As an accountant I frequently hear business people debating the use of accountants. Naturally as an accountant I often feel puzzled as to why individuals do not understand or see the value in engaging an accountant. At other times I am really amazed at how business people perceive accountants and the role they play within a business. I would therefore like to take the opportunity in this week’s blog to dispel some of the myths that are circulating in relation to accountants.
First and foremost is the common perception that businesses only need to have their ‘books done once a year’ for tax purposes.
Although it is important to keep records for tax, it is not the only reason or even the primary reason. Additional reasons why clients might request financial statement preparation centres on obtaining business finance. Obtaining financial support without monthly records will be hard to say the least. Hence if you are planning to grow your business through capital input you will require detailed financial records.
Good record keeping will permit businesses to extract meaningful financial information that will facilitate the effective business management. Ideally good accounting records should be kept on at least on a monthly basis. Thus this information will act as a warning signal alerting you to declining sales, excessive expenses, tax opportunities, cash flow problems, and other vital concerns about your business.
To be of value, your accounting system should contain meaningful account categories and departments. It would be worthwhile considering the outsourcing this element of your business. Outsourcing your bookkeeping can prove to be cost effective alternative to DIY. However, in the event of deciding to take a DIY approach to your bookkeeping it would be advisable to consult an accountant to ensure that the right information is captured.
Secondly is the view that accountants charge too much, ‘I cannot afford an accountant’.
Many business people regard bookkeeping, accounting, and tax preparation as necessary evils. Their perception is that accounting fees are an unnecessary expence that can be reduced, deferred or completely eliminated.
A good accountant can add many benefits that far outweigh and exceed the fees that they charge. Well-designed accounting systems will enable you to extract meaningful financial information for your business that will help you to manage it properly. Using an experienced accountant will save you money through the advice given relating to tax and other business matters. Equally a competent accountant will be an invaluable resource when discussing business problems and opportunities.
Last but not least it should not be forgotten that the purpose of involving an accountant in your business is to add value to your business. It will also help your business with sound financial planning. If you fail to plan financially, your business plans will fail. An accountant should be a key figure in your business. Listening to or following misleading information will inevitably lead to your business suffering. Setting financial goals is as important as setting overall business goals. All thriving business will definitely need an accountant.