Small business owners strive to do for themselves as much as possible in order to cut expenses and operate as frugally as possible. Indeed, in some business aspects that works out okay.
However, when it comes to finances, it is imperative that you do whatever is necessary to ensure all aspects are well taken care of and if that requires hiring an accountant then do not hesitate.
Accountants have the ability to help businesses on a variety of levels depending on the need. Perhaps your company is at a stage of growth where you’re considering hiring an accountant but are deciding on a few details such as the number of hours one will be needed, or the specific duties you want to outsource.
Duties of an accountant
When hiring an accountant, the amount of involvement that he or she has is entirely your decision. Accountants are highly trained individuals who are certified to handle all aspects of bookkeeping, taxes, budgeting and financial planning.
Some businesses opt for the assistance of an accountant only for tax preparation and filing, or for advice on future financial growth of the business. While others require a higher level of involvement to handle part or all of the daily, weekly or monthly accounting tasks.
Paying for the help of an accountant should be regarded as an investment rather than an expense. This is because the value of knowledge and skills that an accountant has to offer is oftentimes priceless for the financial well-being of a company.
Below are some details that will help you in determining the right time to hire.
If you are just starting out in business, or even in the first stages of planning, hiring an accountant could prove advantageous in helping you determine how you want to structure your business.
All business structures have advantages and disadvantages, and an accountant could collaborate with you to establish which structure would be most viable in reaching your business goals.
The most common business structures include sole trader, partnerships and limited company (Ltd). Within these various structures are an array of regulations, which an accountant would be able to advise you on.
Furthermore, if you are in the developmental stages of getting your business off the ground, an accountant would be constructive in helping you formulate a business plan or proposal to acquire financial backing of investors.
If you need assistance choosing accounting software to track inventory, accounts payables, receivables, taxes, and payroll, not only would an accountant be able to assist you in selecting what would suit your needs, but they would be instrumental in setting it up correctly.
Additionally, if your business reaches the point of hiring an accountant to take care of routine accounting, the details could be handed over in an organized manner with the appropriate software in place.
It’s important to note that with the coming into effect of Making Tax Digital (MTD) for VAT on 1 April 2019. Businesses whose VAT turnover exceeds £85,000 will have no choice but to submit their returns using MTD-compatible software. You can read our recent article to learn more about making tax digital for business.
Lack of time to focus on future growth
An accountant could assume a variety of tasks that would free up your time to focus on other aspects of the business, such as future growth and expansion.
If your company is at the stage of growth that you’re consistently using valuable hours to complete daily tasks rather than truly being a leader of your company, then most likely it’s an ideal time to consider hiring
Advantages of delegating duties
Time is something that no one can ever get back, so if you’re trying to determine if paying an accountant is worth the cost, consider the following details. First, evaluate the number of hours you devote to accounting matters and multiply that by the rate at which your time is worth per hour.
For example, if you spend 8 hours per week addressing payroll, accounts payable, accounts receivable, and taxes with your hourly rate being £100, then you lose £800 on a weekly basis, not to mention the loss of what you were not able to focus on from the business growth aspect.
Revenue is increasing but your bottom line is not improving
Being that accountants are professionally skilled at viewing data from an objective viewpoint, one could be very beneficial in helping you determine which processes could be reevaluated and help you analyze the issues so you can effectively restructure and benefit from revenue increases.
An accountant can prepare management accounts which allow you to do just that. They are an important tool in financial planning because it allows you to measure performance against benchmarks year-over-year and easily identify what went wrong. In turn, you can gain valuable insight and adjust your strategy accordingly.
Lacking knowledge in key areas that require compliance and reporting to the government such as record keeping and reporting, VAT, payroll and taxation may create major accounting problems that can lead to your small business failing.
Because an accountant is required to stay abreast of all the newest regulations they will be able to help steer clear of any such issues and keep you on the right track to success. Also, during any type of check by HMRC, having an accountant on your team would be very beneficial.
In the end you will probably save more money and time by working with an accountant rather than face penalties and fees from submitting incorrectly or late.
Maintaining accurate financial records
Accountants specialize in keeping accurate records, financial reports, and are trained to be detail oriented. Accurate and detailed records provide you with a clear picture of your company’s financial status at all times.
It also provides necessary data in the form of graphs, spreadsheets, and reports so you gain insight as to where expenses could be trimmed, inventory reduced or new investments made.
Furthermore, if you plan to sell your business at some point, having accurate financial historical records can prove beneficial in not only negotiating prices but attracting potential buyers with past sales history, etc.
Thus, involving an accountant in your business is overall a wise financial decision. Regardless of the stage of growth, your business is in, most likely an accountant would be valuable
In summary, there are a variety of reasons to hire an accountant, but the final decision is up to you. Just be sure that you’re proactive when the time comes, as these skilled professionals can be a key component in helping your business excel to the next level.