Small business superheroes: Why an accountant is your secret weapon

The superheroes that dazzle our screens possess awesome powers to fight off their foes. They use their intellect, skills, and strengths to avert disasters and rectify many of the wrongs in the world.

In that last respect, superheroes resemble small business accountants, who may not hold superhuman powers (as much as they'd like to) but rely on their expertise to prevent catastrophes, decipher numbers, clean up messes and ease the minds of their distressed clients.

The changing role of the contemporary accountant

When you think of what an accountant can provide, it’s likely that tax filings and bookkeeping immediately come to mind. However, the role of the accountant has evolved considerably over time. In today’s highly competitive environment where small businesses jostle for the attention of customers, accountants play a vital role in the overall commercial wellbeing of a company.

A relationship with an accountant built on trust is important if you want to be confident in the quality, clarity, timeliness and understanding of the financial reporting provided.

Modern accounting services

The long-term impacts of economic downturn and turbulent market conditions are still unknown. Most professionals, however, unanimously agree that the global economy will be rocky for a while to come.

Social distancing and government health guidelines have tremendously affected spending habits. This shift happened in a very short space of time. However, on or offline, accountants are the professionals best placed to consider the financial impacts on your business.

So, all things considered, what exactly might you need a superhero accountant for?

To support the writing of business plans

As a business owner, you might have limited experience in writing a business plan and don’t know what is expected. Support is really important at this crucial stage. An accountant will be able to add financial projections and other reports to the plan. This will help create a plan that’s realistic, professional and more likely to succeed.

To manage cash flow

According to research done by U.S. Bank and cited on the SCORE/Counselors to America’s Small Business, roughly 82% of businesses fail because of cash flow issues.

The stress of not knowing how much tax is owed or which supplier hasn’t been paid pushes many entrepreneurs back into employment. By analysing cash flow, inventory, collection and payment, accountants create plans which identify areas for reduced spending. Their valuable advice and insight, which is specifically tailored to your business, could minimise tax liabilities and save you money in the long run.

To provide expert advice and perspective on managerial accounting

Accountants bring a third-party perspective to spending practices and offer an informed second opinion on expenditures that could be overly taxing to your business’s bottom line. By accelerating receivables and reconciling balances, you also get to tap into funds not previously accessible. Accountants can prepare a set of projections that look at how the business has been performing and help you make informed strategic decisions. These can include budget forecasts, profit and loss statements, actual versus budgeted performance and more.

To keep the company’s records updated

You regularly make big decisions about product lines, pricing, inventory, services and much more as a small business owner. But without accurate, updated financial records, the financial impact of any of these decisions is just a guess. On that note, if you get to the point of bringing in investors or need a loan, accurate and up to date books are a must for that too – in this light, a dedicated accountant is an indispensable asset.

To support a loan application

Most banks will ask for an accountant’s certificate for lending and this requires a history with the accountant. The banks trust the certification of the loan application by the accountant who will have reviewed the information to make sure it is true and accurate even if the information has not been filed with the tax department yet.

To consult on salary, dividend and benefit planning

Speaking to an accountant about tax planning will prevent you from overspending or overpaying. Tax-efficient salary and dividend plans can also increase overall cost-effectiveness and help reduce stress levels.

To be your personal part-time financial Director

Every business needs a financial director, However, as a small business, their high costs can lead to them being largely out of reach. An accountant can offer part-time or flexible financial directing to your company.

To assist on tax returns

Year-end financial statements and tax deadlines can be sorted out by your accountant. They can help you with your tax matters by assisting with preparing your annual financial accounts and taxation return whether you are a sole trader, in a partnership or a limited company. They can also give tax advice on the best way to structure your income in the most tax efficient way.

To run your payroll service

Ensuring your employees are paid on time is vitally important but can be highly time-consuming and complex. Accountants can help with preparing payroll on a weekly, fortnightly or monthly basis – depending on your requirements. They can also assist with the auto-enrolment pension contributions that are a compulsory requirement if you are an employer.

To advise on secretarial services for statutory compliance

When you have your own business, you have certain statutory filing obligations. An accountant can perform the role of the company secretary to ensure you are up to date with all your statutory filing obligations.

To provide insight on due diligence, shareholder agreements and dispute resolutions

When buying, or investing in a business, it is tempting to get caught up in the excitement and adrenaline of doing the deal. Often referred to as "deal fever ", this feeling of elation can lead to mistakes, especially if you haven’t done your homework. Carrying out the background work on the company and learning as much as you can about it is called “due diligence”. It is an essential part of completing a successful transaction.

Shareholder agreements are essential when there are multiple shareholders but these are often overlooked when spirits are high. A good shareholders’ agreement could save you time and money further down the line especially when it comes to resolving disputes.

The benefits of a small business accountant

If you’ve built a small business from the ground up, you probably know your industry, customers, and products or services like the back of your hand. When it comes to the ins and outs of taxes, accounting and finance, however, it never hurts to have an experienced crusader to turn to for guidance.

This includes help when there is poor cash flow management or a lack of a developed business plan. There are so many ways financial know-how can benefit your small business. Even if you don’t have an immediate need, consider opening a line of communication with a hero who you can call on in times of need. It's a smart choice to make.

We offer accounting services and financial management to small businesses. Call our accountants on +44 (0) 20 7759 7553 or contact us via email for further assistance.