It is commonplace in this day and age for small businesses to think that they can conduct all of their business and keep track of their books without the help of an accountant. Financial constraints and tight budgets in a time of economic volatility also mean that they believe it will be better for their bottom line if they do not invest in an accountant’s services.
However, many small businesses fail simply because they find themselves in financial difficulties that could have been avoided or flagged up if they had the keen eye of a professional accountant roving over their books.
Employing accountants, even if a business outsources them part-time from an external company rather than employing one full-time, means that there is someone monitoring and keeping track of all financial circumstances; a vital asset in such an unpredictable economy.
“Having an external accountant is a crucial component within a well-run, well-maintained business,” says Laurence Collins, Managing Director of SME specialists Magic Accounts. “Small businesses who don’t hire an accountant run the risk of financial ruin, simply because they did not have the know-how to spot the danger in advance.”
The role of an accountant for small businesses does not end at helping with tax issues once a year and keeping an eye on the books for the rest of it. Talking to an accountant before even starting a business can prove invaluable; they can advise on whether a business should be a sole trade, partnership, limited company or limited liability partnership, as well as bringing to light any legal or tax issues that might stand in the way of the business’ success.
Having an external, independent accountant on board also means that directors, especially those who work alone or in very small numbers, are given an impartial view of their business. They can offer neutral and fair advice about the running of the business and the day-to-day management of finances.
A professional external accountant can also assist in the raising of finance and the growth of a company. Should new capital equipment be leased or purchased? Should you increase an overdraft, take out a loan or issue more share capital? These are all questions which can be answered properly by an accountant.
If a business suddenly encounters a period of unexpected and rapid growth, accountants can advise on meeting the increased demand of customers and ways in which they can raise additional finance.
Finally, when it comes to the sale or merging of a company, having a professional accountant on hand is essential. Many businesses choose simply to hire someone at the last minute specifically to help out in the valuation and the tax issues when selling a business, but this one-off accountant isn’t acquainted with the inner workings of the business and how it functions, and can’t always give the best advice.
An accountant who knows the business inside-out can become one of an organisation’s most prized and invaluable resources; their knowledge and ability to focus entirely on the financial circumstances of the business make them a crucial asset to even the smallest company.