How an accountant can help your small business

Surveys regularly show accountants to be the most trusted adviser for business owners. Clive Lewis, head of enterprise at ICAEW, considers what an accountant can do to help your company.

1. Lighten your workload

Running a business can be very demanding and small business owners often don't have the time or the skills to do all the tasks the business requires. An accountant can help lighten the load.

This includes keeping a check on the accounting records through to providing services such as payroll. A business' accounting software systems can be monitored in real time through the cloud allowing the accountant to keep a check on clients records.

Payroll preparation has become more complicated in recent years with the advent of real time information (RTI) which requires businesses to notify HM Revenue & Customs "as and when the payroll" is activated.

The complexities of the national living wage and the national minimum wage have added to the burdens of payroll preparation.

2. Are you happy with the performance of your business?

Many businesses plod along at the same level of trade never really realising their full potential. It is easy to think that the current performance is the best the business can achieve. A conversation with an accountant can bring some new thinking.

An accountant can also ensure that you are getting regular reports on the business' performance through management accounts and suggest some key performance indicators which measure the performance of individual aspects such as turnover and gross margins.

3. Are you looking to raise finance?

One way to develop a business is to invest in some new equipment or to take on a new customer which may require an increase in working capital to fund increased stocks or debtors (amounts owed to the business).

Accountants can help you prepare an application for finance as well as helping prepare forecasts of future trading. The accountant can also help find finance appropriate to your business' stage of development and help respond to finance providers questions.

If you are considering selling equity (shares) in the company, an accountant can help prepare a business plan including financial forecasts.

4. Do you need to register for VAT?

Business must register for VAT if their sales in the preceding 12 months exceed £85,000.

Some businesses are not aware of this requirement and only realise that they must register months later. Consequently they may have to file an initial VAT return covering a longer period than the usual quarterly return.

In addition, as they should have registered earlier, they will not charged have VAT to customers and consequently the VAT on sales in the period to registration has to come out of the business' profits.

An accountant can help by monitoring a business' sales performance to ensure it registers at the correct time as well as helping prepare the VAT returns.

5. Are you paying the correct amount of tax?

If you are filing your own tax returns you may not be certain you are paying the correct amount of tax and national insurance contributions (NICs).

Are you claiming all the expenses you are entitled to claim? What about the allowances you get from buying equipment? Are you charging the right cost for use of a motor vehicle? What about use of your house as office?

An accountant will have other clients with similar businesses to yours so they will be able to ensure you pay no more tax and NIC than you should.

6. Are you planning to sell your business?

If you are planning to sell your business, an accountant can help prepare the financial reports that prospective buyers will expect to see.

Many accountants undertake the advertising of client's businesses for sale so as to preserve anonymity and to keep the sale confidential.

They can also research recent transactions of similar businesses and advise on the potential selling price, using price and earnings ratios.

7. Inheritance tax planning

Since April 2017, an estate will be entitled to an additional inheritance tax threshold if:

• the person dies on or after 6 April 2017

• the person owns a home, or a share of one, so that it's included in their estate

• their direct descendants such as children or grandchildren inherit the home, or a share of it

For estates valued at more than £2m, the additional threshold (and any transferred additional threshold) will be gradually withdrawn or tapered away.

An estate may also be entitled to the additional threshold when an individual has downsized to a less valuable home or sold, or given away their home after 7 July 2015.

Many homes have increased in value in recent years, so this additional allowance will help reduce the number of estates which pay inheritance tax.

It is always worth consulting an accountant to check that you are maximizing the opportunities to reduce potential inheritance tax liabilities.

Get a free advice session

The ICAEW Business Advice Service (BAS) offers businesses or individuals the opportunity of a free advice session. Go to the BAS website and access a list of chartered accountants in your area. Contact one displaying the BAS logo to arrange a meeting and have a free, no obligation discussion on your business or personal financial issues.