When setting up a new business, there’s a lot to consider. From choosing the company name, all the way through to your employee’s first paydays, it’s likely that you’ll seek support and advice from all around you. When the time comes to register a company, delegating out roles within areas you’re unsure of to trusted professionals can be extremely profitable for your business.
One of the main areas new small business owners struggle with is accounting, often because they are, rightly so, focused on the business idea and getting it off the ground. Handing over the financial affairs to a trusted accountant allows you to concentrate on your passion for running the business, whilst also saving time and money.
Below we’ve outlined the main challenges you could face if you choose to go it alone in the world of small business accounting. However, we’ve also provided solutions. Working with an experienced accountant can help with the entire start-up process, including registration, complying with tax regulations and the day-to-day management of your business’ finances. Once you know what an experienced accountant can do for you, choosing the right one is straightforward.
Accounting challenges for new businesses:
If you’re considering starting a new business, you’ll already be aware of the huge journey you’re about to embark on. You’ll probably feel like you’re spinning hundreds of plates at once; just managing the financial side of things alone comes with a breadth of challenges. What with monitoring cash flow, keeping on top of expenses, setting up payroll, completing tax returns, understanding tax law, and predicting, recording and reporting on finances, the list feels endless.
However, there are three key challenges that you will face in small business accounting:
- Setting up your business. This is an exciting but daunting time as a new business owner and it’s tempting to rush through it, which could be detrimental in the long run. Knowing how to register your business properly is not always clear, whilst creating an extensive business plan which includes a structured, in-depth financial analysis can also be extremely overwhelming.
- Understanding taxes. Tax law is renowned for being very complicated, and with laws changing all the time, it’s difficult to keep up. Attempting to understand the ins and outs whilst also setting up your business can be very time-consuming and completing tax returns is no simpler – they are often referred to as an art form!
- Recording all financial transactions. Otherwise known as bookkeeping, this needs to be done from day one, i.e. as soon as you start incurring expenses, even during the setting up of your business. Recording all financial transactions, from sales and purchases to payroll, can be extremely burdensome as it must be done in real-time and constantly maintained.
Clearly, there’s a lot to think about and bringing in expertise from elsewhere can, at the very least, lighten the load. But at most, working with an experienced accountant can make the above challenges much more manageable. Here’s how accounting experts can help:
1. Advising on business structure and financial analysis
Creating the foundation for a successful business starts with working out which legal business structure best suits your needs. An accountant will explain the legal business structures available and help you to consider whether your business is a sole proprietorship, a corporation, a partnership or forming as a limited company.
Many accountancy firms specialise specifically in limited company formation and can make your company incorporation straightforward. They will help you set up with Companies House and HMRC; making sure you’re aware of all the information you need in order to register your company.
Once you’ve decided on your business structure, you’ll need to work on your business plan. Writing your company description, describing your product or services and understanding where you fit in the market will make perfect sense to you. However, the financial analysis is often the dreaded part, especially if you don’t have a financial background.
An experienced accountant can support you in writing this aspect of your business plan, as they will have worked with similar companies before and will understand your industry inside out. Making predictions for future growth and estimating expenses is second nature to them.
2. Offering a Chartered Tax Advisor
Complying with tax law and calculating your contributions as a business can be a lengthy and complicated task. In fact, small business owners in the UK lose around three working weeks every year to tax compliance. But, every new business must register for corporation tax and maintain their contributions. With the added pressure of trying to minimise your tax bill with ever-changing rules and regulations, it may feel as if you’ve barely got time to actually run your business.
A qualified Chartered Tax Advisor, provided by your accountancy firm, will do all of this for you. It is their job to manage your business’ contributions, remain up to date with the latest developments in tax law and also to understand the tax-related nuances between industries. Chartered Tax Advisors are dedicated to helping clients at any time of need. Should you need support through difficult legal processes involving tax, a qualified tax advisor can ensure you’re above board at all times, whilst remaining confidential and taking due care.
This level of expertise can only be offered by a Chartered Tax Advisor, as in order to receive their qualification, they must demonstrate a high level of technical knowledge and high standards of ethical and professional conduct, and maintain these standards throughout their career. The Chartered Tax Advisor qualification is internationally recognised; when you choose to seek advice from a Chartered Tax Advisor, you can rest assured that the support you’re given is certified, specialised and of the highest calibre.
3. Structuring bookkeeping and payroll
Bookkeeping is essentially the recording of all financial transactions in a business and must be extremely well structured. Inputting purchases, sales, receipts and payments can feel endless, particularly if you have a high transaction rate business, such as a restaurant. It’s a long slog of admin and probably isn’t where your passion lies. However, it is vital that you establish a solid bookkeeping system from the day you register your business and start making transactions, to ensure everything is done ‘by the book’ – if you’ll pardon the pun!
Accountants provide expert bookkeeping services to free you from handling this admin. They are passionate about completing rigorous and timely bookkeeping and based on this, you can measure the health of your business more accurately.
Similarly, if you’re a new business and planning to employ a team, your payroll must be a well-oiled machine. Setting up your payroll system is also something an experienced accountant can assist with. Calculating wages based on hours worked and making sure your employees receive payments on time can be managed by your accountant, so you can stick to personably managing and supporting your team.
Along with bookkeeping, setting up payroll may involve installing accounting software for your business, which will help you to manage your own payroll and bookkeeping in future. Investing in an experienced accountant to structure your financial data management at the beginning of your business journey will make for a much smoother ride along the way.
How to choose the right accountant
After weighing up the costs and deciding to hire an accountant, choosing the right one is fairly straightforward if you know what you want. Here are a few things to consider when choosing your accountancy firm:
- What services do they offer? Work out what services you require. For example, you may have already employed someone to do bookkeeping and payroll in-house, but you still require expert tax advice. Most accountants offer a range of services, whilst some specialise in certain areas.
- Where do they operate? Having an accountant who operates in your local area is beneficial as they’ll understand your market well and can meet with you regularly. However, the development of could-based accounting means location is less of an issue and can sometimes save you time.
- Do they have experience in your industry? It’s important that your accountant understands your business and the industry it lies within. Speak to peers in your sector to find out which accountants they’ve used, or simply enquire at the firm where their experience lies.
- What qualifications do they have? Ideally, you’ll choose a Chartered Accountant; their expertise is regulated by a professional body and is recognised by the government. You don’t necessarily need a certified accountant for more basic services like bookkeeping, but for expert advice on how to get the most out of your business, choose a qualified accountant.
- Can they save you money? An experienced accountant will be proactive about saving you money, while some may simply manage your accounts and complete your tax returns. Before choosing an accountant, ask them how they will endeavour to save your business money and ask for evidence of doing so in the past.
Choose Barron & Co. as your trusted accountant
There are many different accounting companies that can support you through the setting up of a new business, offering a range of services. However, choosing a team of Chartered Certified Accountants and Tax Advisors ensures the highest quality of expertise.
At Barron & Co. our team of chartered and experienced accountants have experience in working with large companies, small businesses, partnerships and sole traders based in Birmingham. We aim to make business accounting more straightforward and as a result, significantly boost your bottom line.
With years of experience in limited company formation, offering chartered tax advice and providing bookkeeping and payroll services, you can trust that our friendly and professional team will focus on the time-consuming accounting work, whilst you focus on what you do best. Book a consultation by contacting us today, or browse our range of services on our website.