
Whether you need them to manage your finances, compile financial reports, prepare financial statements for HMRC or ensure you remain legally compliant.
As a general rule, the bigger your company, the more government regulations will apply to your operations and finances.
Compliance with HMRC and government regulations is essential to staying out of trouble. Rather than wasting your time focussing on these, bring in an accountant to handle the paperwork.
Every small business needs to grow, but growth isn't cheap. At some point, you'll need additional financing to fuel expansion.
Again, your accountant can help you negotiate and secure financial assistance from banks or other lending organisations or individuals such as investors.
With a professional accountant singing your praises, you'll have no trouble finding enough money to guarantee continued growth.
While slow growth can be frustrating and potentially dangerous for a small business owner, sudden growth can be just as damaging.
From cash flow to taxes, employees, payroll and office space, unexpected increases in operations can significantly affect many areas of your business.
Professional accountants can react quickly to these sudden growth spurts, and rather than knocking you back, they can turn them into an opportunity.
Statutory audits are essential for businesses of a particular size. In this case, accountants are the most important people on the planet.
But aside from legal requirements, having your accountant conduct an internal audit on a monthly basis is a fantastic way to learn more about your business's performance and whether you are on track to meet your goals.
Nothing beats mergers and acquisitions (M&A) to grow your business quickly or enter a new market smoothly.
A good business accountant is a must-have whether you want to purchase a complementary business or buy out a competitor. They can determine if it will be prudent and look into the target company's finances to ensure it is a suitable purchase.
Accountants can also serve as experienced business advisors. This is especially true for accountancy firms, who will have worked in countless industries for businesses and clients of all types.
With their experience of how different businesses operate, they're likely to have insights into improving your own and acting as an unbiased third party to check your business decisions and provide advice, warning you against potential risks and illuminating opportunities.
If you require further assistance or believe that your small business can benefit from bookkeeping services, please reach out to our professional team, and we can advise you further.