There are several professional people, and potential allies, that you will need to consult when running your business. These might include:

 

Dealing With Your Accountant

Before you start in business it is well worth finding an accountant to advise you. They will normally:

• prepare, and if necessary audit, your annual accounts
• agree your tax liabilities with the Inland Revenue.

 

They will also be able to help you with:

 

• advice on the purchase or sale of your business
• advice on how to keep the books
• arrangements for business finance
• writing up the statutory books for a limited company (if applicable)
• investment advice
• many other kinds of independent financial advice.

 

Although we looked at the preparation of annual accounts earlier in this book, in practice few small businesses actually do this themselves. Instead they keep the books of prime entry (cash book, day book, etc.) and pass them to their accountant at the end of the year so that he or she can prepare the accounts for them.

Choosing An Accountant

When choosing an accountant the following points should be considered:

Be Open With Your Accountant

Your accountant will prepare your annual accounts and advise you on your financial affairs. But they can only do so if you give them all the facts. If they ask you questions about your finance, it’s because they needs the details to help and advise you. They’re not just being nosey!

Sometimes, for example when dealing with your tax, they might ask questions that seem rather searching and even seem to question your honesty. But it’s far better that they ask the questions rather than the Inland Revenue! The accountant can then give an explanation to the Inspector of Taxes about something that might otherwise arouse suspicions and perhaps give rise to detailed enquiries.

How Does An Accountant Fix Their Fees?

Most accountants charge according to the amount of time taken to deal with your affairs. Many use a sophisticated time recording system to keep track of the time they spend on each client’s affairs; for example, office work, meetings and telephone calls. Different members of the accountant’s staff will be charged out at different rates depending on their technical ability. A junior clerk will obviously be charged out at much less per hour than a partner. The accountant will use the most suitable grade of staff to look after the different aspects of your work.

Clearly, if you present your records to the accountant in a neat and tidy condition they can keep their fee to a minimum. But if they had to spend many expensive hours sorting out a ‘messy’ set of records, their fee will certainly reflect the extra work.

Do make sure that your work on writing up the records will in fact help your accountant. Some traders spend hours writing up records, but since they are not in the right form for their accountant much of the time is completely wasted. Discuss your records with your accountant early on, so that you can agree the best way of doing things.

Briefing Your Accountant

Soon after the year end let your accountant have all your accounting records. Do make sure that your records are complete at both the beginning and end of the year. Often bank statements will cover a period that spans the year end. If so the accountant will need the statement twice, i.e. for the previous year and the next year.

It will also help your accountant (and save fees) if you provide them with the following as at the year end:

• details of your stock valuation
• details of debtors (money owed to you)
• details of creditors (money owed by you).

 

It is also useful to your accountant for you to note any unusual matters concerning the business that have occurred during the year. All these matters will help your accountant prepare your annual accounts (and thereby save you money)!