It’s easy to overlook the crucial role your accountant plays in your business, whether they’re in-house or off-site. They’re the ones with an eye on your financial health; used properly, they can alert you to cash flow worries and financial stumbling blocks way ahead of time.
In truth, not all businesses make the most of that valuable resource, and some make their accountants’ lives outright difficult. Here are some common accountant mistakes and how to avoid them.
Accountant mistakes #1: Late submission of information
Your accountant needs ample time to consider the options when paying your tax returns. To the layman, the complexities of HMRC can be head-spinning. Accountants are paid to know the ins and outs of HMRC but even they need some time to consider the options. Just imagine if all their customers arrived only a few days before the deadline for tax.
Solution: If you want to annoy your accountant, leave everything until the last minute. Otherwise, prepare well in advance. Get your documentation in a few months before the end of the tax year to allow them time to consider the options.
Accountant mistakes #2: Inferior prior service
As with many things in life, going cheap isn’t always the best option. If you try and do too much DIY accounting or pay your mate to do it, there’s a risk that your records won’t be of the standard your new accountant requires, meaning they have to spend time tidying the mess.
Solution: Don’t cut corners. If you want some help from the start go to a professional. If cost is an issue and you need some help with bookkeeping make sure you get some relevant quality training or find someone who can provide recommendations.
Accountant mistakes #3: No system
Be truthful: have you ever just printed off invoices and receipts and thrown them in a box? Whatever you do, don’t take the box to the accountant. If you want to give your accountant a major headache then don’t keep a system for filing relevant materials.
Solution: You need a system for recording all transactions in chronological order and which is easy to decipher for someone who’s never seen them before. Create a ledger or use a reputable online system for managing accounts.
Accountant mistakes #4: Missing information
If you turn up to an accountant with a box full of receipts and invoices in no particular order then some integral information is likely to be missing. Your accountant needs to be able to balance the books to ensure you are managing cash flow correctly – they need to know everything.
Solution: Again, a proper system for managing payments, preferably online, with all relevant paperwork will help to minimise the risk of missing documentation.
Accountant mistakes #5: Mixing business and pleasure
Occasional receipts for a pint of milk or some coffee may be a bona fide business expense but receipts for that Saturday night movie or a new surround sound music system may arouse the tax man’s suspicion.
Solution: Be very clear in separating accounts and spending for business and pleasure. Ensure you don’t use the business account for personal use or confuse your receipts, and get into the habit of paying yourself a set wage from the business to manage your budget effectively.
Accountant mistakes #6: Asking the accountant to get ‘creative’
Whether you want your accountant to give you a ‘mates rates’ discount or lose invoices by accident, your accountant will not be happy. Not only would such misdemeanours impact on their reputation and professional integrity but even worse they risk losing their license to operate.
Solution: A combination of careful planning throughout the year, good systems and a great relationship with your accountant will help you to plan in advance how to manage your business’ tax affairs without resorting to ‘creative’ accounting.
In professional terms you want your accountant to be your friend. When you go through troubles in your business, remember that it’s likely something they’ve seen before. Follow this advice and you’ll have a sustainable relationship with your accountant for life.
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