No-one quite prepares any business owner prior to the launching of their company for the baptism of fire you face in the initial fight for revenues, in keeping those early customers happy, and in juggling all of your new-found responsibilities. It’s a steep learning curve.
But this learning curve turns you from being an expert in your chosen field to being an expert in running a business in your chosen field. The importance of moving from the first step to the second step cannot be overstated.
One of the more unwelcome bonuses of opening a business for many company owners is the responsibility to keep accurate financial records. Financial recordkeeping is not only required so that you can submit accurate tax returns when they’re due – financial recordkeeping also provides you with the insights you need on how well your business is doing and with the information you need to make better decisions.
It’s almost always better for a business owner to outsource their bookkeeping and accounting rather than manage the responsibility themselves. Of course, we have a vested interest in promoting that belief so we wanted to share with you the five most significant ways that an accounting firm adds value to your business.
In this article, we’ll cover how An Accounting Gem:
- frees up more of your time,
- normally more than covers their cost by making sure every allowable expense is claimed,
- helps you see the real meaning in the numbers,
- can open doors when it’s time to expand, and
- has helped other clients through business highs and lows and how they help you do the same.
An Accounting Gem frees up more of your time
For all our clients, we strongly encourage the use of online bookkeeping platforms – in our mind, they are one of the most useful business tools to have been created since widespread adoption of the Internet. If you can, spend 5-10 minutes a day on which platform you are using issuing invoices you’re issuing to your customers, inputting invoices issued to you, reconciling with your bank account, and keeping your records as a whole in good order.
While online bookkeeping platforms are easy to use, we appreciate that many of our clients would prefer someone to do their bookkeeping for them. If that’s you, please let us know and we can arrange a personal, part-time bookkeeper for you.
Calculating VAT, PAYE, corporation tax, and your own personal taxation is time-consuming and complicated. An Accounting Gem produces account for Companies House and prepares tax returns to HMRC on your behalf when you’re a client of ours.
By outsourcing your bookkeeping and/or accounting to An Accounting Gem, you will save yourself a significant amount of time and negative stress. This is time you should be using to find new customers, build your company infrastructure, improve your operating processes, recruit the new members of staff you need, and more.
Running a business always involves stress – negative stress is unproductive, it doesn’t make you money, and it doesn’t make yours a better business. If you’re going to work with stress, it’s better that stress is positive – use the emotion instead to make money and to make your company more efficient and smoother running.
But accountants cost money – money you could keep in the business and perhaps even pay yourself with. But that’s not the full picture.
An Accounting Gem makes sure that every allowable expense is claimed
An accountant makes sure that, on your VAT, PAYE, corporation tax, and your own personal tax, that every single allowable expense is claimed for.
When you switch to working with An Accounting Gem instead of doing your own financial recordkeeping, you will likely be genuinely surprised at the level of reductions that they will discover and claim for in your VAT, corporation tax, and personal tax liabilities.
Your accountant forensically examines your financial records not just at the end of the year but when your financial year is in progress too. Each claimable expenses will be marked as such and each claimable expense means that you and/or your company pay less tax.
Even going through the smallest invoices you’ve received from your suppliers with a fine toothcomb can save £100s a year on VAT. We make sure that your personal income is split into the most efficient mix of salary and dividends possible to bring down the amount of tax you pay.
Once a business passes £100,000 a year turnover, company owners who keep their own financial records and manage their own tax affairs tend to forget to claim (or don’t realise they can claim) against certain expenses.
For most accountants, including An Accounting Gem, our aim is to make sure that the fees you spend with us on a monthly basis are lower than the amount of money we save you in tax by forensically analysing your records and making sure that we claim for everything.
An Accounting Gem is there to help you make sense of the numbers
With your financial recordkeeping very well managed and the amount you’re paying in tax reduced, what other benefits does an accountant offer which adds value to your business?
It’s often difficult to spot trends in a business. Your turnover may be going up but are you managing to maintain your level of profitability? If not, is that because your cost per sale is going up (the amount you spend on sales and marketing to find a new customer) or because your unit cost is going up (the amount you pay to fulfil an order).
Your accountant can match up what occasionally may appear to be unrelated sets of statistics and form a story from them. They’re able to produce monthly or quarterly management accounts identifying areas in which business performance has improved and areas in which business performance has deteriorated.
An Accounting Gem is a valuable ally when it’s time to grow
This increased knowledge of your own business’s performance, knowledge which your accountant also has, is valuable when you are seeking advice and support on growing your company.
If you intend to grow your company using careful cash flow management, your accountant will help you plan your expansion in stages, setting targets for each stage which, when achieved, can unlock the next stage of growth.
Alternatively, if you want to grow using external funding, either via an expansion loan or by attracting investors, your accountant will help you prepare the financial and operational forecasts for each stage of growth so that a lender or investor gains the confidence they need to back your proposal.
An Accounting Gem helps you take advantage of opportunities and threats
No matter at what stage of development, companies are sometimes subject to major swings in revenue. Sometimes this is caused by a temporary change in the market, the arrival of a new competitor, a key member of staff leaving, and more.
If turnover has substantially increased in recent months, this opportunity may be disguising a number of threats – threats often caused by a business owner chasing revenue but not controlling their costs as carefully as usual. Spikes in turnover may lead to over-purchasing of stock or the hiring of new members of staff who may not actually be needed. If turnover returns to normal levels, a lot of cash that would otherwise have been free is tied up in excess stock and is being drained faster because of increased fixed costs.
If turnover has substantially decreased, the threat may actually present a number of opportunities. Together with your accountant, you can analyse in detail each cost to justify its continuation. If you can’t see the added value in that cost, it can be (subject to any contracts you’ve signed) discarded. You can use the reduction in turnover to rapidly streamline all aspects of your business so that, when turnover does return to normal levels, your profit levels on that turnover are higher than before the downturn.
Services built around your commercial needs with An Accounting Gem
You may wish to choose an in-house bookkeeper and or accountant to establish and maintain your company’s financial recordkeeping systems. Your annual investment in wages for these two members of staff will be significant however and do you really have enough work to keep them both busy for 40 hours a week?
At An Accounting Gem, we provide all of the services and support listed above (and more) for a fixed monthly fee.
Your An Accounting Gem partner is here to help you at all stages of the business cycle from start-up to expansion to exit. Get in touch with us on 01473 744 700 or email us on firstname.lastname@example.org.