When your finances are not making sense, and there is more money leaving the bank than coming in, many people will recommend hiring an accountant. Is that why you need an accountant? To keep your finances in order? Is there more to accountancy than punching in numbers? Can you do it yourself?? There are a lot of questions you are asking yourself if you run your own business and are worried about hiring accountants.
While the government and HMRC do not make it mandatory for you to have an accountant, not having one usually means you end making mistakes with your taxes and paying penalties. That’s a whole lot of money for the treasury. They surely do not want you liaising with the experts. We are one of the premier accountants in Milton Keynes and here to answer your Frequently Asked Questions on hiring an accountant.
Are Accountants Essential to My Business?
The authorities say you do not need an accountant. Why do most businesses still hire one? Because the accounting knowledge, expertise and experience of an accountant is incredibly beneficial to a small business. You need an accountant because:
- Taxman. Hiring an accountant is imperative to help avoid a visit from the taxman. In case he does decide to visit; you will be prepared. A business that does not have an accountant to help sort out the finances and pay and file your tax on time and in full, is likely to be spending more on penalties and fines. An accountant can keep your tax and financial records in order so you can be prepared if there is ever a tax investigation. They are experts on the tax process and can guide you well and make sure that you stay compliant with HMRC’s tax requirements.
- Save Time – You are probably a jack of all trades and are handling the marketing to the human resources. Finding someone to carry out the admin and tax related tasks, can help free up time to focus on revenue generation.
- Expertise – No matter how good you are in everyday accounts, you cannot compare to an accountant’s experience, training and their understanding of HMRC. They have so many clients and such a vast experience, that they find it easy to identify every single opportunity or risk related to your financial affairs.
- A second opinion – Accountants can comment on every financial aspect of your business and not just tax. They can guide you on growing your business, help you with applying for a bank loan and many other money related matters. They can be the ideal second opinion and since they are money experts, their advice will be spot on.
- Support – HMRC processes are not fool proof. You need a good accountant to help fight your case. The stronger and more competent your accountant the more likely you are to win. As one of the best accountants in MK, we ensure our support to client for services that are not just limited to tax and book keeping.
What is a CIMA?
It might have come to your notice how some accountants have some letters after their names and some accountants have a different set. The accounting industry is not well regulated by the Government. Which means that not all accountants go through the same academic process. Unlike doctors or lawyers, pretty much anyone can sell accountancy services. Many accountants in MK and the rest of the UK have certain letters after their name that indicate that they are a chartered accountant.
There are various institutions which train professional accountants and provide these acronyms. Here are three key professional qualifications providing routes into the wonderful world of accounting: ACA, ACCA and CIMA. These institutions require their members to gain a qualification and make sure they are correctly insured, experienced and up to date in the way they work. Only then are they allowed to attach these prestigious suffixes to their names. Always hire a qualified accountant with a proper degree to back them up. An ACA (associate chartered accountant) or ACCA (associate chartered certified accountant), are qualified accountants and their regulatory bodies ensure much of their learning is done on the job.
Members of CIMA (Chartered Institute of Management Accountants) have the letters ACMA (Associate Chartered Management Accountant) after their names. CIMA is a UK-based professional body focused on accounting for business. You can work towards this qualification independently or through training while on the job. It is an intense 3-year long course and you need to rack up 3 years of experience to qualify.
The CIMA qualification is targeted for students working their way up to be management accountants and are more likely to be hired by businesses and not accounting firms. A CIMA member has studied business strategy and is more specialized than other accountants to manage the performance of a business. While the rest of the two qualifications are also well rounded in terms of accounting knowledge, CIMA is the one that gears you up to be a management accountant.
The CIMA qualifications helps its members understand every part of a business, From sales and marketing to customer service and supply chain. Every area links inexplicably to finance and knowing how it does is essential to a good management accountant so they can make well informed decisions.
Finance is a support function, to be able to truly support a business, one needs to able to empathise, with key stakeholder. During CIMA training, candidates are often given the position of a leading role and then judged on their performance at making decisions. My CIMA qualification has been critical to help deliver my best to clients in Milton Keynes. The new age of accountancy has brought a shift from simple book keeping to complex finance and business strategy. My professional background helps me help you make smart choices about your business.
Are Accountants Good at Math? What Other Skills Am I Paying for?
At a recent meetup for accountants in Milton Keynes, a common joke was that we’re not too good with English grammar and spellings. We have never needed to be; maths is our strong suit. Or so we have been told for ages past. It was funny while we all laughed over it. However, this is not a stereotype I agree with; that the most important skill for an accountant is to be good at maths.
Being good at math can be of some benefit, but it is not the sum total of our expertise. An accountant has a myriad of skills while being good with numbers is important, there are other things that are crucial to our job. Like understanding tax law, having the judgement regarding what looks reasonable in terms of tax deductible expenses, etc.
Accountants help protect clients from tax enquiries. They will make sure that the HRMC has every piece of information they need and no case or issue is delayed because of lack of or incorrect information. Accountants are also important to highlight if the client is being taken for a ride by the authorities and doesn’t realize it.
Accountants that help with business strategy need to excel at presentations. To convince investors or banks, everything needs to be top notch and that is a key skill if you ever want to grow your business. Nowadays there are many skilful accounting software out there, they will punch your numbers for you. You do not need to be a whiz at math to use that software. You do need to be an expert to keep things under check and balance at a high level. The accountant of the 21st century needs to understand the tools, the logic and methodologies of accounting and use that knowledge along with technology to help transform a business. Accountancy today is more system based.
If you can’t explain it simply, you don’t understand it well enough. – Albert Einstein
The most important quality of an accountant would be to be able to relay his knowledge and his advice in a manner understood by everyone. If you can’t get that across, it’s all for nothing. Your explanations need to concise and clear and the actions that entail should be well planned.
The stereotype that accountants are simply just good at maths needs to die because there’s so much more to being an accountant than just number crunching. The 21st century demands that accountants move up the value stream and build robust processes for fault free accounting.
Can an Accountant Help Me with Loans and Mortgage?
As a small business owner, you are self-employed, and it is true that getting a mortgage or any other type of loan is more difficult for you than your salaried friends. Someone with a job usually needs only 3 months of payslips for a mortgage application, while you would need 3 years’ worth of accounts and tax work (SA302 statements).
As practicing accountants in MK, we have worked with many clients and helped them with their application for bank loans. We help them make long term changes that makes them appear and be financially healthier. Their application looks good and the changes they make help sort out their finances in the long run. Sometimes only tax work is of importance to banks. So it needs to be spot on. Banks these days tend to just make a decision based on a client’s personal tax work (SA302 statements).
Since accountants work with other businesses and have a wholesome knowledge of the finance industry, they are really the best people to sit with and make your mortgage application.
Are Accountants Expensive?
Running a business is a huge responsibility. You cannot however manage every department. You have to look to the experts. Hiring someone to share some of the load can help free up time for you to concentrate on marketing and sales activities. Having someone who has the expertise you do not, multiplies the knowledge and skill available to your business.
While we have determined the absolute importance of having an accountant, lets also discuss the numbers and value of costs you offset by hiring an accountant. By avoiding tax penalties and any future tax investigations, hiring an accountant is a smart decision regardless of their hourly rate. An accountant is worth it, always. It is their job to prove their cost by saving you time and money.
Accountancy is no more the pedantic data entry it once was. The clerk like accountant is a relic of the past. Accountants today are your partners, they are committed to seeing you grow and their academic and professional backgrounds are proof that they are experts in finance and strategy. Accountants today have come beyond the basic competencies of yesteryears and now build value by communicating key insights and trends from your financial data and providing guidance based on that.
If you’re looking for expert accountants in Milton Keynes to support your business then get in touch today for a free consultation.