Why your small business needs an accountant

If like many new business owners, you find yourselves thinking that as a small business, you are able to manage your own accounting and bookkeeping, this may be for you.

As with any business, whether small or a start-up, the aim should always be to grow – and grow in a controlled manner. By enlisting an accountant, you can focus on the growth of your business whilst they handle all the paperwork. Read on to find out more about why your small business needs an accountant.

What do we mean by small business?

Of the 5.5million registered businesses in the UK, over 99% of them are classified as a small to medium-sized business. These small businesses and start-ups cover a whole range of useful and luxury goods, or services and experiences.

However, if you happen to run a limited company, a small company has a definition in statute. To be legally identified as a small company, your organisation must employ fewer than 50 employees and have sales of less than £10m annually. A micro company is a little bit smaller than that and will have fewer than 10 employees and sales of less than £2m a year. 

What a small business accountant can do for your business

In the UK, company accounts must be submitted to Companies House every single year, regardless of whether your company has been active or dormant in the last 12 months. Your accounts must be registered with Companies House within 9 months of the last Accounting Reference Date, also known as the ARD. This is usually the anniversary of the last calendar day of the month your company was registered. So, for example, if your business was registered with Companies House in January, your accounts must be filed with Companies House in the following September. 

If you run a small business, or you are self-employed, an accountant can bring considerable advantages. We’ve listed a few of the top ones below. 

An accountant helps you handle growth

As a small business, your aim is likely to be that you want to grow your business sustainably. By hiring an accountant, they will be on hand to help you handle these growth transitions, such as hiring new employees or moving to new locations. Your small business accountant will be on hand to look after the finer details of your businesses growth, such as payroll, employee tax management, property taxes, utilities and so much more. This frees up a considerable amount of your time to run your business.

To improve your cash flows

The old saying goes, “cash is king” and in business, this couldn’t be any more true. Cash is the fuel that will keep your business running and without proper control of your cash flow, you cannot make the critical business decisions necessary to keep your business running. 

Having a good small business on hand will help you to ensure that you have good credit control and cash management policies. For example, say your business offers services or goods on a 30-day payment term. By hiring an accountant, they can work to keep your business on top of your finances and ensure that you have good credit control with your customers paying on time. 

Reduce your workload

Understandably, you will want to focus your time on the day to day running of your business rather than spending your precious time and resources on bookkeeping and compliance. This is where an accountant comes in handy.

Let’s say, for example, that you run an Amazon business dealing in technology. Business is booming and you need to ramp up your resources to keep up with demand. This is where an accountant that specialises in accounting for Amazon sellers will come in handy. They can handle all of the day to day running of your business bookkeeping whilst keeping up to date with tax and company compliance. 

They provide valuable business advice

When you choose the correct accountant, they will also be able to serve as a valuable resource for business advice. Carrying with them a wealth of knowledge and experience from dealing with companies and clients from all walks of life, an accountant will be well versed in most of the problems and challenges you may encounter in your business. 

As a result, they are a brilliant resource for sound boarding ideas off and providing valuable business advice. For example, imagine you have a small food takeout business that is booming in popularity. So much so, that you consider opening a new location in another town. Your accountant will be on hand to help advise you on the potential challenges and pitfalls you may face as a business owner looking to expand, to help eliminate some of that risk. 

They help you to process payroll

Businesses with employees need to operate payroll effectively and in-line with proper payroll regulations to ensure that employees are treated fairly and legally. By not complying with payroll regulations, your business could face huge fines and backdated tax bills that may ultimately lead to the collapse of your business. 

By hiring an accountant to handle payroll for you, your business will not fall foul of payroll regulations, leaving you with one less thing to worry about. 

To help measure your businesses performance

Oftentimes, business performance is neglected by small business owners, as is setting timely and measurable business objectives. It has been suggested that approximately 90% of startups fail because they fail to keep on top of their objectives and measure these against their performance. However, an accountant will help you to understand your business’s performance that will enable you to effectively plan your business growth moving forward. 

They keep you up to date with tax and compliance regulations

By hiring a business accountant, they will help you stay up to date with the very latest in tax legislation and other regulations. In doing so, your accountant will help you from falling foul of legislation that may affect your business and cash flow should you encounter large fines and tax bills. 

As an example, perhaps you are struggling to keep on top of your accounts and taxes, with HMRC stepping in due to large unpaid corporation tax bills. In this instance, your business will most likely incur large fines and backdated tax bills. However, by having a small business accountant in place, you can avoid this issue altogether as they file your company accounts annually and calculate your tax bills. 

Find a small business accountant

You can see why it is so important to find a small business accountant to help you grow your business, whilst also managing your accounts and ensuring that you keep up to date with the latest tax legislation and compliance. 

When you are looking for a business accountant, it is important to not just consider the cost to your business. You need to also consider the service they are providing and how good their customer service is. It is vital that you feel comfortable enough to be able to have frank business discussions with your small business accountants about the future of your business and they must understand the nature of your business to help you operate effectively.

Consider all of these factors when looking for your first small business accountant and watch your business flourish with their support.

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