One aspect of your business that you may be considering to do yourself instead of hiring someone else is accounting. This is an excellent cost-cutting measure if you have a background in accounting and handling of business finances. But if you lack the knowledge and experience to do so, maybe you should rethink that decision. Improper management of the accounting system can be potentially damaging to your business.
A competent chartered accountant can help you and your business through the various stages of business management. Interested business owners in London and other nearby areas in England should check out their local accountancy services providers.
Setting up shop
If you have just set up shop, here are some areas an accountant can help you with:
- Determining the best structure that fits your situation. Examples include sole proprietorship and partnership. It is advisable to work with both your lawyer and accountant on this one.
- Assisting you with opening a business bank account
- Providing a financial analysis of your business plan
- Walking you through the basics of tracking daily expenses in your business activities
- Helping you understand the importance of keeping business and personal expenses separate
Maintaining the accounting system
Your business has now started to gain traction. Congratulations! Now, you have got to maintain the accounting system to make sure that everything runs smoothly. Here are some things your accountant can continuously help you with:
- Overseeing the company’s payroll
- Closing out the books and preparing financial reports at the end of each year
- Advising you on estimated tax payments that you are going to pay for the year
- Explain the basics of financial statements so that you can understand how it works better
Managing the transition
You have already gained a steady base of regular customers and a stable net income, so you decide that you are ready to grow the business. Your accountant can help you manage the transition. Here are additional areas they can you with:
- Guiding you through an audit (if ever you are going to have one)
- Pinpointing areas for growth by sharing their insights into pricing, inventory management, and patterns of cash flow
- Helping you come up with a budget that will support your business goals
- Making financial forecasts to help you make informed decisions regarding business matters
Consulting an accountant about your break-even point
The break-even point means that you are not earning but not at a loss, either. The expenses and revenue are at the same rate. In other words, you are making just enough to pay for what you have spent.
Your accountant should be able to determine the business’ break-even point by analyzing a couple of metrics. Being aware of your business’ break-even point is vital to the determination of your pricing structure. Once it has been identified, you will have a clear idea of how many products or hours of service you need to sell to cover the expenses.
Matters you should regularly consult your accountant about
The accountant can assist you in discussing the financial implications of certain decisions such as whether to buy or rent an office space and to hire a full-time employee or get an independent contractor instead. The accountant can also guide you on actions that need to be taken immediately or in the future. Ideally, they should be able to discuss all this in a language that you will be able to understand—one that is not too convoluted with accounting jargon.
Getting an accountant on board can be beneficial to your business. This ensures that you will get expert advice on financial matters. It is important to develop a harmonious and collaborative relationship with your accountant so that they can effectively help you realize your vision for the business.