How does accounting help a business?

How Does Accounting Help a Business?

For most owners of small to medium businesses, the thought of dealing with accounting is a daunting one. If the owner has a background in accounting themselves the importance of accounting in business will already be obvious and ironically they would probably be the first to enlist the services of a professional accountancy firm. While most people think of accountants as number crunchers you only approach when tax returns are due, the services they can actually offer are many and varied. From starting up a business right through to retirement, your accountant is your best friend, freeing up you and your staff to get on with the running of your business and providing much needed peace of mind.

Benefits of using an accountant

• Accurate bookkeeping

  Bookkeeping services are the first thing most people think of when accountancy is mentioned but the importance of accurate records cannot be overstated. Even with the latest accountancy software, someone competent still needs to enter data and manage it. As accidentally submitting inaccurate information to HMRC can lead to hefty fines and increased scrutiny in the future why take the chance on doing it yourself? Accurate bookkeeping also allows the owner and staff to see at a glance how the business is performing and isolate any issues with cashflow before they become major drains on resources. From April the first 2019 the Making Tax Digital HMRC Directive means all VAT registered businesses in the UK must keep accurate digital records and submit VAT returns via HMRC approved software. As this software is not provided by HMRC, the responsibility falls to the business owner to implement and maintain it. As a result, having a reliable accountancy firm to manage it for you makes good sense.

• Financial services

  As the main reason for enlisting the services of an accountancy firm is to manage finances properly, any advice and financial planning services they can offer are invaluable. An accountant can help to organise and manage any payroll issues such as ensuring independent contractors are registered as such and properly insured during work. They can review any debts the company has and reduce them in the future and assess the most appropriate loans if needed, or indeed if they are needed at all. Your accountant can work with you to create a streamlined business budget and create financial forecasts to ensure your business functions efficiently and more importantly profitably as it grows. By monitoring cashflow patterns, they can assess the best areas for growth within your business and highlight any areas underperforming and costing money. As it is now the duty of all employers to provide workplace pensions, pension planning will be necessary. Late payment for services provided is the bane of many business owners, your accountant can help structure the issuing of invoices to clients and subtly chase up any late payers to protect your profits.

• Reviews and reports

  Instead of wasting time on monthly management accounts meetings, leave it to your accountancy firm. They can then suggest how to adjust targets and budgets accordingly, saving you time that could be used more effectively elsewhere. For most small businesses these are an unnecessary distraction as an awareness of cashflow is all that is really needed and when the time arrives that they are relevant, your accountancy firm will inform you and manage the process for you. A mistake many businesses make is only performing a yearly review at the close of the business year, when any poor practice has already done its damage and, crucially, cost your business money. A competent accountant will review your business during the business year and highlight any inefficient practice that could harm your turnover, allowing you to resolve the problem and save your business money.

• Working options

  For a new owner starting up their first business or planning to work as a contractor, one of the main concerns is how you or your business will be classed for tax purposes. Will you work as an employee for an umbrella company, operate as a sole trader or form a limited company? As an employee of an umbrella company, you will be treated the same as any other employee, taxed through Pay As You Earn and not have to deal with the paperwork necessary for other options. However, you will as a result only take home between 66 and 76 percent of earnings and can only claim limited expenses. As a Sole Trader you will have to submit yearly tax assessments and taxed accordingly. You will be responsible for your own trading and if things go wrong your possessions could be at risk. If you form a limited company, the company itself is liable for trading and you should take home between 80 and 86 percent of earnings and be able to claim more expenses but as a director you will have additional responsibilities under the Companies Act 2006. A reputable accountant will be able to advise you on which option best suits your needs and future business plans and will be able to deal with any paperwork necessary.

• Advice and contacts

  A good accountancy firm will have employees with varied experience of many areas of business, experience that they can pass onto you. They will be able to guide you as your business grows, showing you the most efficient and cost-effective methods to improve your business and profit margin. As the purpose of any business is to make money, making the right moves first time is vital and this is why a good accountant is the best friend your company could have. Due to their experience, even if your accountant faces an issue they cannot resolve, their knowledge of the business world and the contacts they have built up over time could be invaluable to your business.

Contractor unlimited are Independent Certified Practising Accountants based in Warrington and have been specialists in contractor accounting since 2011. We also offer our services to smaller businesses and can deal with all aspects of accounting, bookkeeping and financial advice for your business and much more. We are professional business accountants who passionately believe in going the extra mile for all our clients and our wide range of business contacts ensure that whatever your business needs, we can meet them. Contact us today with any enquiries about the services we provide, we will be happy to hear from you.

Email : enquiries@contractorunlimited.co.uk

Telephone : 01925 393186