9 Reasons Why Small Businesses Need An Accountant
Why should you hire an accountant for your small business?
To take your business to the next level you need more than passion. You need a trustworthy team of people who are just as driven about your business as you are. That is why hiring the right accounting firm is one of the most important decisions you can make as an entrepreneur. Unseasoned entrepreneurs often limit their accountant’s role to creating and submitting their accounts and tax return.
However, a first-rate accountant will provide you with a wide variety of value-added services that will help you comply with up to date regulation, save money, reduce risk, manage growth and plan ahead. As an entrepreneur, all of your essential decisions will be dependent on your finances, so it is imperative that you have an exceptional accountant that will not only give you the required information but advise you as well.
How to Choose the Right Accountant?
Why should you hire an accountant for your small business?
- To help you improve your Cash Flow
Cash is the fuel that keeps your business running. Without proper control of your cash flow, you will not be able to make critical decisions to run or grow your business. Cash flow management is very important for your business, even a highly profitable business without sufficient cash will soon collapse. To help you better understand and manage your cash flow we have curated an effective cash flow guide.
Hiring a good accountant will ensure that you have good credit control and cash management policies in place so that you have all the possible funds and information available to you. Effective cash management encompasses how a company manages its operations or business activities, financial investments, and financing activities to maintain positive cash flow. A company should generate adequate cash flow from its business in order to survive, allowing it to cover its expenses, repay investors and expand the business. In addition to generating cash from its activities, a business also needs to manage its cash so that it holds the right amount of cash to meet its immediate and long-term needs.
2. To help you reduce your workload
Once your business takes off, you’ll need all your time to run day-to-day operations, rather than be occupied with compliance, tax or bookkeeping. Similarly, as the business finances become more complex, you’ll almost certainly need a specialist to take charge of them. Hiring an accountant will help you manage operations by recommending process improvements, take over the financial and tax obligations and introduce you to tools that can help you save time while also saving you money.
3. To help you manage Growth sustainably
A growing business has many needs, to name a few, these can be things such as managing the requirement for funding, hiring the right team, managing cash flow, improving customer relations etc. An accountant will help you manage operations by recommending process improvements, will take over the financial and tax obligations and introduce you to tools that can help you save time while also saving you money. Their expertise will be valuable when seeking funding and creating incentivising pay packages for employees. As good as the word growth sounds, it comes with its own challenges, sudden growth that you haven’t planned for can be as problematic as growth that is too slow, leading to all kinds of difficulties relating to cash flow, tax, employees or office space, for example. A good accountant can help you react quickly and effectively to unexpected growth and turn it into what it should be: an advantage.
4. To Provide valuable Business Advice
Accountants possess the right skills, expertise and tools to serve as business advisers. They carry a wealth of knowledge that comes from working with clients from all walks of business, an experienced accountant will have seen most of the problems and challenges that you may encounter. As a result, an accountant can provide an unbiased sounding board for your ideas, warn you of potential risks and alert you to great opportunities. Their network will add further value to your business decisions, by helping you connect with key connections that can help you implement complicated strategies and solve complex problems.
Video: What value can Accountants add?
This short video will help you identify the role of an accountant in business and what value it can add to your business’s growth.
4. To help you stay ahead of trends and regulations
In this era of emerging technologies, an accountant has to keep up with emerging trends, new technologies and changes in rules and regulations, they are also mostly aware of the key pressure points a business faces at different stages of their life. Using expert analytics, forecasting and presentation skills, a competitive accountant will help you visualise major issues the business faces due to economic uncertainties, trend changes and new regulations that might be in the pipeline, these should be identified by them using regular health checks and through financial and economic evaluations of your business compared with industry benchmarks. Once identified they will help you prepare for these using effective financial forecasts, smart solutions, growth management tools and predictive performance reporting.
The advent of cloud accounting software has made the whole process of staying ahead of trends much easier, the presence of online accountants has made selecting location-based accounting firms obsolete. Cloud accounting software is accounting software that is hosted on the internet which means that you can access it at any time regardless of the time as well as your location. To help you select the best accounting software our online accounting specialists have curated a guide which can help you select the best option for you.
5. To help you improve cost efficiency
Even a basic function like managing cash flow or reducing business expenses can help a business grow exponentially. An expert accountant can provide you with a financial map, which should help you decide which costs to keep and which to cut, it would also show you which costs can be improved, which contracts are too expensive and which costs have better alternatives in the market.
Further cost reductions can be achieved through tax deductions which should be done properly through clever tax planning with the help of an expert tax accountant, this will help avoid costly and stressful investigations. Being tax literate is important and non-submissions of tax filings can put business owners in legal trouble. A cost improving exercise can also be key when an owner is thinking about selling the business, as it will impact the bottom line positively. Improving business profits can mean an increase in value for the business. An accountant will also play a major role if you decide to sell or franchise your business. They will make sure that you are selling your business tax efficiently.
Related: To understand an accountants role in greater detail, read our guide here.
6. To help you process payroll
Businesses with employees need to operate payroll effectively and in-line with payroll regulations. Not doing payroll properly can result in fines, unhappy employees and huge backdated tax bills. Payroll compliance is crucial for running a business. In order to do payroll properly, you should hire a good payroll specialist or an accounting firm that has accountants who are proficient with payroll services, to help you submit RTI and generate payroll records for your employees and for submission to HMRC. If you are unsure about how the payroll process works, it is advisable to seek help from an expert payroll accountant.
7. To help measure business performance
Performance measurement is almost always neglected by businesses, setting objectives and measuring these against results such as customers acquired, revenue increased, complaints received, invoices are written off etc. can be key to determining if a business will succeed or fail. Almost 90% of startups fail because they fail to keep track of their key objectives and how the business is performing against these objectives. An accountant can help develop performance evaluations to get a company to understand it’s actual performance against the objectives it set for itself. Using these evaluations a business can understand its actual performance in terms of the indicators the business considers important for long term growth and sustainability.
8. To Help with virtual CFO services
If your business is big enough to need the expertise of a CFO but isn’t big enough to hire one full- time, you need to look at virtual CFO services. This provides you with the expertise of a CFO at your fingertips at a cost which is within your budget.
A good CFO will help you set effective financial controls, a management accounting process, help manage investor relations, review business plans, provide unbiased financial and business advice, set an effective budgeting and forecasting process, help with strategic planning, cash management, and help set effective reporting for the business.
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There is no doubt an accountant can help you add value to your business in a variety of ways. So, give your business a boost by hiring a knowledgeable accountant who can help your business thrive, grow fast and sustain itself.
Clear House Accountants are payroll specialists and Accountants in London, we are the accounting firm nearby, the online accountants and the business advisors you are looking for. We cover services for all your business needs such as Accounting, Tax, Payroll, VAT, Business Advisory and Business Growth. Contact us now to see how we can help you.
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