For both new business and those that have a long trading history, an accountant can sometimes be an untapped resource. Whilst dealing with matters of taxation and understanding the processes surrounding this will be squarely under the care of your accountant, there are many areas where their involvement can be invaluable.
1. TAX PLANNING
From a comprehensive understanding of the tax system and an up-to-date knowledge of how this may change due to political and economic factors, your accountant is in a strong position to provide advice that will prove beneficial in both the short and long-term. This not only concerns you personally but family members and any businesses with which you are associated.
The tax system is designed in a way that certain reliefs exist in many circumstances. The
reason for this is to incentivise specific behaviours such as investing in businesses that are
likely to create jobs or one that many of us are familiar with, leasing an electric car, which has a positive environmental impact. An accountant has this knowledge but also the experience to ensure you are taking advantage of such reliefs so that your tax efficiency is maximised whilst remaining compliant.
2. BUSINESS & PERSONAL STRUCTURING
For those who hold a directorship and/or hold shares in a company, it is possible to take
advantage of the associated flexibility in how funds are attributed and moved between entities. There is not necessarily a one-size-fits-all approach in how to do this as everybody’s circumstances differ, which is why advice is essential. Matters of Income Tax, Corporation Tax and National Insurance contributions rely heavily on understanding your whole picture, especially when your income has multiple sources.
Whilst this is a complex area, accountants can help you understand how best to manage the
interaction between you and your company and the trade-offs you may have to make. This is especially important when making decisions in the long term as it’s not a simple matter of paying less tax overall if this creates issues elsewhere in your personal affairs such as plans to apply for your first mortgage.
3. BUSINESS GROWTH PLANNING
When businesses grow, they change structurally. Taking on employees for the first time is a
good example of this and the business inherits new costs and responsibilities that require
forward planning. No one can see into the future, but forecasting is the next best thing and doing this alongside your accountant, who can call upon years of experience in doing so, allows you to pre-empt issues that otherwise would not have occurred to you. Your accountant will be an additional cost in this, but the associated savings in the long term
routinely outweigh the initial cost of professional advice.
4. BUSINESS EFFICIENCY
The numbers that an accountant sees every single day create a picture of the business’s overall health. Whilst the mind of a business owner is quite naturally focused on signing the next contract and ensuring the company is ready for that new piece of legislation that is on the horizon, it is difficult to find time to sit and study management accounts looking for an unspecified concern. This is where experience is invaluable and you will find this in an accountant who has had the privilege of studying the accounts of many companies over their years of practice and being privy to the reasons behind the success or failure of those companies. As a company grows, accounts become more complex and require a trained eye to fully interpret. When people talk about “the bottom line”, it focuses us on the importance of profit created by the business but every figure above it that contributes to the bottom line, tells a story of what the profit and loss account may look like in six months or a year from today. That is certainly knowledge you wouldn’t want to be without.