Managing your business finances is a critical part of success. Four in 10 small businesses in the UK don’t make it past the five-year mark and there are many reasons why this is. One is financial management and a stuttering cashflow.
Keeping overheads and costs down whilst maximising every penny that comes in is essential and with the help of a financial professional such as an accountant, a small business could thrive.
But professional help comes at a cost. And with a small business watching every penny, can it really afford to pay an accountant to ‘do the books’?
Accountants can be sole traders themselves or a large, national accountancy chain, the choice of who or how your accountant looks depends on your own personal preference.
Accountants are on the side of the business. They want your business to survive and thrive because that way, you remain a client of theirs.
Whilst an accountant is useful for any business, no matter its size, reducing the cost of accountancy services is something a small business would look to do. Just how can a small business benefit from the professional services of an accountant but not be landed with a huge bill?
Many accountants will have specific packages for small businesses in which they charge a set fee for the work carried out. Whilst you can opt to pay in a lump sum, you may also find your accountant willing to allow monthly payments either through the year or for a set period of months.
Within this package, they will complete certain financial services such as creating your business’s tax return, calculating tax liability, financial reports and so on. If your business needs something outside of this package, they will quote for the work separately.
To minimise small business accountancy costs, avoid paying by the hour unless the accountant quotes for a set number of hours. An hourly rate service can yield a rather large bill at the end of it.
The less your accountant has to do in terms of getting paperwork in order, the more time they can spend on the important stuff – that is, getting a clearer financial picture of your accounts and the business’s financial health.
What this means is for your small business to have a good grip on basic bookkeeping. Some small businesses, however, do hand over the financial responsibility of their company to an accountant but this is expensive. For your small business, keeping a tight hold of the day-to-day financial organisation of your business will reduce the burden on your accountant.
At one time, businesses kept paper copies of every receipt and invoice with accountancy firms often hidden under a mountain of receipts from their clients!
The digital age is upon us and has reached the world of accountancy and tax too. Modern, forward-thinking accountants will suggest that their clients use an online software accounting program that allows every financial aspect of their business to be organised.
Remote accounting is when physical meetings don’t have to take place, with your accountant having access to your online bookkeeping software. This also allows you to be more organised and with this program generating monthly reports etc., you are relying less on the service of an accountant.
The key, however, to lower accountancy costs is efficiency. The quicker you are able to supply information to your accountant, the more organised your financial procedures are, the more up-to-date your financial records, the less time your accountant will need to spend on putting your financial business in order.
And that is the crux of the argument in saving money on accountancy fees – the MORE your small business does and the LESS time your accountant spends on putting your yearend tax affairs in order or creating financial reports, the LESS you will pay in accountancy fees.
It is not uncommon for a small business to be completely self-reliant when it comes to bookkeeping and accounting.
And it is possible because there is no rulebook that says a small business must involve an accountant. Online accountancy courses could give you all the skills you need.