When you are setting up in business you may assume that you don’t need to involve an accountant until it’s time to prepare your first set of annual accounts and file a tax return. This is a serious mistake and could cost you valuable money before you even start trading. A chartered accountant will ensure that you register for taxes on time and that you tick all the right boxes when it comes to tax compliance. However a chartered accountant will be able to assist you in many different areas besides taxation. Here are four key reasons why it makes good business sense to engage a chartered accountant before you set up your business.
When you start a business it’s tempting to focus on promoting and selling your product or services right away. This is understandable, but don’t rush in without a clear business plan. Go over every aspect of your proposed activities as carefully as possible before you start trading. You may already have put an outline plan together, but have you accurately factored in all the costs associated with your business? A chartered accountant can provide more than just a second opinion and will have an excellent understanding not only of what costs you’re likely to incur, but of how to finance the business as well as providing tips and advice on what you may offset against tax. And if you need to register for VAT, you can often get a rebate on pre-trading and initial expenditure. An accurate business plan backed up with efficient tax planning will provide a firm platform on which to launch a business and ensure that there are no unforeseen costs lurking around the corner.
What trading structure?
The next step is to think about what form your business should take – a sole trader or a limited company, a partnership or a limited liability partnership?
Making the wrong decision about a trading structure at the start could have dramatic implications for you. Not only can it affect how you hold property and contracts, but it will also affect the rate of tax you pay and availability of different tax relief.
A chartered accountant can talk through these options with you and advise on what’s right for your specific situation.
Systems, software and accounting
Putting the appropriate management information, accounting and bookkeeping systems in place before you start trading will help you run your business as efficiently as possible.
A chartered accountant will know which systems will benefit you the most, so ensuring you have all the information you need to make your business profitable. Installing good systems from the outset will save you time and money sooner than you think.
Almost all young businesses need to borrow money at some point, either at launch or when they’re looking to expand. With the present economic climate, borrowing from banks may not be possible.
A chartered accountant will be able to suggest a number of alternative options, from venture capital to a range of central and even local government grants. All borrowing options have their positives and negatives, and being able to draw on your accountant’s expertise will help you decide on the most appropriate financing for you.
Using a qualified chartered accountant to help you plan and set up your business isn’t an excessive luxury, it’s a sensible investment that will reap dividends for years to come.