4 Ways an accountant can help you start a business
Starting a new business is one of the most exciting things you can do. But that doesn’t mean it isn’t hard. We highly recommend finding the right accountant to join you on the journey as early as possible. You will eventually need to work with an accountant because of their expertise in complex business accounting and understanding of how to file essential documents to HMRC.
Here are 4 ways an accountant can help you when starting your business:
1. Decide what type of business you should have
There are different types of businesses, and when starting your business you will need to decide what structure best suits what you’ll be doing. Your accountant will be able to help you decide which option to choose.
Sole trader – You run your business as an individual and are self-employed. You are not separate from your business and can keep all the profits your business makes after paying tax. You are personally responsible for any losses your business makes.
Partnerships – A partnership business, by definition, consists of two or more people who combine their resources to form a business and agree to share risks, profits and losses. Common partnership business examples include law firms, physician groups, real estate investment firms and accounting groups.
LTD (Limited business) – An LTD company is a privately held commercial enterprise that has one or more registered employees. LTD companies are traditional companies and are their own legal entity. This status sets them apart from sole trader businesses, which are not separate from the business owner.
Corporation – A corporation is a legal entity that is separate and distinct from its owners. Under the law, corporations possess many of the same rights and responsibilities as individuals. They can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes.
LLP – This is a limited liability partnership. LLPs allow for a partnership structure where each partner’s liabilities are limited to the amount they put into the business.
2. Day-to-day business operations
When starting your business, it’s important to automate and delegate what you can so you have time to focus on the important things such as growth, marketing strategy and bringing in new clientele. Understanding and managing the financial aspects of your business is time consuming and requires expertise. Plus tracking all your incomings and expenses gets increasingly complex as the business grows.
This is where your accountant comes in. Not only will they be able to assist with understanding how to track the incomings and outgoings of your particular business in the most efficient way, but also to understand what your business can file as expenses, reducing your yearly tax bill.
3. Accessing funding for growth
If you’re not funding the start-up of your business yourself, it’s likely you will be looking for external funding. Your accountant can help with putting together proposals, assist with deciding how to allocate funding within your business, and overall give you a thorough understanding around the financials of your business growth.
4. Save your start-up money
It’s never been more important to be strategic with where your money is going than when starting up a new business. This is because your business won’t be making a profit yet, and all of your funding will be going on the setup. You will need to have a plan in place for how your profits will begin flowing in.
By having a trusted accountant in place from the get-go, they’ll be able to save you money through their in-depth understanding of business financials, allowing for more funding to be accessible for getting your business off the ground.