The Accountant – Bean Counter or Business Adviser?

The Accountant – Bean Counter or Business Adviser?

It has long been the common conception of accountants that they are merely number crunchers and form fillers. But is this really what they do? It could easily be argued that the external accountant of a business is the most valuable adviser to that business. The numbers in the Financial Statements can tell a lot about a business and its financial position.

Factors your accountant can advise on

Particularly in smaller owner managed businesses, the client focus of the accounts is on how much tax is there to pay at the end of the year and, more importantly, can this be reduced as much as possible.

Whether the business is making a profit or loss is usually obvious; however, is that profit analysed any further. Are profits being reinvested to build the business or drawn out immediately by the owners? Are drawings being made in excess of profits, therefore,
putting the business in a negative cash flow position?

Often in reality the Balance Sheet is the most important factor on a set of financial statements. This shows the true position of the company at a point in time. The Net Assets on a Balance Sheet should really reflect how much a business is worth; however,
this can often be misleading and require further explanation.

The structure of a business is fundamental to its future development and growth. This can be from a tax planning point of view but also depends on other factors. What are future plans of the business, attempt to grow, stay small, try to sell or keep it in the family
chain? The structure could also vary depending on the people involved, what competitors are doing and how the business is financed.

Where you are planning to sell your business, whether as a long term scheme, or if someone is interested in buying, an accountant can how best to maximise sale proceeds and reduce profits. Tax, as previously mentioned is usually the biggest issue amongst smaller businesses. But is it merely a case of getting business profits down? It may be that other reliefs are available such as Capital Allowances, Research and Development allowance. Should you put your vehicle in the business or take it out. What vehicles are best to introduce? Also should you be saving for tax? In the case of Sole Traders and partnerships it can be possible to know your tax liabilities for the next 18 months.

Are your own accounting and book keeping systems hindering the accounts progress? The accountant can pro actively advise on what records you produce each year and what recording system you use. If the accounting records are in order the accountant will have
more time available to give better advice. In some cases the fees could even be reduced! A good accountant will always give additional advice or business commentary as part of their service. This is how the client is kept happy and a good service should lead to client retention and verbal referrals.

Choosing an accountant

If you, as a business, are not getting this level of service then you should be considering,
‘why not?’

What should you look for when choosing or assessing your accountant? –

  • Do you really see your accountant? Do you drop the records in and a few weeks later receive a set of accounts, a tax return and a bill? If that is the case then consider arranging a meeting yourself and ask about the figures. A good relationship with your accountant is essential. The accountant should understand exactly how your business works.
  • Is your accountant qualified? It is a common misconception, particularly in smaller businesses, that if someone calls themselves an accountant they are one. In reality, anybody can call themselves an accountant. A qualified accountant will always have ‘Chartered’ in its title. This means that they are regulated and have to undertake Continuing Professional Development (CPD); therefore they are up date with all the latest accounting and tax knowledge.
  • How much does your accountant charge? Fees should be relevant to the service you receive. If you aren’t getting any commentary or business advice are you really getting what you have paid for? Try to arrange a fixed fee agreement upfront. Most firms will be happy to set up a monthly standing order to cover fees. Be honest with your accountant and tell him exactly what records you keep and what state they are in. It may be worth showing the accountant as this will help ensure the fee is correct.
  • What other services are available to help your business? Can the accountant relieve the burden of some tasks such as book keeping, VAT preparation and payroll?

Often the best time to obtain an accountant is when you are setting up in business; however, it is easy to change. If you feel you are not getting the correct levels of service it does no harm to go and see other accountants. Usually most firms will provide an initial consultation in which they will go through services they offer and how they can help your business. If you decide to change you will need to ensure your affairs with your current accountant are up to date and inform them. With qualified firms there are
professional clearance (like a code of professional conduct) procedures to follow.