The number one advisers to SMEs are accountants. They are essential to the running of small and medium-sized businesses.
But if accountants are so essential, how much should an SME pay for their services?
There is an important distinction to make here:
Accountancy can be costly, if you choose to do it yourself.
According to the Federation of Small Businesses (FSB), SMEs in the UK spend the equivalent of three working weeks each year sorting out their tax reporting.
Filing their returns adds up in working hours, costing them around £5,000 a year on tax compliance.
That’s one expense of accountancy, but there are others.
As businesses develop and grow, often their accounting becomes more complex, and the tax system more confusing.
Many business owners find issues such as tax exemptions confusing, and other aspects of tax, like VAT, corporation tax and PAYE, extremely time-consuming.
The time these SMEs spend on tax is the time they’re not spending on their business. Lost time can be costly, when you add it up.
Plus, there is the risk of making errors in accounts and tax returns, or submitting them late and incurring penalties.
Accountancy is a dedicated, specialist skill, and while many business owners have plenty of drive, ambition and strategic know-how, they may not have the insight or experience to get the best out of their accounting.
Using a specialist small business accountancy can help SMEs get on top of their money and free up their resources to focus on their core business concerns.
This is not just about doing tax returns and annual accounts though. What an accountant can offer is valuable business support and advice, combined with experience, knowledge and insight.
Not only do you get someone who will take the burden of financial paperwork off your shoulders, but they’ll also be able to help your finances work that much more smoothly.
Another significant benefit from hiring a professional accountant is the use of cloud-based accountancy software.
This maximises the efficiency of your financial management, while keeping your records up to date, accessible and very secure.
It’s also highly scalable and adaptable, ensuring that your accountancy support grows and develops alongside your business.
Outsourcing is the successful business owner’s hidden weapon. It’s about knowing when to bring in the right kind of trusted, outside help to make the running of your business as efficient and effective as possible.
And the cost of all this?
A good SME accountant knows that one size doesn’t fit all. It’s about ensuring that what you get fits your immediate needs, but can also help support your future plans.
Talk to Venn Accounts about our different packages for SMEs. From traditional accounting services like annual accounts and corporation tax to more consultancy-based services such as management accounting or helping businesses claim R&D tax credits.
We’ll be very clear about what we can do for you, and how we will support your particular business requirements.
When starting your own business, you should be looking to get your financials in place to provide you with the firm foundation you need to launch your startup. Using the services of a professional accountant can put you in the best position for subsequent growth and development.
Despite the economic aftershock of lockdown, and the onset of recession, there are still plenty of business opportunities for ambitious, dynamic startups. Certain sectors will have to adapt, but in so doing, they will also need new forms of technology to adjust to demand.
Consequently, for many tech-based startups, the pace of business development is still quite rapid, and the competition fierce.
But where startups do experience accelerated growth, they may find they haven’t had the time to address certain business fundamentals, such as accounting.
An important aspect of business strategy is knowing when to outsource certain essentials, to make sure you don’t lose control of the things that help power your startup.
Having the dedicated support of a professional accountant offers several crucial benefits, including:
You might consider your core business to fall outside the accounting remit, but ensuring robust accounting and bookkeeping are core requirements if you want to keep your startup business on track.
A professional accounting service can help you set up the essential financial systems your business needs running on its behalf.
An accountant will be able to spot issues in advance, such as obstacles to cash-flow, and act on them before they have an impact on your balance sheet.
Tax compliance is another vital aspect of running your own business. Compliance and regulatory issues can be complex, and an accountant will advise you on these, as well as ensuring you claim back all that you’re entitled to.
If your startup is looking to secure funding or a loan, an accountant can conduct an audit of different aspects of your business, such as your suppliers and expenses, to get you financially fit for investment.
Finally, the benefits of having your own accountant aren’t limited to accounting issues. Accountants offer a broad resource of business insight and a depth of knowledge which you can tap into.
Your accountant can also support you as a strategic business adviser.
There’s nothing stopping you from doing your own accounts. It is not a legal requirement for businesses to use the services of a professional accountant.
However, an accountant is a ready resource who can add value to your business.
These are all essential administrative tasks which growing businesses encounter to a greater or lesser degree.
Most startups often start small, maybe just a couple of people in a room, but as they expand, their administrative requirements expand with them.
The crucial thing is to recognise when these requirements mean you could benefit from outsourcing certain specialist areas, such as your accounting.
Remember, too, that you can claim your accountant’s services as a business expense to offset your taxes.
Using any professional service comes with a cost, and this applies to a chartered accountant as it would another type of expert.
But having an accountant you can turn to as a resource is also extremely cost-effective.
They are someone who you can put in a position of trust, because they gain a detailed understanding of your business, helping to prepare it for growth, while working to minimise your tax burden.
Trust really is a high-value commodity when you’re a startup, and it can be the thing that makes a difference to whether you succeed or not.
When you’re choosing an accountant you want to find someone who understands your type of startup, as well as someone who will also be able to meet your specific business needs.
If, for example, you’re a tech startup, you should be looking for the kind of professional accounting support that has experience in this sector.
Your accountant should also be prepared to provide a person-to-person level of interaction, so you always know who you’re dealing with.
This helps build the essential trust you need to work with an outsourced accountancy service.
Points you should note include:
Making the most of having an accountant to support your business means building and maintaining a good working relationship with them.
This means making regular contact, and keeping your finances well-organised. Helping your accountant enables them to help you.
Startups and other SMEs can require different levels of accounting support, but it’s always worth reviewing the service you get regularly. Maximise what your accountant can do for you and take advantages of the services and insight that will benefit your business.
We specialise in a range of specialist, cloud-based accounting services for startups throughout the UK. Our team of senior chartered accountants provide dedicated and personalised support to our full range of small business clients. Give us a call on 020 8088 2590, email email@example.com or fill in our contact form, and we’ll be in touch as soon as possible.