Have you ever wondered what an accountant actually does? There is probably a lot more than you think! Watch our video to find out more.
At its core, an accountant will help a business owner to undertake the preparation of the set of accounts and the tax returns for the business. These are legal requirements.
If you’re a limited company, you need to do these once each year – you need to file a set of accounts at Companies House and a Corporation Tax return with HMRC within nine months of your year end.
If you’re a sole trader, the accounts and tax return are filed each year for the year ended 5 April and you get until the following 31 January to file them and pay any taxes.
So, at its simplest, an accountant helps you do just that.
However, an accountant can do so much more.
A good accountant will be there for you when you need them – for financial advice, to help you grow your business, and to help to keep your tax bill as low as legally possible.
Many accountants will offer many different services, and it’s up to you to choose which are most appropriate for you and your business.
Compliance Services
When you start out, it may be that you do want just the basics – what some accountants call Compliance Services – these would be a set of accounts, a tax return, VAT returns (if you are registered for VAT), and also running a payroll. Often this would also include your personal tax return, either as the sole trader or as the director of a limited company.
These services keep you legally compliant.
Launching Your Business
An accountant can help you launch your start up. There’s a lot of administration around that.
An accountant can help you set the business up, form a limited company, introduce you to a bank for a bank account, and also just make sure you have a solid foundation.
Bookkeeping
Accountants can also help with the bookkeeping. The bookkeeping is actually taking your financial records and turning that into a set of accounts. So you might have, for example, paper purchase invoices, bank statements, and sales invoices. Your accountant can process them and turn them into a set of accounts.
These days, much of this is done using cloud software. So, rather than typing in purchase invoices, you’ll take a photo or scan an email of the invoice and the software will process it. Similarly, cloud software can talk to your bank account and pull the bank statements in directly without the need for any paper. You can raise your sales invoices in the software and email them to your debtors, and also chase them for payment as and when you need.
Saving Tax
A good accountant will always help you save tax. Often this comes by meeting you regularly and planning – by understanding your circumstances and talking to you because, although some tax reductions can be done after the fact, many need to be done in advance.
Management Accounts
As you grow, you might need much more than that and find it very, very useful.
A lot of business owners find it useful to have management accounts throughout the year. These are prepared on a regular basis, and actually give you a small set of accounts at regular intervals, so you can track your business and see how it’s doing.
Many management accounts will also include non-financial key performance indicators as well. That might be the number of customers, the number of new sales, your reviews or customer satisfaction – all of the figures that are important to you to help keep your business on track and make sure you’re getting your business to where you want it to be – to help you meet your business and personal goals.
Budgets and Forecasts
Some of the other services that accountants can provide include budgets and forecasts.
When you start your business, you want a business plan. An accountant can help you with that and also help with the numbers to support it. But then it’s useful to keep preparing budgets each year.
What are your budgets for the year? What are you forecasting your business to do? Again, so that you know your goals and you can track yourself to see whether you get them.
Cash Flow
A really important thing is actually looking at your cash flow and, as well as preparing cash flow forecasts, this means actually working with you on how best to manage your cash.
Whether it’s over the speed you pay your creditors, or many ways of helping you get paid quicker by your customers, an accountant knows these – they do this all the time and they can work with you to help you put more cash in your bank account.
Support
A lot of my clients say to me that, sometimes, it’s just the fact we’re there to listen and to support them. A client of mine used to say that having me there was like speaking to a counsellor because it can be a lonely place running a business. If your friends and family don’t run businesses, they don’t understand what it actually means and what it entails. So, having someone to talk to who gets it can be really important. An accountant gives you that.
So, an accountant can help with so many things from the core functions of keeping you legally compliant, making sure your accounts are done correctly and on time, to saving you tax, to supporting you, to helping your business grow, and making sure you meet all of your business and personal goals.
There’s a lot to it! If you would like any more information, please fe