You may feel that you can keep your own financial records, and calculate your own tax liability. Wouldn't it be better however to concentrate on doing what you do best in your business? Elizabeth Tapley of TaxAssist Accountants explains why most people turn to the expertise of an accountant.
The Government tells you to keep records so they can calculate how much tax you should pay and if you get it wrong there can be expensive penalties. But there is more to it than that. Good records will help you to see how well you are doing, where your money is coming from and how you can make more.
Using a good accountant can help: making sure only tax that is actually due is paid and providing really good advice to help your business grow and flourish.
Any accountant can produce a set of accounts for you, but a good accountant will help you understand how your business has performed. You can compare results against what you had expected to achieve and make changes that will improve results next time around.
But your accounts can be used for other things too, and it is important that your accountant helps you get the most from them. For example, they can be used when you talk to your bank manager to raise some finance for expansion.
They can also be used to calculate how much you are eventually going to sell your business for. And, of course, good records will make sure you pay the right amount of tax.
You can use an accountant to do as much or as little as you want. For example, if your business is straightforward with easy, simple records, you may wish to calculate your own trading figures. You should follow some standard accounting principles and a good accountant will help you with these. You may however find producing your own accounts takes up too much time, wading through paperwork and figures, not to mention research into current legislation.
Then it makes sense to use a professional to do the job. Your time will then be free to do what you are good at, and to concentrate on making money and developing your business.
But there are costs attached and this can be a worry, particularly when you are starting a business and the income has yet to flow. It is important however to remember that a good accountant will help you save money by advising how to set up the most tax-efficient way of running your business. For example, would it be better to start as a partnership or limited company, rather than a sole trader?
Your accountant can help you make such important decisions.
A good accountant will also help you set up efficient record keeping right from the word go.
This is really important because if you get it wrong you could be fined. Having a good record-keeping system in place will additionally save you time and large accountancy bills in the future.
There are loads of other areas your accountant could help you with: cash flow planning, payroll, National Insurance, PAYE... the list goes and on.
So how do you know a good accountant when you see one?
Here is some practical advice for choosing a good accountant:
* Contact a couple of accountants that you have heard of through word of mouth, or seen advertised.
* Get an appointment with them. Before your meeting decide what services you would like them to provide.
* It is very important that you feel comfortable with your accountant.
* You should be able to trust them - after all they will see a lot of personal information in the coming years.
After you have met with them, ask yourself these questions:
Q. Did I feel that they understood my business and its needs?
Q. Are they easily accessible, and will they be able to answer my questions quickly?
Q. Are they asking a price that I can afford?
Q. What experience and qualifications have they?
Q. Does their website give me more information about their firm?
Q. Can they give me guarantees for the quality and service I can expect, and an estimate of when the work will be completed?
Q. Do I get on with them and do I think I will be able to work with them over the long-term?
Each one of these questions has to be answered positively. If not, then this accountant may not be the one for you.
Once you have decided which accountant to use, make sure that you are both clear about what services you require and get written confirmation about what they will do for you.
Taking some time at the outset to choose the right accountant for you will reap rewards in the long run as you develop an invaluable and long-term business relationship!
Martin and Elizabeth Tapley can be contacted on 01202 853280
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