According to the UK Government, SMEs account for 99.9% of the business population. SMEs account for three-fifths of UK employment, and around half of the turnover of the private sector.
The Economic and Research Social Council (ESRC), states that SMEs are important in boosting productivity, and that they contribute 47% of revenue to the UK economy.
For SMEs to continue to contribute in this way, they need the right kind of support and expertise, and this includes the accountancy services they use.
But does it matter what type of accountancy services these are?
What small and medium-sized businesses want and need from their accountancy services will not always be the same as what larger enterprises need.
Therefore, it makes sense, if you’re an SME, to find an accountancy firm that will focus on your issues, help you solve your problems, and support your business growth.
Just as small businesses themselves are different from larger businesses, so to are small business accountancy services.
Small business accountancy supports SMEs and serves their specific requirements.
What Do You Need from Your SME Accountant?
Obviously, you want your SME accountant to provide expertise and insight when it comes to looking after your finances, but a vital quality you should be looking for is trustworthiness.
As an SME, you should expect to work closely with your accountant, as a trusted guide and source of support.
An SME accountant should have an excellent level of experience and expertise, with the testimonials to back this up. It is important that they can establish their credibility with you from the start.
They should understand the kind of issues your size of enterprise faces, and show their commercial awareness of how your business model works, and the market you’re operating in.
Your SME accountant should be enthusiastic and proactive, showing initiative when it comes to looking after your business interests.
Alongside demonstrating initiative, they should also be innovative, helping your business become fit for the future, employing modern tools such as the latest accountancy software.
It’s important that your SME accountant is a good communicator. You want to be able to reach them easily, and to have direct contact with experts and decision-makers.
In an age of remote communication, it might be tempting to assume that personality no longer matters, but with your SME accountant this really isn’t the case. Having a good rapport with your accountant will help create a solid bond that forms the basis for an ongoing professional relationship built on trust.
You can build this trust remotely too. What matters is the quality of communication you have with your accountant, and that they are available when you need them.
Above all, your accountant should be a professional, and embody values of integrity, honesty, reliability and responsiveness within this professionalism.
Is it Better to Go with a Large Accounting Firm Rather than a Small One?
The question of size shouldn’t really figure. What matters most is the focus that your SME accountant brings to your business, and how this works as part of their professional relationship with you.
What you don’t want is to be dealing with a faceless, corporate body, where you are unable to talk directly to someone with the established experience your business requires.
Small business accounting is different from large business accounting. Whichever accountancy firm you choose, it is crucial that they make this distinction when working with you.
For most SMEs, the fundamentals are essential and come first. These include bookkeeping, annual accounts, tax and VAT.
Cash-flow and short-term growth are vital concerns, but so is how to ensure future expansion and have the right structures and systems in place to support this.
An SME accountant, therefore, has to be a good listener and interpreter, understanding how to maintain the right balance between immediate needs and longer-term strategies.
This isn’t a size issue, it’s about empathy.
The volume of accounting activity at a smaller enterprise is likely to be less than at a larger one, but for SMEs, the details matter. Cash-flow is the lifeblood of the business and successful, smooth transactions are vital.
At the same time, complexity can creep in, as volumes increase and invoices multiply.
Growth can be both exciting and challenging, with potentially more complex accounting situations to manage.
The SME accountant you choose needs to understand the issues you face at present, but also to help prepare you for dealing with what lies ahead.
- Would a smaller accountancy firm have the capability to manage your growth?
- Would a larger firm be able to dedicate the time and resources to you as you grow?
If a large firm can demonstrate that it empathises with your issues and needs, and that it understands the world you’re operating in, then it is as credible as a smaller firm for meeting your accountancy needs.
You should base your choice of SME accountant on a combination of credentials and communication. Is your accountant going to be attuned, focused and dedicated to the type of business you’re running?
Local or Not Local?
We like the idea of a local business serving our needs. But accountancy isn’t a cottage industry. It provides the essential infrastructure and support for managing your accounts.
It can help you consolidate your success, and prepare you for future growth.
Location is much less important than overall approach. If your SME accountant can clearly dedicate the time, energy and focus to your enterprise, then whether they’re local or not shouldn’t come into it.
In other words, choose your SME accountant based on what support they will offer you, how accessible they are to communicate with, and what understanding they can demonstrate about your business.
These things are far more important than their postal address.
It’s true that a local accountant offers convenience, to a degree, but this is not the most important criteria.
Technology is an enabler. Modern digital communications make building a close relationship with your accountant much easier, regardless of their location.
Your first priority should be to find the accountant that is the best fit for your business. A good accountant specialising in serving and supporting SMEs should offer a level of service that feels local, even if it isn’t.
Should Software be a Factor in Choosing an SME Accountant?
Accounting software is a key pillar in the support SME accountancy offers businesses.
Cloud accounting gives flexibility and scalability to SMEs. Professional accountants are recognising the benefits of cloud-based accounting systems, and how they can pass these benefits on to their clients.
These dedicated software platforms are another factor in making the physical location of your accountant no longer essential for ensuring you get a dedicated service from them.
It’s not simply that cloud accounting is more convenient, however. It is also faster, and highly flexible.
Cloud accounting benefits include:
- Rapid data processing using powerful online tools
- Automatic data flow from business bank accounts for instant clarity and full visibility
- Instant reviews of your information for expert analysis, advice and recommendations
- Daily, secure backups of your accounting information
- Encrypted and securely stored data, in several locations rather than on a single server
- Scalable and expandable software, with automatic updates.
Choosing a cloud-based SME accountancy service gives you access to leading-edge technological tools, designed to make your accountancy streamlined, straightforward and secure.
Your accountant isn’t only there to complete your accounts or tax returns. They can help your business evolve and move into its future phases. Dedicated accountancy software supports this.
Cloud accountancy software saves on time, accelerates efficiency, and provides the critical support your business needs: a 21st century business should have 21st century accounting.
How Much Can You Expect to Pay for Small Business Accountancy?
The critical question here is whether an accountant represents good value for money.
Cash-flow is often the single most important issues for SMEs. Whatever else changes in the business landscape, including new technologies, and even the roles of accountants themselves, cash-flow is still going to be a major concern for the great majority of small and medium-sized businesses.
Because of this, cutting costs can become a priority. But the risk for some SMEs is that in looking to cut their costs, they cut back on the very support that can help them better manage their finances.
Using the professional services of a dedicated, specialist small business accountancy practice is not simply another cost on the balance sheet. It is an investment.
It offers long-term value in streamlining financial processes and saving you money.
Accountants bring an expert perspective, shedding fresh light on situations and offering insights that can make the difference between success and failure.
That sort of value is hard to quantify.
In practical terms, typically accountants will offer a range of services, in the form of different packages.
You might, for example, choose something quite basic, where a professional will take care of your tax returns and your annual accounts.
But you could be getting a lot more value by widening the remit of your accountant and taking full advantage of the kind of strategic insight and business support they can offer.
What you spend on your accountancy services now could give you an excellent return on investment in the shape of a more profitable future for your business.
It’s important to clarify all this upfront. A good accountant will be totally transparent about charges and what you should expect to get for your money.
Is it Better to Have an In-house Accountant?
This comes back to a question of scale. An SME will have different accounting needs to a larger business.
An SME’s needs are as important to it, but they may be neither as complex or continual as a big business or corporation.
Large businesses will have their own in-house accountant, or entire accountancy departments. Smaller businesses are unlikely to either want or need this kind of in-house resource.
However, what a dedicated, outsourced accountancy service specialising in small business can offer, in very real terms, is the best of both worlds.
You have a ready resource at your disposal, making use of the latest accounting technology, with a clear understanding of your business model, your market, and the issues you face.
But, you have an agreed level of service, so you’re only paying for the accountancy services you need, when you need them.
And a good, customer-focused SME accountant will be able to tailor their services to fit your business. If the time comes when you want more support and input, they’ll be on hand to offer it to you.
Meanwhile, you have the peace of mind that the advanced cloud accounting software you rely on will make sure your accounts are running smoothly, leaving you to focus on your core areas of business.
Dedicated Small Business Accountancy Services
At Venn Accounts, we specialise in supporting startups (including those within the UK technology sector) and small businesses throughout the country. We do this by combining personalised services with cloud-based online accounting software, including Xero.
We get to know you and your business, working alongside you to help you grow and thrive. Venn Accounts can offer a variety of small business accountancy services which we can tailor to meet the needs of your business, including:
- Small business bookkeeping
- Small business VAT services
- Small business payroll management
- Annual accounts for small businesses
- Self-assessments for small businesses
- Corporation tax for small businesses
- Management accounting
- Claiming R&D tax relief
We can also provide coronavirus support for any small business that has been financially affected because of COVID-19.