06-06-2008
Why your accountant is your BBF (best business friend)
by Adfero
A good accountant is essential to running a successful business. They will be by your side during the good times and the bad; advising you, supporting you, reminding you and saving you from yourself. Of course you pay for the privelege but it's worth the expense because in short, your accountant will be your business best friend (BBF). It is therefore important to find the right one who is a good fit with you and your organisation.
Business owners have a vast array of tasks to keep on top of such as payroll, tax returns and accounts, which involve knowledge of VAT, corporation tax, income tax and national insurance. These things are time consuming and can be easy to push aside but they are all areas that an accountant can take care of. Attempting to do them yourself could result in serious consequences if anything went wrong.
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"Organising your tax and reporting responsibilities may be one of the less exciting parts of business life, but it's not a good idea to delay paying your tax bill or submitting tax returns or other essential company records," said Business Link. "It can lead to hefty financial - or even criminal - penalties if you're late."
So what are the penalties?
Given that there are a number of different penalties that can be imposed, according to the exact nature of the offence, it is perhaps better that the scope is limited to a few core areas, including some of the effects of negligence.
Firstly, in respect of failings relating to the return of income tax self-assessment forms, if a submission deadline is missed, then - according to Business Link - this automatically results in the generation of a penalty fee of £100, which extends to a further penalty fee of another £100 if the deadline is again missed after six months. However, it is worth bearing in mind that if HM Revenue & Customs are not of the opinion that £100 fines are a sufficient enough prod, daily fines of £60 can also be imposed. In case there is some confusion, the submission deadline usually appears on the front of the self-assessment form.
Self-assessment documents for corporation tax are also important forms that can land any entrepreneur in trouble if they are not completed and returned on time - and again, it is important to follow the statutory filing date. Should a return be submitted up to a total of three months late, then a flat-rate penalty fee of £100 is imposed. However, higher penalties can also be levied depending upon the circumstances.
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Limited companies must submit their accounts to Companies House annually. Failure to do so can result in a penalty ranging between £100 and £1000 for a private company up to £5,000 for a public company. Directors may also be prosecuted for failure to return on time and could be fined up to £5,000 and receive a criminal record
How can an accountant help?
While it may be perfectly feasible for a business to take care of at least some of these things, the work that an accountant can deal with can be too much for an entrepreneur - or even a small to medium-sized enterprise. Even if you have the necessary skills in-house to do much of the work it may be worth outsourcing in order to ensure that everything is done properly and on-time.
Accountants can also be excellent resources for advice on all kinds of business issues. When you hire an accountant you should meet with them at least once every couple of months to ensure that communication lines are open and to make the most of their services.
Locating a skilled accountant
Once it has been decided that an accountant would be a useful addition to the business, the next task is to find one with recognised professional qualifications in their field. Business Link advises sourcing accountants from either personal recommendations or through the use of professional associations in the field of accountancy, such as the Institute of Chartered Accountants in England and Wales, or the Chartered Institute of Management Accountants.
They also recommend drawing up a shortlist of potential accountants well in advance of when you will need them. After all, they need to get to know your business and its needs before any heavy work can be done.
"It's best to start looking for an accountant well before you need to use one. If possible, don't leave such an important decision to the last minute," according to Business Link.
In conclusion, it is important to spend a little time and care in appointing an accountant, as they really are a vital addition to any entrepreneur's armoury for success, irrespective of the amount of work they take on. A good accountant should be the best of friends with your business in order to give it their best work.