In the small business world, cash is king

The accountancy profession is changing with new technology such as artificial intelligence (AI) and regulation such as Making Tax Digital (MTD) having their impact.

These may transform the traditional accountancy role, but the fundamental needs of an SME in 2019 remain the same. In business, ‘cash is king’, where cash flow is the life-blood of commerce, particularly in start-ups and small enterprises.

Should you do your own accounts?

SME owners are constantly thinking of new ways to cut back on business costs and do as much in-house as possible to stretch out any available funds. And, if you have a concrete knowledge of business finance, practical experience to draw from and extra time on your hands, assuming the job of the accountant can save money.  On the other hand, if you aren’t proficient in managing books and hope to learn on the job, you need to reconsider. Managing your own bookkeeping system incorrectly, making errors and omitting important information can have serious consequences.

The benefits of hiring an accountant

Cost effective accountants can help streamline your financial processes, saving you money and adding untold value to your company. From filing accurate taxes to helping you make more informed decisions on how your records are organised, submitted and archived, it can be the difference between the success and failure of your business. Employing the help of a certified financial professional can help keep your business afloat. Expert accounting for SME’s can help businesses grow through adopting lucrative strategies for expansion.

An accountant will handle the analytical aspect of your finances, getting your financial systems in place, organising and arranging all of the accounting data you gather. They can then produce financial reports that can facilitate business owners to make better judgements and further increase the chance of profitability. Accountants assist in predicting future capital, scrutinise the financial health of the business, mitigate risks, pinpoint trends that can help grow revenue streams, assist with corporate strategy, provide advice on how to reduce costs and improve the top line. The list goes on.

Solving common problems

Accountants can also pinpoint and remedy problems that can affect numerous SMEs. For example, high revenue in conjunction with low profit is a common complaint for many small businesses, and an accountant will examine the figures to work out exactly why this is happening and find a solution. A business owner can also look to an accountant for small business tax-related advice. The financial professional will help maximize tax credits and deductions, keeping hold of more of the business income and ensuring the SME is receiving all the financial help and credits it is entitled to.

Most importantly, using an accountant ensures SMEs abide by all of the ever-changing tax regulations to keep the firm from facing any fines or penalties, and at tax time, you can be safe in the knowledge that everything is accounted for and compliant. An accountant will make sure a business stays up to date with the latest regulations for small business taxes and will provide expert advice on how to maximise benefits and minimise taxes, generating even further savings.

What to look for

In the UK and globally, anyone can technically call themselves an accountant, whether they have a professional qualification or not, so it is hugely important that you look for verified qualifications from recognised institutions when you hire. Failure to do so could cost you and your business hugely. Their practical training in accounting enables accountants to adopt a pragmatic and objective approach to solving issues, and this is a hugely valuable asset to management, particularly in SMEs. While there are multiple certified routes into accounting, the three main ones are the Associate Chartered Accountant (ACA), the Associate Chartered Certified Accountant (ACCA) and the Chartered Institute of Management Accountant (CIMA).

The ACA is the professional qualification from the Institute of Chartered Accountants in England & Wales (ICAEW), and is globally recognised as a premier business diploma, with a mark of quality and professionalism. ICAEW boasts 140,000 members and students in 160 countries. The ACA qualification gives a well-rounded knowledge of both sectors. The qualification is so highly regarded, that almost every FTSE company has an ACA qualified employee.

Alternatively, the ACCA has 586,000 members and students in 170 countries and is one of the largest and fastest-growing accounting qualification providers in the world. ACCA’s qualifications are developed with employers that teach international accounting standards, allowing employers all over the world to have the utmost confidence that any ACCA certified accountant understands the rules and laws of corporate finance in their country.

Finally, the Chartered Institute of Management Accountant (CIMA) is a UK-based professional body focused on accounting for business. They offer training and qualifications in management accountancy and related subjects to their 203,000 members and students in 173 countries. Outsourcing your finance function to experienced professionals with the right accounting expertise can help guarantee that your financial affairs are processed accurately and efficiently.

See where your money is going

If you employ an accountant, you will find you save your business money in the long-run, so don’t let the initial expense put you off.  Better record keeping is the easiest way to allow you to quickly see – on a monthly, weekly or daily basis – where your money is going. It will allow you to be more strategic about spending, and curtail any unnecessary outgoings. An accountant is trained to find savings with wholesalers, employees and operating expenses. An accountant can advise on business plans, with crucial insights that will help measure the feasibility of strategies from the offset, avoiding needless expenditure on those with little chance of success.

Lastly, securing funding can be a challenge. The role of an accountant doesn’t start and end at tax and expenses, they can also advise on lending matters, crucial at a time when many big banks err on the side of caution. The lending landscape has altered hugely since the 2007 crash and accountants can help SMEs evaluate traditional lending verses the newer, more innovative, funding solutions.

The move to digital

Accounting is rapidly changing, not least of all due to MTD, which aims to modernise the tax system and change the way companies engage with HMRC. The primary aim of MTD is to make tax administration more effective, efficient, and easier for taxpayers through the implementation of a fully digitalised tax system starting with VAT by 2020, while also reducing HMRC’s overheads for managing tax affairs. UK businesses will have to start transitioning to system where tax is filed online every quarter, and accountants are going to be key in making this a smooth transition.

From April this year, businesses with taxable turnover above the VAT threshold (currently £85,000), will have to keep digital records and use software to submit their VAT returns to HMRC. Change can be daunting, but MTD frees up time for business owners to spend scaling their businesses and increasing their returns. However, MTD will come as a shock to the 82 percent of businesses that do not currently use software, according to ICAEW research. This is where an accountant’s knowledge is invaluable. HMRC hopes to create a world-class tax system in Britain, and says MTD will be ‘secure, light-touch and far less burdensome than the tax returns of today’. For those firms eager and able to adjust, this increasingly tech-driven tax landscape will ensure businesses can be proactive, as opposed to reactive, and make decisions based on real time knowledge.

When you hire an accountant, it frees you up to focus on your professional strengths and capabilities, helping you to serve your clients better and implement plans for growth, while a pro handles the numbers.