6 signs your business needs an accountant

Accountants are there for much more than your tax return, they can and should play a vital role in the growth and expansion of your business. So how do you know when it is time to hire an accountant? 

Deciding to start a business is exciting but taking care of the finances isn’t always as appealing. Unfortunately, being too frugal can be a costly mistake in the long run.

Keep your eyes peeled for these 6 warning signs that your business needs expert help:

Step 1.

You are spending too much time in the business

Many business owners wear a multitude of different hats within the business to keep costs low. However, you need to question your ability and what your time is worth. If you value your time at £150 per hour and it takes you 10 hours a month to complete your accounts, that is £1,500 a month you are spending on completing the accounts.  

The reality is, an accountant will more than likely cost you less than this and produce a better and more reliable result! In addition to this, the time you will save can enable you to generate £1500! 

You definitely do not need an accountant to work out that calculation!

Step 2.

You are not taking the salary you were expecting

Your reward for all of your hard work is your salary PLUS dividends. Are you taking advantage of this? If not, why not? Is it a lack of profit within the business? Or a personal choice? 

Poor cash flow management is the number 1 reason for businesses failing in the first 2 years. Monitoring cash flow can allow for you to make decisions and forecast where your money is best spent.

Step 3.

You are growing at a rapid rate

Your business is growing, customer numbers are increasing steadily but do you have the right foundations for growth? At the beginning it makes financial sense to do everything yourself but as the business grows, things start to slip through the net, now is the time to seek outside help. 

More customers, more sales equals more paperwork and number crunching. It is helpful to have someone on board whose sole focus is on keeping the finances accurate but also keeping a track of your current growth and providing professional insight for growth in the future.  

Hiring an accountant should be like adding a whole new branch of team members to your business. These team members have a sole purpose to help grow and monitor your business.

Step 4.

You do not understand your financial information

Can you trust your data? You may have an accounting system in place but is it providing accurate, up-to-date information that you can make sound business decisions on? Are you able to use the data for scenario planning (what-if x happens), to help you decide if to take on that extra member of staff? 

Software such as Xero allows you to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. An accountant can help get you set up and understand the invaluable information this software can tell you.

Step 5.

Sales are up, but profit is not

So you’ve done the hard bit and now the sales are flowing in at a steady and attractive rate, but you are still not making profit. The pattern we often see is business owners get so excited over a sale that they often overlook the price that it is selling at.

If you do not have an agreed progress for pricing a product or service, you are susceptible to this. It is more likely that you will be negotiated down and devalue your service/product. 

Step 6.

You want/need to write a business plan

Do you have a business plan or have you ever considered writing a business plan? An accountant will help you to make the most of a business, looking at real numbers which you can track your process against. 

A business plan will give you focus and direction for the business.  It also is an essential piece of documentation if ever you need to raise capital via grants or loans. A business plan is vital to apply for some financial assistance due to the recent pandemic.


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