Setting up a new business is an exciting adventure, but it can quickly become overwhelming and full of obstacles. There are so many things to consider when you start a business, that it’s easy to make mistakes. While gaffes aren’t necessarily a bad thing (businesses can learn from their mistakes), small blunders can quickly become catastrophic.
There isn’t a fool-proof plan for starting a new business, but it is worth reading up on common startup mistakes. Hiring an accountant in the early stages of your business is also a good investment.
Hiring an accountant who is experienced in supporting startups and you’ll be able to tap into a lot of good business advice. Here are 6 things your accountant can help you with when you are setting up your new venture.
1. Business structure
Are you a sole trader, a limited company, a partnership or LLP? The structure of your business may not seem that important, but the right business structure can offer tax and legal advantages.
An accountant will help you to choose the right business structure and give you advice on risk mitigation and also on how to structure your assets. The business structure you choose is even more important if you have a complicated ownership situation.
2. Business plan
Your accountant knows a lot more about running a business than you might think – they don’t just crunch numbers. Many accountants are able to offer valuable business advice and help you with your long-term business strategy. The biggest challenge for entrepreneurs is interpreting financial data, optimising financial resources and mitigating risk.
An accountant can help you with business planning and ensure you have the crucial information you need in the right form at the right time to plan ahead. SME accountant and business planning expert, Oliver Spevack from OS Accounting says “the first few years of any new business are often the most difficult and many businesses fail because they haven’t developed a robust business plan.”
3. Accounting software
Without an accounting background how will you know which is the best accounting software to choose for your business? There are so many different types of accounting software, picking the right one at the right price can feel like you are taking a stab in the dark.
Of course, you need to consider cost, but also features, usability and potential for growth. Choosing accounting software that is right for your business isn’t as straightforward as it may seem. An accountant will quickly be able to determine your priorities and recommend accounting software to suit your business needs. This could save you a lot of time, money and headaches later on.
4. Financial health and cashflow
Your accountant can keep you up to date with cashflow as your business gets going and spot any areas of concern. The biggest mistake new business owners make is around cashflow. When projections look good, it’s easy to overlook the cashflow situation. But, a temporary blip with cashflow could be costly enough to close your business. When the cashflow is negative everything falls down.
Your accountant can provide you with regular critical updates on your cash position, enabling you to budget and plan ahead. For more cashflow insights, check out the small business essential guide for managing cashflow here.
5. Tax compliancy
Tax is a very complex area and many small businesses hire an accountant when their first tax return is due. Making mistakes in tax can be extremely costly for businesses, as are late returns.
Seeking the expertise of an accountant will ensure you stay tax compliant and get your returns filed on time, leaving you more time to concentrate on growing your business. In case you are going it alone and filing your own tax returns, here are 10 common tax return mistakes made by small business owners.
6. Financial insights
Above all else, your accountant will be experienced in identifying strengths and weaknesses in your business and will help you to see the bigger picture – it’s easy to get wrapped up in the day-to-day. Financial insights are imperative for getting your business set up on a solid foundation and to make sure it is ready to scale.
In a survey by Accounting Today of more than 1,000 small businesses on what business owners want from their accountants, it was found that businesses that collaborated with accountants were more profitable and experienced higher growth.