By Andrew Gerrard, director Harding Lewis Limited, Chartered Accountants
It is a common misconception that the job of accountants is to focus on cost reduction only. For sure costs are important in a business but this is only one piece of the jigsaw. An experienced firm of Accountants can help mentor a business in so many ways. Yes, of course the usual compliance tasks such as bookkeeping, accountancy and tax are important but the value is in the advice.
Here are just a few examples:
Business start-up and planning
Planning your business is crucial not only in terms what product or service you offer but the whole environment around this.
When starting a new business, there is almost always more than meets the eye. New business entrepreneurs might find themselves asking: What structure is the most appropriate for my new venture? E.g. limited company, sole trader; How do I draw money from the company and how do I pay my employees? E.g. payroll, dividends; How do I preserve my state pension rights and have entitlement to statutory sick pay? How should I finance the start-up costs and equipment that are needed? Are there any hidden costs in running the business? How do I manage the cash flow if there is a lead time before customer receipts appear? What regulations might the business be subject to? Should I register for VAT and if so should this be now or at a later date? What type of VAT scheme is most appropriate? What impact will any off island activity have for VAT and tax and do I need to plan in advance for this? What is the most tax efficient way for me to save for retirement?
Business activity rarely goes to plan and picking up anomalies and addressing them early is vital to avoiding business disruption. The biggest shock to many business owners is the realisation that so much happens in a business behind the scenes to get it right. Having early warning systems in place is essential. Having up to date financial information and knowing what it means and what areas of the business need attention is an ongoing necessity.
Succession and cessation
Inevitably business owners have to hang up their boots at some point. This takes careful planning and rarely can you decide to stop on a Friday without a properly thought out contingency plan in place. Accountants are well placed to advise on this and, indeed, an exit strategy should often be factored into the start-up phase.
A well planned business will have a successor in place before the owner retires. This may be someone internally or perhaps a target acquirer. The plan may involve franchising or installing a management structure early on to enable growth. Working out a plan well ahead enables a more effective business to take hold, but bearing in mind the plan is constantly changing!
Finally, business failure sometimes cannot be avoided and it is a reality of risk taking. Systems need to be in place to raise the alarm when the business appears to be no longer viable. Early advice is essential to avoid legal problems and claims from third parties. Business owners may find themselves asking; at what point do I decide my business is no longer working? What action should I take and when? If company wind-up is inevitable then what form of wind-up is appropriate? e.g. members’ liquidation, creditors’ liquidation.
At Harding Lewis we provide our clients’ with advice from start-up to closure. Please get in touch (firstname.lastname@example.org) with me or one of the team for a free initial consultation and to find out if you are asking the right questions and getting the guidance your business ultimately needs.