Most business owners and startup founders are reluctant to hire an accountancy firm in the initial stages of their new business because for a new business it is unthinkable to hire an accountancy firm when you don’t actually need the services right away. As a business owner, you would need to make smart decisions especially when you are just starting off and hire an accountant when you need to make the first set of annual accounts or make your first tax return.
There are business owners who make the decision of hiring an accountant right from the getgo, as they believe that an accountant should be on board when the company rents its first office, hires its first employee, outsources its first service or makes its first transactions, but these business owners can be differentiated from those business owners who don’t hire accountants straight away by a single fact and that is capital. If you have the capital to put an accountancy firm on the payroll or hire an accountant for
their services for a certain period of time then you should go for it and if you don’t then you should wait for the time when your company actually needs an accountant to be on board.
For companies who want to stay cost-effective for the first year, they can also hire accounting services as there are plenty of cheap tax return accountants London that can help them.
How can an accountant help a business?
You can sit down with your accountant and formulate a business plan that can forecast the cash flow of your business. This will allow you as a business to make financial planning more robust and make more informed decisions regarding your business.
Accountants also act as business advisors who help you make sound financial decisions for smooth sailing and keep your business away from falling into financial trouble that you may get into if you don’t hire a professional to do your taxes or set up your annual accounts. A professional accountant can help you with financial planning to build a financial model that can more or less accurately predict the future. The purpose of this model will be to give estimates on your revenues, costs, goods sold, overhead and the al important cash flow. However, in a young company, this model will not be always so accurate, and it will be based on many assumptions, but this needs to be done to develop more and more assumptions and test these assumptions reliably.
What is a good financial model?
Along with a cheap tax return, a professional accountancy firm can help you identify the key revenue drivers by making accurate assumptions and also forecast expenses as your company grows. However, the financial model that you may opt for is not guaranteed to playout as planned because the company will pivot and change in the future but if you can capture the key assumptions it will be considered as a strong financial model nonetheless.