Choosing and Using an Accountant

1. Services on Offer

All businesses have to produce annual accounts for the tax inspector.

The self-employed, partnerships and most small limited companies can prepare these themselves.

The threshold for audit exemption is £5.6 million (for financial years ending on or after 31 March 2007). Larger limited companies must produce fully audited accounts.

Whatever form your business is going to take, accountants can offer you a range of useful services.

1.1 They can advise on starting your business.

• What form the business should take - sole trader, partnership, limited liability partnership or limited company.
• Assistance with your business plan.
• Legal and tax aspects of registering a new business.

1.2 They can provide the accounting and book-keeping expertise you need:

• The setting-up of manual or computerised book-keeping systems - sales ledger, purchase ledger, cash book, petty cash book, debtors ledger, creditors ledger, fixed-asset register. Some firms of accountants will also do the day-to-day book-keeping for you.
• The preparation of financial statements - profit and loss account, balance sheet, cashflow statement and related notes.
• Audited accounts - which must include specified financial information, laid out in a particular way.

1.3 They can provide a range of business tax services.

• Tax returns and corporation tax, VAT, PAYE and National Insurance contributions, and income tax for sole traders and partnerships.
• Tax planning - minimising your tax bill.

1.4 They can give you advice on management information systems.

Even simple systems can help you run your business smoothly and profitably:

• Budgeting and performance monitoring, focusing on sales volumes, costs, cashflow and profit margins. For small businesses, forecasting cashflow is especially important. Serious mistakes in this area can be fatal to your business, even if every deal you do is profitable.
• Credit control and stock control.

1.5 They can give general financial advice.

• This may include recommendations on the financing of your business through overdrafts, loans, leasing, hire purchase, factoring, venture capital (including business angels) or grants.
• Introductions to sources of finance and help with presenting your case to them.

1.6 They can advise on buying or selling a business.

• Investigating the books of a business you are thinking of buying.
• Assisting you in negotiations.

1.7 They can help you with advice and guidance on questions of personal finance.

• Tax planning.
• Advice on inheritance tax, the financial aspects of wills, and so on.