Setting up a company today carries certain dangers. In January 2018, 500,000 UK firms were in “grave financial difficulties,” according to data from the Small Business Administration (SBA). This figure is 10 per cent higher than that of 2017, showing the hazards involved with being an entrepreneur.
The likes of Toys “R” Us’ management just highlighted the importance of business funding. We’ll show you how to get the best possible start for your new company or small business by hiring a competent accountant in this post.
How Vital Are Accountants for Start-Ups?
Directors and owners must be knowledgeable in a range of business functions to start up a firm. Accounting is one of the most essential aspects of maintaining SME finance. You must make sure that all tax payments and returns are accurate and delivered on time to avoid falling into tax arrears.
You must also create a realistic budget, which should include information on your company’s previous history (if you’re starting from scratch), as well as projections for your firm. You may fail to pay back suppliers and lenders if you don’t have the adequate cash flow to do so if you don’t prepare a budget (as outlined in the plan). Similarly, errors when submitting taxes can result in financial penalties that will severely damage your startup business.
As a result, we recommend that you get the assistance of a professional accountant to ensure that your documents are properly recorded.
When you first turn your computer on
During the early phases of your company’s life, a competent accountant can assist you in numerous ways. They can also help you make critical decisions that would improve your earnings.
The right accountant will also walk you through the financial side of starting a business, along with providing a realistic business plan to ensure that your liabilities do not exceed your assets. If this occurs, you run the risk of company bankruptcy.
We also recommend consulting professionals in your field. For example, offer suggestions on when to visit and how much to budget for vacation.
During growth
During moments of growth for your company, you must receive the right guidance. If you need to expand on stock, acquire new equipment, or hire more personnel, for example, your business may profit from the financial advice on business funding and any other finance alternatives that are accessible. They may also have further insights into different possibilities in addition to financial reports that explain how your firm’s development should be managed.
During financial issues
In many situations, a company will have cash flow difficulties – particularly at startup. An accountant may be able to assist with issues or suggest strategies for bringing the finances under control.
An accountant will collaborate with an insolvency practitioner to describe the financial difficulties the firm has encountered, and work to find a solution that may lead to business rescue.
Can I hold my accountant liable for any mistakes?
An accountant will, generally, assume command of your company’s accounts and any funds. However, if they submit incorrect information, you may want to seek further assistance.
For example, if you do not pay VAT and PAYE on time, you will incur additional financial penalties – even by just one day. The majority of business owners who face this situation will undoubtedly attempt to shift blame towards the accountant. HMRC, on the other hand, may see it differently.
As part of your responsibilities as a director, you must make sure all financial records are correct and that any business financing is legitimate. In other words, the accountant is a representative for your firm, but the legal responsibility rests with the director. As a result, the company will be responsible for any income taxes, fees, or financial penalties incurred by mistake.
If you go into administration and fail to pay, HMRC can seek to have your firm closed. We recommend contacting HMRC as soon as possible to notify them of the issue. They may be able to extend the payment date or negotiate a time-to-pay agreement in some situations. More information may be found here.
What can I do next?
If your company is in financial trouble, you should seek immediate bankruptcy advice. Our insolvency lawyers can assist you to evaluate the most suitable financing alternatives for your firm. For example, refinancing might be a viable option to provide the cash boost your business needs.
The input of an insolvency expert may help you gain the confidence of your bank or other lenders. An IP can also give advice and guidance on personal guarantees in a variety of situations, as well as explain the actual ramifications of each guarantee.
Finally, if you detect any financial strain, you must seek guidance. This may also help you reach a settlement with your creditors and provide you with some breathing room before they look to take legal action against the firm, or you are personally.
You have the option of consulting with our business rescue professionals about the best way to keep your company open and any alternative business funding alternatives that may be accessible.
If you’re looking for assistance with your insolvency, we recommend visiting Irwin Insolvency. Irwin Insolvency are expert insolvency practitioners in the West Midlands, with over 25 years’ experience in the UK, having dealt with businesses of all sizes and in just about every industry you can imagine.