Making it count

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calculator and pen 23 2 12Accounts are the blood vessels of a business – but doing your own can take precious time and effort away from your company. Why divert your attention when there’s a whole profession out there to help you? Glenn Collins, Head of Technical Advisory for the Association of Chartered Certified Accountants (ACCA), gives the lowdown on working with an accountant.

In order to understand the drivers behind taking on an accountant, you have to go back to the starting point of setting up a business: people come up with an exciting new venture, that they want to do for the foreseeable future. For this to be successful, they need to try and make their life as easy as possible – and to do that they need to free up time themselves to look after and develop their business.

Even sensible businesspeople can get bogged down in areas where they are not an expert. And that’s where they should go out and get a specific expert’s help, from other businesses – and that’s where accountants are a natural choice.

Many accountants, themselves, are businesspeople running their businesses. They have a large number of businesses they advise, and they have a network to put things in place that small businesses need – and that could be, for example, employment software; security and data protection systems, as well as suitable accounting systems.

An accountant will tailor advice and structure that advice to a specific business and that business owner’s requirements. So the owner gets the information they actually need, when they need it but without being overburdened and in a way they feel comfortable with. For example, a restaurant may not wish to keep full integrated accounting records. What they might wish to do is keep a good record of the sales they have coming in through their tills, and of the payments they have going out – to suppliers and to employees – and outsource the maintenance of the records to an accountant. The very basic information they have provided can then be transferred into something more meaningful that can be used as a basis for filing applications for VAT, PAYE etc, and also help them with their projections going forward in terms of their future cash flow and their future finance requirements.

Above all, businesses should seek to get a firm plan in place as early as possible. Typically, a plan will look 12 months to three years ahead, and will specify what the business is all about, what the concept is, the market and competitor activity in the area, and what the founder is bringing into the business – and will also look at the financial aspect of the operation in terms of where future cash might be required, where the profits will actually be made, and how the business can be expanded in the future. You should be able to identify when you will be able to afford to add an employee or bring in a sales director to take away some of the burden on you. An accountant can assist you with this.

Another key area is the type of finance required – looking at initial and future finance requirements. Accountants can advise on finance from traditional providers such as loans or overdrafts; look at, for example, grants that are available; or investigate alternative structures and investors; and can ensure a suitable mix for each business.

When financing, it is important to also look at tax effects and an accountant can assist here as well. For example, in addition to looking at the tax impacts there may also be grants and tax credits that can be claimed – R&D, for instance – and all these items have to be accounted for correctly. But the accountant can also add value by using his or her expertise to maximise access to the grants and credits in the first place.

One thing that people commonly get wrong is that they will set up and start trading immediately without ensuring that they have the right business structure. There are various different options – sole trader, partnership, limited company, limited liability partnership, to name a few – and it is crucial to get that structure right not only for tax purposes but also in terms of protection. For example, a limited company will provide you with limited liability, so if there is a possibility of a claim, you can protect your own assets – such as your house…


When the company’s structure has been identified, you then need to look at certain registrations: do you need to register for VAT? Will you need to register for PAYE? Do you need to inform Companies House of any changes? You will have to inform HMRC that you have a new business. The actual registration process – from working out which registrations are necessary and why through to the registrations themselves – is again something which can be made much simpler (and safer – you don’t want to inadvertently break the law) by using an accountant.

So those are some of the initial thoughts on helping get the business started. In terms of how to go about retaining the right accountant: the first priority is always to look for a properly qualified accountant, and that means one backed by a series of examinations and who is required to continue and develop their knowledge and professional education. This will ensure that the accountant is up-to-date, and that they are insured: qualified practicing accountants are required to have insurance. Qualifications should be from one of the chartered bodies like ACCA.

It goes without saying that the accountant will look at or concentrate on some of the accounting itself, and make sure that you are not taking on activities beyond your requirements and capability – because, really, again it’s all about freeing up the business owner’s time to focus on the business.

If, having embarked on a relationship with an accountant, you have a disagreement, of course both parties are free to terminate the engagement and call time on the professional relationship. This should be fairly easy to do; the accountant will advise the client which aspects of his or her accounts need to be attended to by another professional, and all the information will be handed over in a suitable form. The process should be as easy as possible for the business.

Of course, confidentiality exists at all times and continues to do so even after the engagement is over. Client confidentiality is one of the fundamental ethical requirements – in fact it is a prerequisite for the accountancy industry – and if an accountant breaks that confidentiality, he or she will be dealt with very severely by the relevant professional body. During times of financial uncertainty there tends to be an upsurge in activity in terms of new small businesses being formed. But at such times there is also a lot of pressure, and new businesses often don’t spend the little bit of extra time making sure their plans actually add up. So I urge people to seek advice and support as soon as possible.

Accountants are able to get all the necessary information together to make sure your business is viable and can help you work out plans that will continue to be viable in the future – so use that expert advice, make sure your plans stack up, go out and develop your business and earn your millions. Because that’s essentially why all entrepreneurs start out: they have a superb idea to make an excellent business, which will earn them a fortune so they can look after themselves, their family and their business in future.

Choosing your accountant

Choosing an accountant is like embarking upon any other business relationship: you need to get stuck in and talk to someone to see whether you will both get along – to see if your business and their business actually fit together. Find out things like, how many similar-sized businesses to yours does the accountant serve? How does he or she deal with similar businesses to your own? Do they concur with your plans for the future? What accounting services do they offer? Do they offer a payroll bureau service, if you wish to outsource that element of the business? What do they offer in the field of VAT? What information do you need to help you run your business?

You need to have those conversations – and also a general chat about your business and its aims, and some of the requirements it has – and if you don’t know what those requirements are, of course, the accountant should be able to pick up on them.

Try to find out about the accountant’s network of connections. One of the great advantages of using an accountant is that they will almost certainly have a broad contact base which you can exploit if you need specialist advice in other areas – for example, they may have excellent contacts within the IT arena, or if you are building a website, they may be able to recommend a few people they have found to be good, viable providers.

This article was first published in Your Business with James Caan in January 2012.

  Image: Shutterstock

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