Accountants Have An Important Role In Your Business…But…
Your accountant has an important role to play in your business. But it’s probably not the one you think it is. Or at least it’s not quite as ‘complete’ a role as you think.
It is a common occurrence for me to find that the relationship that a business owner or entrepreneur thinks that they have with their accountant, is not actually the one that they do have in place. How can that be?
Let’s start by thinking about the things that your accountant is likely to do for you (‘common services’):
Year End Accounts
Corporate Tax calculations
Personal Tax Returns / calculations
Here’s the thing – all of the above are produced based on historical data. Indeed it is quite possible that the information is way out of date (6 months +) by the time some businesses get their year-end accounts sorted out. 6 months is a long time in business – a lot could change – turnover could have increased significantly just as much as it may have declined, you may be employing more people, outsourcing more services, or you may have had to lay people off. The point is, the relevancy of any comment (‘overview’) that your accountant may have could be entirely irrelevant by now.
And yet many business owners rely on the input of their accountant upon the presentation of their accounts in the belief that their accountant is magically in tune with the nuances of every business that they deal with. Spoiler alert – they’re not. There is a mismatch in timing and relevancy more often than not.
So let’s take a look at that from the accountant’s perspective.
The accountant is (generally) reliant upon the business owner to supply them with the information that they need to be able to produce the accounts in the first place. In many owner-managed businesses, dealing with your accountant (and day to day financial information) is often seen as a chore rather than a pleasant experience, and often gets pushed down a ‘to do’ list as there will always be something preferable to do instead…In many cases, the year-end accounting process will be the only contact that the accountant will have with the business in the course of the year. And this is the rub of it – you are probably not paying your accountant to actually care too much about your business.
Here’s the second part – your accountant understands perfectly well what they are being paid to do, and what they’re not. They know that they are being paid to help you comply with your national regulations and tax authorities, they are not being paid to help you run your business. Gasp! But they’re my accountant…they do ‘all my finance stuff’…Err, no they don’t – they make sure you comply.
And there’s a third part to it, I’m afraid. The typical accountant business model isn’t geared up to allow them to be ‘present’ in your business to the extent that they could provide you with any sensible and consistent level of financial control or ‘financial direction’.
There’s probably one other thing that you may have noticed – the original list of common tasks that we had didn’t include ‘business advisor’. There is a reason for that – they would actually have to know something about your business in order to advise you about it. What they can advise you on is:
- Your profit or loss for the year, based on the information that you provide them
- Your company’s tax obligation based on the result of the year-end accounts
- Your personal tax position as a business owner
By all means, rely on your accountant for these things, but think extremely hard before assuming they are your de facto business advisor because they probably aren’t. You know far more about your own business than your accountant probably ever will or could (or cares to). It is more a question of taking the ‘leap’ into recognising that that is one of your key requirements as a business owner – knowing your key numbers.
This doesn’t mean that you have to train to be a bookkeeper or accountant by the way – it just means that there are some simple pieces of financial technique (like how to go about being intentional about the profit that you make, and moreover, how to make an efficient profit for your business) that you either just haven’t discovered yet, or that your accountant hasn’t explained to you (because they’ll worry about how that will empower you with knowledge in many cases and allow you to ask them pertinent questions…)
So, accountants do have an important role to play in your business, but probably not quite the same one that you had in mind, or at least not to the extent that you thought.
Make 2018 the year that you step into your financial responsibility. Efficient profit making is an easy skill to teach, and it will pay dividends (quite literally) for life. You can find out more by clicking on the link here and booking a call today so you don’t waste any valuable profit-transforming time in 2018