Start-Up Support: Rocket Launch With The Help Of An Accountant

Start-Up Support

Why have an accountant

Starting a business can be an exciting and challenging endeavour. As a business owner, you have a vision and a passion for what you do. However, amidst the hustle and bustle of managing day-to-day operations, it is crucial to have the necessary support to ensure your business’s financial success. Start-Up support in he early stages can make a huge difference between success and failure.

That’s where an accountant comes in. You are starting up, probably unsure about how, it at all, successful the business will be. Its easy to think an accountant is an unnecessary expense. However, a bit of forethought should convince you an accountant is one of the best investments you can make.

In this blog post, we will explore the importance of having an accountant for your start-up and address the question on every business owner’s mind: Do I need an accountant now? So, let’s delve into the world of start-up support and discover why every business owner needs an accountant.

1. Its easier to start in the right way than to make changes later

Starting in the right way is easier than making changes later. In establishing your businesses you will set up processes and procedures. This takes time and effort so you probably do not want to be going back and redoing it again later. Of course, there may be circumstances when you should change. For example, if your business changes or develops a lot, or if you find existing processes are not working correctly. However, there is a lot to be said for avoiding this if you can; a bit of thought and planning can go a long way to help.

1.1 Avoiding costly mistakes with HMRC

HMRC will want to know about your business. In the past HMRC did provide help, albeit limited, to start-ups. In recent year, they have, basically, given up trying. Apart from some general and unhelpful information on their website, HMRC leave start-ups to sort themself out.

This is where an accountant comes in. We deal with HMRC and tax compliance on a daily basis. We can guide the budding entrepreneur to make sure they meet HRRC’s convoluted and confusing requirements.

1.2 Ensuring compliance with tax regulations

An accountant will ensure you comply with tax regulations by guiding you on:

  • The relevant tax laws and regulations.
  • How to keep accurate and organized financial records.
  • Classifying income and expenses correctly.
  • Paying attention to tax deadlines and submitting accurate tax returns on time.
  • Regularly reviewing and updating your tax strategies to stay in line with any changes in tax laws.
  • Responding promptly to any communication or inquiries from tax authorities.
  • Implementing internal controls and processes to minimize the risk of non-compliance.

2. Keeping track of the business’s financial success

2.1 Maintain accurate financial records from the start

A new business is likely to grow and develop, maybe rapidly. In the excitement and pressure of success, you may well not be thinking of record keeping.

This is a big mistake. You can easily loose track of payments, both incoming and outgoing. It will be harder to sort this out later, maybe after the year end. You will have mislaid documentation or forgotten what the transaction was for.

Worse still, you will not have been building up a clear picture of the financial strengths and weaknesses of the business. This sort of information is essential to make informed decisions about the management of the business, its growth strategies, opportunities and threats. Its far better to put in place record keeping systems and process from the start; your accountant can help you get started.

2.2 Why use accounting software

To streamline financial processes, improve accuracy, and save time. Using accounting software allows businesses to automate tasks such as data entry, invoicing, and reconciliation, reducing the risk of human error and saving valuable time. It provides real-time access to financial data, enabling businesses to make informed decisions quickly. Additionally, accounting software offers features like expense tracking, budgeting, and financial reporting, providing valuable insights into the business’s financial performance. By utilizing accounting software, businesses can efficiently manage their finances and focus on driving growth and success.

If you are VAT registered, the choice is largely removed from you. Since the introduction of MTD (Making Tax Digital), HMRC require your VAT accounts to be maintained electronically in a very specific way; realistically this means you must have accounting software of some sort.

2.3 Xero and Freeagent

Both Xero and FreeAgent are popular cloud-based accounting software used by businesses for managing their finances. They offer a range of features such as invoicing, expense tracking, bank reconciliation, and financial reporting. Xero is known for its extensive integrations with other business tools, while FreeAgent is designed specifically for freelancers and small businesses.

Ultimately, the choice between Xero and FreeAgent depends on your specific business needs and preferences. We are accredited to support both systems and can advise on which is most suitable for your business.

Given that Freeagent can be obtained for free (we can show you how), is suitable for nearly all smaller and simpler businesses and will save you a huge amount of time and effort, there really is not reason for not at least giving it a very serious road trial.

I have written a separate post on the merits of Xero and Freeagent and why I do not recommend other systems.

2.4 Understanding profit and loss statements

A profit and loss statement, also known as an income statement, shows the revenue, expenses, and resulting profit or loss of a business during a specific period of time. It provides a snapshot of the financial performance of the business and helps assess its profitability.

2.5 Monitoring cash flow and financial health

To monitor cash flow and financial health, regularly track your income and expenses, analyse your financial statements, and keep an eye on key financial ratios such as liquidity ratios, profitability ratios, and solvency ratios. This will help you identify any potential issues and make informed decisions to maintain a strong financial position.

3. Relationships with banks and creditors

3.1 Banks may require accounts before providing loans

Banks may require accounts before providing loans. A simple handwritten or spreadsheet summary probably will not be sufficient. You may need an accountant to help prepare and submit this.

In many cases the lender will require the accounts to be submitted by the accountant. They are not interested in just the figures you present; they want the confidence that they have some substance by having been prepared by a finance professional.

3.2 Loan approvals

As you business expands you may want to take out a loan to finance the growth. Loan approval refers to the process of a lender evaluating a borrower’s creditworthiness and financial situation to determine whether to grant them a loan. The lender assesses factors such as the borrower’s income, credit history, employment stability, and debt-to-income ratio. Based on this evaluation, the lender will decide whether to approve or deny the loan application.

Banks and other lenders will require evidence to support you loan application. Usually but by no mean always they need information to be supported by an accountant. An accountant will need to have an established relationship with you, the business owner. They frequently ask the accountant how long they have represented you; an established track record of working with the named accountant will help your application by showing consistency and credibility.

3.3 Building trust and credibility with lenders

To build trust and credibility with lenders, follow these steps:

  • Maintain a good credit score by paying bills on time and managing debt responsibly.
  • Keep accurate and up-to-date financial records. Prepare a well-organized business plan to demonstrate your ability to repay the loan.
  • Provide collateral or a personal guarantee to secure the loan.
  • Establish a positive relationship with lenders by communicating regularly and being transparent about your business’s financial health.
  • If possible, provide references or testimonials from other lenders or business partners.
  • Demonstrate a stable income and cash flow to show that you can meet loan obligations.
  • Be prepared to explain any past financial difficulties and show how you have overcome them.

A good accountant will help prepare and present your financial information effectively. Finally, be patient and persistent, as building trust and credibility with lenders takes time and consistent effort.

Conclusion – Start-Up Support is available!

Please feel free to contact us if you require assistance from a professional accountant, who is experienced in handling financial records and providing expert advice on financial matters. Our team of UK-based accountants is well-versed in UK tax laws and regulations, ensuring accurate and compliant financial management for individuals and businesses alike. With our expertise, you can trust that your financial records will be meticulously maintained and that you will receive knowledgeable guidance on maximizing your financial potential. Reach out to us today for comprehensive accounting services tailored to your specific needs.