It has been said that there are only two things needed when starting a business: A great idea, and an accountant!
An accountant’s duties are often misunderstood by laypeople. Accountants work in the realm of compliance, mainly, making sure that you fulfil your fiscal obligations to the government.
But great accountants also offer others services. Here are five ways that an accountant can help your business.
A “side benefit” of being an accountant is that they gain vast experience of all sorts of different businesses. A car mechanic only learns about cars. A painter only learns about paints and brushes and types of canvases.
But all these businesses have one thing in common: They must file their taxes. And they need an accountant.
As a result, accountants are often the “secret sauce” of excellent business consulting because they work with so many different businesses in different fields. Indeed, the most valuable business consulting one could have is that of how to manage one’s accounts.
Accountants have extensive experience in seeing what has worked for clients in different industries (and at different times) and so can bring a wealth of advice to the table when you bring them a business idea.
As experienced “number crunchers”, accountants can think with figures and can see meaning in those figures that many of us can’t see.
The challenge for many accountants has been to communicate these intricate significances to other people who are not so mathematically inclined.
Financial Models are an invaluable tool in getting everyday Janes and Joes (such as you and me) to understand their financial position.
Financial forecasts are also crucial in determining a business’s viability, and there is no one better suited to putting together a meaningful forecast than the “Number Crunchers” themselves.
Proper financial planning and understanding are essential if you plan on putting together an effective business plan in order to take out a business loan or get funding from investors.
Accountants are, in a sense, “mini lawyers” and must understand fiscal law like the back of their hands.
As such, accountants are great assets when it comes to structuring a business entity so that its taxable footprint is as small as legally possible.
There are limits to this, of course. And lawmakers have gotten wise to all the “tricks” that many businesses have adopted to minimise their tax payouts.
But there are perfectly legal ways for a business or individual to optimise their tax structure. Doing so efficiently requires an in-depth understanding of tax law for that specific country. An accountant is an invaluable aid in these cases.
An accountant is not a bookkeeper. It’s important to understand that difference.
A bookkeeper is responsible for filing and administrative tasks, keeping your books in order. Hence the term “book-keeper”.
An accountant is responsible for ensuring your company stays compliant with fiscal regulations and that you fulfil your filing obligations each year.
As the world of accounting has grown more competitive, accountants have additionally expanded into offering services such as financial advice and tax consulting. These are not, technically, accounting duties, although they do fall within the same umbrella of financial services.
In either case — whether from a compliance view or an advisory view — a knowledgeable and experienced accountant’s skills are utterly invaluable when it comes to ensuring that your business uses its pennies wisely as well as pays up all its dues to the relevant fiscal authorities.
Although bookkeeping services have mostly been overtaken by software tools these days, some accounting practices still offer this service to their clients even though it is not particularly profitable for them. They do this because it ends up saving time in the long run, both for the client and the accountant.
Many accountants have had to pivot in recent years in order to remain profitable. Online tools such as Xero, Quickbooks, FreeAgent and others have taken away many of the duties of traditional bookkeepers and accountants. Some of these tools also offer automatic filing services for individuals and businesses. As a result, many accountants have expanded the service they offer to include financial advisory functions.
This is different from tax advice. Financial Advisory functions refer more to what to do with one’s money and, often, even where to invest it.
It’s important to not confuse the two trades: An accountant is not automatically a financial advisor, and vice versa. But many accountants have trained up and learned some of this trade in order to offer more value to their clients.
It’s convenient (and also advantageous) for an accountant to be able to offer financial advice in terms of investment and, to some degree, portfolio management. No matter where revenue comes from, there are (almost always) taxes to be paid. An accountant who is also an experienced advisor can assist in structuring your business’s wealth in such a way that its tax liabilities are minimised.
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