Why You Shouldn't Handle All Accounting Manually
By Lina Martinez
A business owner needs to be financially savvy. They need to be clued into their costs, their earnings, their profits, cash flow, debts, and so on. They have to know their financial situation. But that doesn’t mean they should personally handle every aspect of bookkeeping and accounting themselves. Here, we’re going to look at some of the legitimate reasons you should be thinking of getting some help with your books and what can go wrong if you don’t.
Simplify your finances
It’s crucial that your accounts are kept in order and your bookkeeping is as up-to-date and as relevant as possible. You can’t make sensible financial decisions without having all your ducks in a row. But it can take a lot of your time to get them in that row. Time that might be more profitably spent if you were able to use it to address inefficiencies in the business, talk to clients, work on leads, and so on. Accounting software can simplify your bookkeeping a lot, automating most of the math and keeping it all easy to track and suitably categorised. While it still needs some human supervision, it won’t take you all day once a week to update your accounts.
Creating better business plans
Software can’t do everything of course, so let’s take a look at some of the benefits that some real human expertise has to offer. A smart business owner won’t just stick with the first business plan they create and then just wing it once they’ve accomplished what they set out to do. They will continue making business plans in the future, setting goals, outline operations, and giving a deeper understanding of risks and costs. Accountants can help you create more informed business plans with even more specific goals and parameters thanks to their ability to look at your finances and identify opportunities and risks your business will have to address. They are more than “bean counters”, accountants can be strategically important advisers.
Increase your chances of getting a loan
No more does that partnership come into play when your business is looking for funding. There are a lot of funding sources to take advantage of, now, but the truth is still that the majority of them are looking for a return. They’re not interested just in your idea, how much of a market there is for it, and so on. They want to know about the past performance of the business, how your money is being handled, indications of profit, and more. You can spend time preparing and getting to grips with those figures yourself, or you can have an accountant do the same thing with much more authority and (most likely) a deeper understanding of your figures. Simply put, they can be one of the stronger tools of persuasion you have when it comes to getting any kind of loan or funding.
Don’t pay more taxes than you should
There’s a good reason that you want a chartered accountant, and not any old freelancer offering “bookkeeping services”, too. Accountants are registered, licensed, and legally qualified to give business owners advice on their taxes. They can take on the whole process of preparing your taxes, and a good accountant is well-versed in the different deductions, tax breaks, and other factors that could see you paying less while remaining compliant. You very well might be paying a lot more than you should be, after all.
Don’t make big decisions without the right information
Accountants can help you make a lot of decisions regarding how you file your taxes, but there are some events where even their help isn’t quite enough. Whether it was due to mistakes, discrepancies, errors from the HMRC, or genuine wrongdoing, many a business will come under a tax investigation. A lot of them may receive things like a contractual disclosure facility, offering them the opportunity to admit wrongdoing without the risk of being legally charged with it. These are big decisions, and whether you choose to take such an offer or to go with an investigation may or may not work depending on your situation. Not having a tax lawyer help you through the decision making process when facing the HMRC can result in you making a disastrous move that risks the whole business.
Stop yourself from making big mistakes
Beyond the decisions that you might not be able to understand, accountants and tax lawyers can stop you from making tax mistakes that could lead up to receiving such an offer or being subject to an investigation. The HMRC is just as likely to think that fraud is the source of all discrepancies, even genuine mistakes. The best way to avoid being treated like you have committed fraud is to ensure you’re making as few mistakes with your taxes as possible. Tax lawyers deal with the HMRC all the time, and they could find red flags in your tax forms that could spiral into an investigation.
Save yourself a lot of time and research
Accounting software can save you the time of staying on top of all your figures, like your cash flow, expenses, overheads, profit, and so on. But advice from an accountant can save you a lot of the time and research that business owners have to deal with in order to simply do their taxes. There are online tax guides that help you thoroughly understand the process, how to organise your deductions, and so on, but that could mean reading over thirty separate articles. The process of doing your own taxes is hugely inefficient, so why not rely on someone who already knows everything they need to know about them.
Stay informed about your finances and don’t get complacent with your bookkeeping, but don’t miss out on the expert advice and information available. Accountants, tax lawyers, and even bookkeeping software can stop your accounting from getting you in trouble. You won’t waste as much time, you won’t make as many errors, and you have a much better chance of handling legal conundrums a lot more safely.