Here’s why every business start-up needs an accountant on board
Starting a business is no easy task. From developing the concept, honing your pitch and getting people on board, your first day of trading can sometimes seem too far in the distance to become a reality. This year to date, there have been 505,107 start-ups in the UK. It’s a fact that only 44% of businesses survive in their first 5 years so if this number stayed as it was, there will be 282,860 business casualties from 2014’s start-ups.
If your idea requires a significant level of funding, it is imperative that you display competence in all business areas to a potential investor. Leaving no stone unturned, an investor will expect you to be confident with the methods and means you intend to employ, in order to generate a return on their investment. This involves a quality business plan, in-depth financial projections and the right resources and capabilities to execute your business strategy. Attempting to ‘go it alone’ will force many seasoned investors to back down as the odds of success are far greater when all business elements are covered by experienced and suitable resources.
Structuring your business
Initially, you need to decide how to structure your business. Based on the service or product you will offer, and using your business objectives you will decide whether to set up as a sole trader, a limited company (LTD), a partnership or a limited liability partnership (LLP).
Ensuring you have the right structure in place in essential, and making sure you’re fully compliant within that structure will save you a lot of problems down the line. Certain structures offer varying financial benefits and it is vital to the business’s viability and overall profitability that the most suitable is chosen.
Recording your finances
From the outset, ensuring a solid accounting system in place will put you ahead of many other business start-ups. Although you may be dealing with minimal income to begin with, showing that you are meticulous with business’s finances will impress potential investors/buyers and allow you to keep a firm grasp on the state of the business at any given time.
Many business industry leaders say the individuals that impress them most are the ones that look for every way to save on unnecessary costs. Some even go as far to say that you should be scrutinising every cost inflicted on your business to see where you can cut down on unnecessary expenditure.
Displaying meticulous diligence from the planning stage through to the inception of your business will impress your potential investors and reassure their confidence in their investment. Using an accountant will ensure this process is done accurately, professionally and compliantly; and as such the long term benefits significantly outweigh the costs.
Building Contacts and Networking
One of the biggest challenges early on in your business lifetime is building a network of contacts. Initially it is key to build a good relationship with a bank and also a legal professional. An established and reputable accountancy firm will already have long standing relationships with both, which is why having one in your team gives you a strong foundation to draw upon for recommendations, acting alongside you as a business partner.
All new businesses face the challenge of maintaining a positive cash flow. Advice on managing this in the early stages can prove to be the difference in a business becoming one of the 44% or falling by the wayside and condemning itself to one of the 56%.
Finding an accountant
In 2013 there were over 300,000 registered accountants in the UK. With that number in mind, it is a daunting task to sift through the numerous firms and pick one. Reaching out to ask for recommendations from friends, family or business contacts will provide you with a good idea of who is good to use and who isn’t. However if your needs vary from your contacts and in addition to personal recommendations, many accountancy firms like ourselves offer a free initial meeting to help you decide whether we are the right fit for you, without any pressure to sign up.
- We can also help you switch accountants if you’re not happy with the service you’re receiving from your existing accountant: it’s quicker and easier than you think.
Forming a relationship with your accountant will allow you to draw on their knowledge, experience and expertise as you navigate through the competitive jungle that is the world of business. You’ll also have an expert on hand to competently take care of the financial side of the business including: tax planning advice, self assessment/corporate tax returns and annual accounts. As you establish yourself in the market and your business becomes profitable and sustainable, there are many financial aspects that are best left to the experts so you can concentrate on the growth, as well as the day-to-day running of your business.