But this does not mean they are qualified for the task. This is a huge responsibility for anyone and you shouldn't be relaxed when choosing who will handle your accounts and calculate tax.
Nobody would just hand over a pay packet to anyone who said they would pop up the bank and deposit it for them. Your business is worth a lot more. If taxes aren't done correctly, the business could get slugged with a bill large enough to sink the company. Moreover, you don't want to be on the list of people who were left broke when the shoddy accountant skipped with all the company money.
Protect yourself and your assets by using the best advisers and checking into the qualifications of an accountant beforehand.
There are Chartered Accountants (identified by letters designated ACA or FCA) or Chartered Certified Accountants (ACCA or FCCA).
To become a qualified accountant a person will:
What an accountant can do for business
Provide advice for start up
- Have undertaken and passed a rigorous programme of study, followed by exams, and then practical work experience before they are classified as qualified.
- Continue compulsory professional development to keep up to date and maintain their skills to the highest levels.
- Be bound by strong, enforceable rules in regard to ethics and professional conduct.
It's never too late to bring an accountant into the workings of your business. However, if you are speaking to an accountant as early as possible, even from the initial thought process, their guidance can make it much smoother. The costs involved will be more than counteracted by the time saved with sound advice. If you have no previous knowledge of limited companies, VAT, legal issues and the like, you really do need to get advice from an accountant.
Accounting and Bookkeeping
Immaculate record keeping is an essential factor in any business. It keeps a track record of the company's financial health. An accountant will suggest the best way to go about this for your business to keep its records in order. You may not need complicated, expensive computer systems or software. Perhaps a simple paper system will do.
The choices you have are; do your own bookkeeping, employ a bookkeeper, or get an accountant to do it for you. However the records are kept, the accountant will use them to prepare the VAT returns (when registered for VAT), your year-end accounts, and calculate the tax owed to HMRC. Qualified accountants give advice on how to minimize the tax the business pays and how to make the best use of allowable expenses. They also advise on the safest way to invest in new equipment, as well as trading or setting up with overseas subsidiaries.
Accountants also handle and disputes with HMRC over tax or VAT.
Companies with a turnover in excess of £5.6 million are required by law to have an annual audit. You can have this done even if turnover is lower because this independent review provides positive benefits. Audits for companies over the threshold must use a qualified accountant who is also a registered auditor.
Advice on the Running or Management of a Business
Sole traders who do not have a colleague to bounce ideas off find many benefits from getting an external independent review. An accountant can be valuable in assisting you with plans and translating ideas into action. Profit forecasts, break-even analysis, cash flow forecasts, and setting business monitoring systems in place are all areas of expertise for a qualified accountant.
If you business booms quickly it can put as much strain on the inner workings as lack of sales. What if your supply can't meet demand? You may need more financial requirements and cash flow to meet the increased demand. You may need additional workers, but if you employ enough for now and things die down, what then? These areas of prediction and sound decision-making are what a good accountant can give you.
If buying or selling part of the company is on the cards, an accountant will help with valuing the portion, and suggest the most profitable way to go about things like a merger with another business.
Advice on Raising Finance
Financing a business has an important effect on profitability. Whether new capital should be leased or purchased; whether cash should be raised by issuing more shares. Should you take out a loan or increase the overdraft? If there is any spare cash, do you invest it temporarily or long term? Every decision has an impact on your business and an accountant is fully trained in such matters.
Finding an accountant that's good for you
Online directories exist for both the Institute of Chartered Accountants (ACA's, FCA's) and the Association of Chartered Certified Accountants (ACCA's, FCCA's).
ICAEW Directory of Firms
ACCA Directories Online
(click on 'ACCA Services' drop down menu)
Chat with business associates about their accountants and any experiences they may have had, good or bad.
Accountant are providing you with a service, you are paying them top dollars in most cases, so make sure you feel comfortable in your choice. You should be confident in their skills and experience. They also need to be a good fit in advising you about company direction, so your philosophies and company integrity are kept the way you want it.
Make yourself a short list of your preferred choices after research in the various means mentioned. Phone and arrange a meeting. Many offer free half hour consultancies for introduction purposes. Decide if you are looking for a general overview or advice on a specific issue at this stage.
Always meet face to face with the person advising you, and have a clear understanding of how they charge and what they charge. Ask if you don't understand anything.