What Does an Accountant Do For a Small Business?

Small business owners are great at having a vision and essentially doing what they do best, whether it’s a family business, a restaurant or even a medical practice. However, when it comes to running a business, business owners usually need help in this domain, whether it’s administrative tasks or creating a business plan and paying the right amount of tax thanks to an accountant.

Let’s face it, running a business is time consuming, so outsourcing your business finances to a professional accountant might make the difference between being in the red and way over your head versus being in the black and financially sound.

An experienced accountant will do more than save you time; they can also help you comply with regulations, save you money, and help you plan for the future.

Since accountants offer a range of accounting and tax services that can positively affect your business, this post will dive into what the role of small business accountant is.

Build your business

Since your business is as unique as you and every situation you are faced with will be different, having a solid foundation in place is crucial. This is where an accountant comes in to assist you with business planning.

An accountant will help you understand the financial challenges you’re likely to face and will help you plan ahead to achieve your business goals.

They can write your business plan, which will advise you on your business structure (e.g. limited company, sole trader, partnership), hone in on your target market, and help you develop your business model — this includes identifying revenue sources and how your business will operate.

On top of that, a business plan with a Chartered Accountant’s approval attached to it will be appealing to investors, meaning you can secure a business loan or funding more easily.

Pay and even save on your taxes

Owning a business and paying taxes can be complicated. You don’t want to end up in hot water with HMRC by making an error related to Value Added Tax (VAT).

While accounting software can make things easier so that you can easily submit VAT returns on a quarterly basis to HMRC, mistakes can still happen. For instance, you might have poorly maintained financial records and omit sales from your VAT returns, or make a late payment.

Penalties can range from a 5%-15% penalty for not properly registering your business for VAT on time to £400 if you submit a return by paper instead of digitally.

With the help of a Chartered Accountant, tax filing doesn’t have to be overwhelming. They can confidently calculate your business expenses and allowances to ensure that you remain compliant with financial regulations by paying the right amount of taxes on time.

An accountant can also help with tax savings by lowering your tax exposure, help you handle old tax debts, and rectify poor record keeping with expert bookkeeping.

Set up your business accounting software

Having an accounting software integration that’s HMRC compliant to send tax returns is only one of the reasons why it’s important to set up cloud accounting software. The best software will help you manage business income and expenses, send invoices and generate financial reports about your business.

Since accounting software is connected through your business bank account, you get updated information in real time so you can reconcile financial statements and eliminate the need to manually input this information. Other features include online invoicing, automatic payments, and friendly reminders for unpaid invoices.

Business accounting software is no substitute for an accountant, of course, for their training and expertise will find savings no software can. However, accounting software will save you and your accountant time. They can access your information instantaneously and see where your business stands.

Fix your cash flow

We’ve talked about cash flow a lot, but that’s for a good reason: bad cash flow management is one of the top reasons why businesses fail. Cash flow is important all the time but especially during challenging times with skyrocketing inflation and a looming recession.

Cash flow is crucial because it allows you to pay suppliers and employees on time, seize new opportunities for business growth, and gives you more negotiating power since you can pay upfront.

The best small business cash flow management strategy is to hire an accountant. They can help you analyse your current cash flow, create cash flow forecasts so you know what to expect during slower months and get a clear picture of the effect of planned business changes, and identify ways to get paid faster.

They’ll also set you up with the best cash flow apps and organise cash reserves to ensure you always have money in your business bank account.

Act as a business advisor

An accountant will not only help you navigate the startup phase of your business and the ongoing financial management, but they will also help you with future growth. This can be especially beneficial when the growth comes about suddenly and now you have cash flow difficulties, have to hire staff, and get a new office space.

Expert accountants will help you navigate this unexpected influx. For example, they can offer professional advice on the right type of staff to hire from the cost of hiring, training, and paying an employee, and ensuring you can keep this person in your roster, to helping you with payroll.

While this sudden growth can be jarring, an accountant can help you manage things quickly and efficiently, so you can easily scale your business.

Accountants handle more than taxes

When it comes to owning a business, it’s a rollercoaster ride. Better to have an accountant that can help you ride out the highs and lows. While they do help you with taxes, accountants also assist with building your business, set you up with the right accounting software, manage your cash flow, and turn your business ideas into reality.

Take your business to the next level with an accountant

Before a recession or worldwide crisis hits, get the help you need now. Whether it’s to manage your business’s finances or grow it, start by requesting a consultation right here from one of our London Accountants. Having the right support in place will make all the difference for 2023 and beyond.

Source: BrooksCity Accountants

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