What does an accountant actually do?
Posted on 1st July 2021
Accountants are not simply number crunchers who work out how much tax you need to pay. They can help you make important business decisions that require a level of expertise you may not have, reduce the amount of admin you have to carry out and ultimately give you peace of mind that your business is being supported by an expert in all things business and tax law.
Tax efficiency
As experts in tax law, accountants can help you ensure you are paying the lowest possible amount of tax whilst still complying with the law. Changes in tax legislation occur relatively often, and many business owners simply do not have the time or resources to be able to keep up with the changes let alone fully understand what they mean. An accountant is trained to not only keep up with these changes, but to understand exactly what they mean and how they will affect taxpayers.
Keeping up with ever-changing tax legislation is pretty much another job in itself – and who really wants to be putting so much time into running their business, but also taking on the burden of understanding tax jargon and how it affects them as well? An accountant’s job is to do this for you so that you can dedicate all your working time to doing the thing you love. Isn’t that why you started your business anyway?
Reduction in admin for business owners
When you make that leap from sole trader to limited company director, or reach the pivotal moment in your business in which you realise you have made enough money to become VAT registered, the looming paperwork can be incredibly overwhelming – especially if you have never done it before. Similarly, realising that you are at the point in which you need to consider taking on your first employee and setting up payroll is another area in which an accountant can help.
These crucial points in your business are cause for celebration – they mean you are succeeding! But many business owners see them as another source of stress and overwhelm, and the commemorative aspect is overlooked.
Peace of mind that you’re claiming all allowable expenses
Many self-employed business owners are not certain of the expenses they can claim, and some choose to just forego claiming them all together because the rules are perceived as being too complicated. You could be missing out on hundreds of pounds each year – what could that amount of money buy you? It could mean the difference between an extra week off work, or perhaps a new laptop or some trendy office furniture.
An accountant knows the ins and outs of allowable expenses for business owners, whether it relates to working from home or claiming for uniform costs.
References for mortgage applications – and more
Many self-employed people worry that once they leave the world of employment and start working for themselves, their opportunity to borrow credit from financial providers goes out of the window. This can be very worrying for a number of reasons, especially if your family relies solely on your income.
An accountant can be an invaluable asset when it comes to applying for credit – whether it’s a loan, credit card or mortgage – or even when providing income references to a potential new landlord. They can verify the income you receive from your business, its likely future financial footing, how long the business has been established and many more important pieces of information that many providers ask for.
Tax investigations
HMRC may feel the need to investigate your business if it has any reason to believe you may be underpaying in tax over previous years – even if this is a genuine mistake on your part. Having an accountant who knows your business inside out on your side to help you answer the questions the taxman puts forward is priceless – and can possibly help to reduce the huge amounts of stress you may feel if this happens to you.
Of course, hiring an accountant in the first place can reduce the risk of this happening to you.
Business Coaching and Support
An accountant can work with start-ups and growing businesses to discuss business plans and help seek finance options. Accountants work with large numbers of business owners and know their pains and struggles and can help provide support and guidance as you scale your business – whether that be getting your first business premises, hiring your first employee or structuring the business to obtain finance.
An accountant will have contacts in various industries and fields (I know we do!) that can help you find the right advice and support that you need.
Exit Planning
Not all businesses are starting out or looking to grow. A big part of running a business means looking at how the business would manage without you and how/when you may want to sell the business on. This involves succession and exit planning. An accountant will work with a business owner to plan their exit – whether than involved building a management team or finding a buyer.
Ultimately, accountants service a multitude of purposes and provide support to small business owners. At Effective Accounting, we pride ourselves on our human approach and our supportive team. Get in touch if you would like to see if we are the right accountant for you and your business.
Written by:
Nicola J Sorrell -
Effective Accounting
Founder | Xero Champion | IR35 Expert
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Tagged as: Accounting Jargon, For - Contractors, For - Employers, For - Limited Companies, For - Property Owners & Landlords, For - Self-Employed, Founder's Notes
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