Accountants for Startup Businesses and Entrepreneurs

Start-ups, New Businesses and Entrepreneurships

Start-up is commonly used term for entrepreneur, when an individual or a group of individuals with two to more than two members wish to start a business. The most significant thing to consider is whether to start business as a sole trader, a limited company or if relevant, a partnership firm.

Each one has a noticeable returns and shortcomings. It is better to go with the option that is most appropriate for you and about which you also have clear understanding. However, if you are not confident about your option seek advice from a qualified professional or start-up accountants.

Comparatively, it is easy and not so expensive to form and register a company. Accountants who deal for start-up can give your advice on your business plan, structure of your business, as an owner can also make you understand your responsibilities in business and how you can earn higher returns.

What can accountants do for a small business?

It all depends how big your business is and how wise it would be to maintain your books and records on your own. And if hiring an accountant to act on your behalf for book keeping, file accounts and the appropriate tax returns would be a right decision. However, appointing an accountant attracts a cost to your business for the services they offer, their knowledge and expertise on the accountancy can help you run your business properly an also enable you to fulfil statutory obligations to HMRC and Companies House if applicable.

Depending on the business expertise, an accountant can also ensure that you have succeeded in your business

With his/her considerable business expertise, an accountant could help ensure that you have the best chance of succeeding in your venture.

If you hire a good accountant it can add substantial value to your business. Accountants not only manage your accounts but also assist you in making business decisions to help you grow your company. Accountants also help in minimising tax charges legally and many a time also takes care of your admin work.

How Accountants are Helpful for Small Businesses?

Helps you Grow your Business

A good accountant will guide you to take your business to the next level. They can help you right from the time of structuring your business properly to ensuring you take right decision at the time and avoid over spending.

Helps in Minimising your Tax Bill

You will come across people who will say they are on top of taxation rules and processes. This is where accountants come into role. A good accountant takes notice of your business minutely and will also check that you are using making proper use of taxation reliefs and exemptions and that can help you claim the taxation allowance.

Helps you to Fund Raising

Accountants are not there only to manage your finances; rather they can also guide you in making additional finances for your business with affecting it. They also look at options for loans and increasing overdraft and issuing share capital. They also guide in selling your business shares, crowdfunding and find venture capitalists.

Suitable for your Needs

Know your business requirements before hiring an accountant. If you own a small start-up then avoid hiring big accountancy firms who are hired by big corporates and multi-nationals. List down the activities that you want an accountant to help you with, and then start looking for an accountancy firm or an individual, whatever best suits your business requirements. A good accountant can guide a small business on concerns like sufficient working capital, good stock control and billing/invoicing.

Register you for VAT

You will have to become VAT registered if your annual turnover is close to or is above £81,000. If all or almost all of your sales is made to VAT registered businesses, you will be entitled for benefits for being VAT registered even if you are on the threshold. This will enable you to reclaim on any business expenses you obtain. Your accountant can deal with the VAT registration process that can ensure less admin work for you.

Helps you in Managing the Transformations

From employing more people and bringing a business partner on board to transforming your business to a limited company and setting up a voucher scheme for childcare, your accountant can guide you in each of the processes. Apart from book keeping, an accountant can be your guide in each of your business decisions, as they have vast knowledge on a number of topics. Do have contacts with a good accountant so that in any case if your business situations change they can guide you with a wealth of professional support and guidance.

Questions to Ask While Hiring an Accountant?

Selecting a good accountant can be truly a daunting task, especially if you are a start-up or new in the field of business. It can be made simpler approach in a systematic way. Here you can find 15 questions listed below to ask before hiring an accountant;

Fifteen Questions for an accountant for your small business:

• How long have you been in business?
• Do you have any references?
• How do you typically communicate with your clients?
• What steps will you take to prepare me for tax season?
• How will you improve my company’s bottom line?
• How do you calculate your fees?
• How do you keep up to date?
• What challenges particular to my industry concern you most?
• Which, if any, accounting programs or systems do they recommend?
• Will my account be handled by a single person?
• Can you give me your thoughts on a certain deduction?
• Why should I hire you as my accountant?
• Does the accountant speak your language?
• Can you provide feedback on my current accounting system?
• Do you foresee any conflicts of interest?

The above questions are to be asked in the beginning to assess the aptitude of the potential accountants. Once appointed, you are likely to work with the accountant for some years. Hence it is worth spending time with them to assess their skills and suitability to meet your business needs.

When should Start-ups think about Consulting an Accountant?

By now, you have already understood why professionals are required for your accountancy work. Consultancy Giants like McKinsey, Bain, BCG, etc. are very expensive and are hired by big corporates and multinational companies. In the recent few years, with the emergence of start-ups revolution, a huge number small to mid-size accountancy firms have started coming up. Most of these firms are offering important accountancy services like company registration, business plan creation, pitch decks and fundraiser plans. The reputed ones in the block do offer Strategy and Management Consulting services.

So, now you have to decide, knowing your cash flow and your business size and type, whether your start-up need Consulting services? If you find the right match, an accountancy consultant can be of great advantage.

Advantages are listed below and if it suits your business needs then it is would be your sole decision to hire one;

• When you will need to know the industry best practices
• To make business plans
• Well defined milestones
• To know the market
• Access to right contacts
• Things done quickly
• For third perspective
• Access to data and analytics
• A global perspective
• A specialised professional
• A vision into the future
• Someone to encourage you
• Neutrality/ Consensus building
• Some who knows multiple industries
• Someone to tell you what is working and what is not

Common mistakes Start-ups making with regards to accounting

Stay on top of your tax obligations; and ensure you are not making any mistake as a start-up.

1. Choosing the wrong legal entity

Choosing wrong business entity can lead to major business obstacles. Whether you choose sole proprietor, partnership, or one of the forms of corporation as your legal business entity, there is no right choice for your company. Know about the advantages and disadvantages of each entity before making the choice. Learn what are the tax laws associated with each one and then make your decision.

2. Not understanding your tax obligations

Know you tax obligations. Many a times, when start-ups start earning profits, they are unaware of the tax obligations that their business attracts from time to time. Based on the location your business is established, you may be responsible: state and federal taxes, licensing fees, payroll taxes, 1099s and more.

3. Not asking for professional tax help

Not hiring a professional to manage your finance and taxes is a major mistake that most of the start-ups do. You should concentrate on your job of focusing your energy on creating strategies for your business and working on products, services, business relationships and other big pictures. Finding a tax advisor is the next big job once your business is up and running. A tax advisor provides guidance on taxes, liability, and all other legal rules and regulations.

4. Blending business and personal finances

It is important to separate business and personal finances. Most of the times start-ups do not separate and later this leads to confusion. But, the worst is when you could be sued and could be charged additional taxes due to your mixed business and personal finances. And further, your company’s corporate status could be disrobed. Avoid mixed finances and establish and maintain separate income statement and balance sheets.

5. Not deducting business expenses

Manage your expenses accurately. Whether you are travelling or arranging a dinner for your staff, partners and clients, or purchasing office consumables you should include everything in your business expenses. You are also entitled to deduct organizational fees and rent and utilities, if your office is your home. Keeping records of expenses can make filing of your tax returns simpler and easier.

6. Not using the right tools

Choose the right tool to manage your accounts and finances. This will help you figure out how to track all the financial transactions in your organisation including - expenses to revenue earned, billing, and all financial obligations. Several tools are available in the market – both software and cloud based to choose from. But there are many other systems -- both software and cloud -- to choose from.

7. Not paying quarterly taxes

Not paying your taxes on time can make everything messier. Whether you are required to pay taxes quarterly or not, it is recommended that you keep your books updated to avoid end-of-the-year tax worries. Stay on top of your tax obligations by planning your taxes ahead with the right professional assistance.

DNS Accounting Services for Startups & News Businesses:

At DNS Accountants, our experts specialize in offering tailored accountancy services for startups & new businesses. We’re a British accountancy award winning firm, committed to help startups & small businesses in UK through our services. From setting up a company to tax return, we do all. Book a free consutation with one of our experts today!

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.