Why Small Businesses Need an Accountant

Growing your small business requires making critical decisions all the time. To do so can be challenging as often the outcomes of these decisions is uncertain at the time.

Such decisions can be financial or non-financial.

Important financial decisions usually revolve around, cutting costs, attracting new leads, increasing client base, staying ahead of the competition, improving shareholder’s value and so on.

A good accountant can provide you with a wide range of value-added services and critical intelligence to assist you in making such decisions. A good accountant can make complex numbers speak plain English.

For your better understanding, we have come up with ten reasons why your small business needs an accountant.

Why Small Businesses Need an Accountant

1. To guide you during the startup phase

The startup phase of a business is usually challenging. Tasks like finances and legal regulations are critical, especially for the business owners new in the business field.

Accountants can guide you in writing your business plans, setting up the right VAT scheme, registration for Payroll.

An accountant can help you decide about your business’s legal structure with their financial knowledge and expertise. In the UK, a business can be run via a  company, group of companies, partnership, sole trader, community interest company-CIC or hybrid thereof.

Which one is right, depends upon factors, and only an expert can guide you.

2. To guide you during the growth phase

Growth is fantastic for any business.

However, growth has its own challenges. Faster its velocity, more challenges foir the business to deal with.

Challenges can be of all sorts, like:

  • human capital issues- recruiting, training, onboarding
  • managing sales pipeline- CRM, order management, customer services,
  • technological issues- upgrading system, more sophisticated hardware and software, telephony and telecommunication
  • finance issues- more number of transactions, detailed information which market segment is growing, which product is selling fast, product profitability reports, breakeven analysis for each division or products, increased compliance like audit and so on
  • investor relations management
  • employee expenses management
  • customer service
  • Environmental- currently because of COVID-19, most of the staff will be working from home. So you need a robust and safe IT infrastructure for team and business in place.

There are many challenges you can face regarding proper maintenance from a legal and financial perspective if your business is growing at the rocket speed.

An expert accountant can help you deal with growth phase challenges such as inventory management, cash flow management, management accounts, timely bookkeeping etc.

You need not worry about Payroll, tax management, payments, and growth strategies of your small business if you have a small business accountant to look after these things.

This way, you will have accurate business intelligence available to make all critical decisions timely and correctly.

3. To save time by reducing the workload

Finances of your business can take so much of your time while running your business’s day-to-day operations.

Instead of maintaining everything by yourself, it is good to hire an expert accountant to take over the financial burden away from you and conduct the entire legal, financial, and tax-related tasks.

It will save you time, which in business is more important than money!

4. To help you make better business decisions

If you are looking to grow your small business by adopting a financial model like franchising or buying a new or selling your existing business, then an accountant can play a significant role.

It can be challenging to make such important decisions for the relatively new business owner. An accountant can help you understand the total profit you will make after franchising your business by calculating and deducting the fees and percentages charged.

In case you are looking to buy another business or sell yours then you should be aware of your company’s financial statements. An expert accountant can help you in that.

5. To improve cash flow

One aspect of the business is making money, while other is preserving capital. An accountant can certainly help you with the later.

To make critical business decisions, you need to manage your cash correctly.

A small business accountant will help you manage your cash flow by setting up an early warning system.

This usually include setting up a cashflow forecasts.

Comparing actual cashflow with the forecast and looking for any gaps.

This way, you will be able to identify any cashflow gaps and have enough time to take corrective action.

An accountant will keep a check on your business’s credit control policies and cash management policies.

6. To deal with the audits

In the UK, not every small business requires an audit, but it’s you can contact any small business accountant to confirm whether you need one or not.

It is always beneficial to keep an accountant at your side because they will update you on audit procedures and help you prepare all the critical documents in compliance with the appropriate regulations.

7. To save tax

With the adequate knowledge of all tax laws, an accountant can help you save tax.

For a small business owner, hiring a professional accountant at the beginning of the year will be very beneficial. If you are a freelancer, check our other article on tips for freelancers to save tax in the UK.

An accountant can suggest many ways to reduce tax, what expenses to claim, what allowances are available and also ensure that your tax filings are done correctly and on time.

Your small business can have a stress-free tax filing season.

8. To help measure the performance of the business:

Business owners almost always fail to timely measure the performance of their business. This practice stops identifying problems at an earlier stage.

You can determine if a business will succeed or fail by setting objectives and measuring it against your business’s results. Collectively knows as Key performance indicators (KPIs).

You can have financial KPIs like profit target, net margin ratio, growing equity of the business, maintain a healthy debt to equity ratio, analyzing cash cycle.

KPIs can be non-financial like the number of click on your website, complaints received, number of staff leavers, number of new enquiries.

One of the main reason behind small business failure is that they fail to keep track of your business’s objectives and how the company is performing against those objectives.

An accountant will help you to measure, evaluate and analyze actual performance against the budget one.

By using these evaluations, your business can take corrective actions to keep the performance on the right track.

9. To process Payroll

If you are unsure how the payroll process works, then hiring an accountant would be beneficial.

Business with employees needs to manage Payroll, in line with the HMRC’s payroll regulations.

If you are not able to do Payroll properly, then it can result in fines, backdated tax bills, and unhappy employees.

An accountant can help you generate payroll records for your employee and timely submissions to the HMRC.

10. To avoid mistakes

To keep your business well advised and sustained, you should keep an accountant by your side from the very beginning of your business.

With expert analytical skills, an accountant can advise you about long term risks and downfalls.

An accountant can save you making any mistake by analyzing your business’s budget, assist you in making changes by catching errors, and help your business avoid challenges.

Wrapping up

Accountants pay the best roll in adding value to your small business in both the startup and growth phases. So, boost your business by hiring an accountant who can help your business grow faster in its field.

Nidhi is a Content crafter at 123Financials – Financials writer, blogger for the last 2 years – she loves travelling, photography, reading and hanging out with friends and family.


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