4+ Reasons Why Your Business Needs An Accountant

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StrategyDriven Managing Your Finances Article |Why Your Business Needs an Accountant|4+ Reasons Why Your Business Needs An AccountantWhether you’re starting up a new business or have a successful one already, you may feel like you don’t need to use an accountant. After all, if your financials are simple enough to calculate, why pay for the services of an accountancy firm?

Well, whether you may wish to admit it or not, there are actually several reasons why it makes perfect sense to use an accountant for your enterprise. Here are seven of the top reasons to enlist the services of a local and reputable accountancy firm:

1. You can ensure your tax affairs are all in order

Let’s face it: one of the reasons anyone hires an accountant is because they want to lower their tax liability. The thing is, if you attempt to manage your firm’s financials yourself, you could be in danger of paying too little tax. It’s for that reason alone that an accountant can make sure your tax affairs are all in order, especially with things like IR35 and capital gains tax.

2. You find dealing with finances rather boring

Trawling through tens or even hundreds of documents to determine things like turnover, profit and loss, and tax liability isn’t the most fun job in the world. If you haven’t got a head for numbers or just find the idea of dealing with company accounts boring, you are most likely to make mistakes in your calculations. That’s why it’s best to leave such tasks to professionals.

3. You can get advice on improving your business

It goes without saying that accountants have an intimate insight into the financial health of each client’s organizations. With that in mind, when an accountant works on your firm’s financials, they are best placed to advise you where you could improve things in your business to increase profitability. For example, they can suggest ways to save money by cutting out certain expenses.

StrategyDriven Managing Your Finances Article |Why Your Business Needs an Accountant|4+ Reasons Why Your Business Needs An Accountant4. You want to raise extra capital for your business

If you’re planning an ambitious growth project for your business, you may find that you need to secure funding from a third party such as an angel investor or your bank. Before you can ask anyone to lend you some money, you need to provide a detailed insight into your company’s financial health. You will also most likely need to provide financial forecasts to show that your business is a viable one. An accountant is the best person to ask for help with such requirements.

5. You need to have an audit

There are times where businesses must legally oblige with audit requests from government agencies such as a tax office. Some business owners panic when they must comply with audit requests, especially when they’ve been taking care of their financial paperwork themselves. Luckily, an accountant can make it easy for you to provide the required documentation for any audits.

6. You want to sell your business

If you’re planning to retire soon, you are likely going to sell your business and use some of the proceeds to have a comfortable retirement. An accountant can help you determine the value of your business.

Just for Entrepreneurs: How to Choose the Right Financial Adviser

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StrategyDriven Managing Your Finances Article | Financial Adviser | Entrepreneurship | Just for Entrepreneurs: How to Choose the Right Financial AdviserWhile most entrepreneurs know their industries well, many are not experts when it comes to money. To help entrepreneurs succeed financially at work and in life, they need both a great CPA and a trustworthy financial adviser. Ideally, with the right people, one firm could serve both roles. It’s possible, in my opinion, to work with two different firms, but coordination is essential to keep critical information from falling through the cracks.

What are the characteristics of the “ideal” adviser? To me, it’s all about trustworthiness, the existence of a solid process, and a holistic approach that considers all aspects of an entrepreneur’s life and business.

Defining “Trustworthiness”

How do you know whether your financial adviser is trustworthy? The perception of trustworthiness is subjective, but to me, it’s more than just likeability. It’s also more than friendship, or a reputation based on a referral from a friend, boss, relative or coworker. By “trustworthy,” I mean an adviser who isn’t considering his or her wallet when offering guidance: a person who always puts the client’s agenda first.

It’s true that some financial advisers are required to place their clients’ interests before their own because of the fiduciary standard established under the Investment Advisers Act of 1940. However, that standard only applies to certain types of advisers in specific situations, all of which the layperson is usually unaware. Finding an adviser who is required to meet the standard is one thing; finding an adviser who embraces the standard as a mindset, and who structures fiduciary processes to support the standard, is ideal. Look for an advisory firm accredited by the Centre for Fiduciary Excellence, or CEFEX. CEFEX-certified firms voluntarily undergo annual audits to verify their adherence to best-interest standards. This is supplemental to regulatory or government oversight.

Why Process Is Important

Your financial well-being is a big-picture scenario. All of the moving parts need to work together, and your adviser needs to be confident that his or her process compensates for blind spots and avoids errors. In his book, The Checklist Manifesto, author Atul Gawande discusses the difference between someone with “aptitude,” (the natural ability of a person to be able to accomplish a certain skillset) vs. “eptitude” (the application of knowledge correctly and consistently). High-performing advisers demonstrate eptitude by having strong processes in place to identify and understand your needs, and monitoring those processes to make needed adjustments. Any adviser should provide a great deal of clarity about what you can expect from the relationship. In addition, he or she should be skilled and confident in connecting your business growth with integrated and holistic wealth management that includes tax, financial and investment strategies.

It’s important to understand that a good process informs strategies, which determine the tactics you and your adviser will take toward your financial well-being. Entrepreneurs know that complexity (and sometimes, chaos!) can be the rule in getting a business off the ground. Having a trustworthy adviser who can guide you through these types of situations will help you sleep better at night.

The Need for a Comprehensive Approach

Entrepreneurs have far different financial situations than those with regular, salaried jobs, yet most advisers provide only investment consulting. Entrepreneurs need more. A financial professional suitable for an entrepreneur should ask such questions as: What was your objective in setting up the company? Was it just to have an exit strategy sale? Was it to provide a service to your clients on an ongoing basis, and then to ensure that continued as your legacy? Do you want to help your employees save for retirement, and how? Who, if anyone, are you grooming to take over your business? How can you minimize the impact of taxes that diminishes your wealth over time?

An adviser who can go beyond investment consulting has to have a very different mindset than the average adviser. The shift is from that of a master-builder, as Gawande describes in The Checklist Manifesto, to a more collaborative mindset. In premodern times, as the great cathedrals of Europe were constructed, the master builder held all of the necessary knowledge in his head and directed huge teams, but the projects were not collaborative. Today, complex large structures involve a team of architects, engineers and others who work together in constant communication. The financial services industry is on the cusp of a similar shift. Instead of working with one “perfect” adviser, entrepreneurs should look for firms with diverse master-builder teams who collaborate with, and on behalf of, the client to find creative solutions that work well for the inherent complexity of entrepreneurs and their businesses.

Choosing the right adviser is well worth the time and effort, even for the busiest entrepreneur. With the right person to watch your financial back, you’ll have the freedom to focus on what really matters to you: your family, your goals, and your company.

About the Author

StrategyDriven Expert Contributor | Wayne B. Titus III, CPA/PFS, AIFAWayne B. Titus III, CPA/PFS, AIFA founded AMDG Financial and AMDG Business Advisory Services in 2002 based on his 15 years’ experience at two large accounting firms working with Fortune 50 clients. He dove into entrepreneurship to make a bigger impact on people’s lives. As a fee-only fiduciary adviser, his loyalty is to his clients: he places their interests ahead of his own or his firm’s. With assets of more than $150 million, AMDG Financial integrates tax, financial and investment strategies to help clients make financial and life transitions successful on purpose. The company’s credo is, “From financial wisdom, better stewardship.” His latest book is The Entrepreneur’s Guide to Financial Well-Being (Lioncrest Publishing, March 2019). To learn more, visit amdgservices.com.

IT Expenditure: What Should a Realistic IT Budget Look Like in 2020?

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StrategyDriven Managing Your Finances Article | IT Budget | Entrepreneurship | IT Expenditure: What Should a Realistic IT Budget Look Like in 2020?Every business needs to have an IT department of some sort, whether on-site or remotely, in order to keep their company afloat. So much relies on computers that if they suddenly stop working, your business stops moving.

That being the case, it’s not uncommon to see much of a business’s finances go directly into making sure their IT services continue to run smoothly. But how much do you really need to be spending on an IT budget – and how much are you already spending?

There are limits to how much you should be putting out for the services you receive. This article goes in-depth with how your 2020 budget should look like for your IT software and troubleshooting needs, so you won’t spend any more than necessary. Read on to find out more!

Your IT Budget Will Increase Most at the Beginning of the Year

New year, new you – and new business. Your company is bound to shape up and adopt the “out with the old, in with the new” rhetoric. That most likely also means you’ll be getting rid of old hardware and software and investing in new tech.

Of course, this is bound to bring up the IT bill initially, as the purchasing and the installation of new equipment will be added to the tab. In most cases, however, it will pay for itself in the long run, so the initial purchase shouldn’t be seen as something scary.

Streamlined Operations Will Save You Money

As technology gets better, it becomes easier to use the software to our advantage. These streamline operations will allow you to not only better serve your customers, but will save you money as well.

There will be minimal confusion on what you need to conduct B2B and B2C interactions as well as in-house operations, and the lack of complexity will free up the IT department from working on the small stuff and allow them to focus on what really matters.

Internet Is Faster at Relatively the Same Price

Businesses need internet, and it’s good to know that each year companies are able to make their services faster. It’s even better to know that, due to competition, the internet is still being sold at the same price – or in some cases, even less.

This is good news for you as that means you get better services without the higher price, allowing you to place the money you’ve saved onto other important aspects of your business.

To make sure you stay up to date on how much you’re spending on IT needs, you’ll want to use an organizational tool such as a NetSuite price cheatsheet to make sure you know where every penny goes!

Stay Driven. Be Successful

You know what you should be spending on your IT budget for your computer needs, so now you’ll be able to watch your money flow and still get things done. But that’s only the beginning of what you need to know to help your business succeed.

At StrategyDriven, we help focused and goal-oriented business owners like yourself take on the competition and succeed in their field. We offer help from all angles, including formatting and executing business strategies, management and organizational programs, and more.

Ready to get started? Click on any of the tabs on our site to learn more about what we have to offer you. We’re sure that we can help your company to win!

Signs your business might qualify for R&D tax credits

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StrategyDriven Managing Your Finances Article |R&D Tax Credits|Signs your business might qualify for R&D tax creditsIt is common for businesses to think of research and development (R&D) to be something that is only carried out by specialist science labs and large corporations. And this can lead to them imagining that R&D tax credits are not something that could possibly apply to them. However, it is important to understand that these are misconceptions.

Businesses of all sizes can carry out R&D work – it is just a problem that many people don’t know what qualifies as R&D, or how they might go about making a claim. So here we take a closer look at R&D tax credits and examine some of the situations in which you might be able to claim them. It could be the case that you are missing out on a significant amount of tax relief for your current projects.

Here are some of the signs that your business might qualify for R&D tax relief.

You are an SME

Small and medium sized businesses (SMEs) are sometimes the most likely to miss out of forms of tax relief, because they may lack the accounting expertise to make the most of them. However, the R&D tax relief scheme was specifically designed for SMEs – defined in this case as companies with fewer than 500 staff and a turnover of under €100m.

Larger companies can get tax relief on R&D activities too, but under the R&D expenditure credit banner. But it is just quite ironic that many SMEs don’t realise they can claim on the R&D tax scheme even though it is specifically designed for them.

You’re trying to solve a problem

Even though many assume that their company needs to be scientific or advanced, however, this is not the case. You do need to be looking for ways you can improve what you are doing, and experimenting and researching ways that you can do this. But these activities do not need to be limited to a specific area.

You can claim R&D tax credits across a wide variety of industries. If you create products then it likely that you will be engaging in work that falls under the category of R&D. This could involve creating new products, or improving existing products. It may be in the production process itself, or even in distribution.

As long as there is a problem, and you are trying to solve it – you may qualify for the R&D tax credit scheme.

You are looking to advance the field as a whole

To qualify for R&D tax credits it is important that your project is aiming to advanced knowledge in the field as a whole, rather than simply as a way to benefit your business alone. For example, it would not qualify for R&D tax credit if you were just utilising an existing technology for the first time in your industry.

If your advance can be used by others, then you may qualify for tax credits. This is because the government is intending to incentivise things that the general public can use.

You are doing work others can’t

Another factor in qualifying for R&D tax credits is in showing that the work that you have carried out is not something that can be easily achieved by others. There can be many ways to do this, but one of the most effective is in being able to show that others in your field have attempted to find a solution to the problem.

It is worth noting here that being successful is not a condition of receiving R&D tax credits – you only need to show that you have attempted to find a solution.

You can show that the problem is real

To be able to claim tax relief, it is important to be able to show that there is a problem or uncertainty that you are trying to deal with. You cannot get tax relief for simple exploratory work in the hope that some positive is developed. Additionally, it means that your business cannot already have knowledge of the solution to be able to claim tax relief for it.

If you know the problem that you are trying to solve and can show how it has encumbered others, this can be a strong sign that you can get tax relief for it.

How To Use Money Wisely For Your Business

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StrategyDriven Managing Your Finances Article |Using Money Wisely|How To Use Money Wisely For Your BusinessMoney goes hand in hand when it comes to running a business. For the most part, you need money in order for your company to continue to thrive and to tick along as it may have been doing up until now. However, mistakes can be made when it comes to money, and that’s really not something you want when it comes to your business. So here are some tips for using money wisely and to give you the best opportunities to have a thriving and successful business for years to come.

Be Wary Of Risk Taking

Risks are good to take for your business, but only if you can afford to do so. There are many risks that will come by throughout the course of the company’s existence. Some will be beneficial and work the risk, regardless of whether it pays off or not and some, not so much. It’s good to have a keen eye on which ones look good and then thinking about which ones are going to be the best option for your business at that time. Turning down these risks are going to set you back any more than where you’re at now. Instead, look forward to the opportunity to get that offer again, and perhaps next time you’ll be ready to front the risks. No opportunity is worth losing your business over, so always consider the pros and cons that come with each venture, whatever that might be.

Don’t Hire Too Soon

Hiring is necessary for many businesses to do, some a lot more than others depending on where your business is currently. Every staff member that is hired needs to be bringing something new and substantial, especially when you start creating new roles too. Think about whether your company needs that extra person right now or whether it can be covered by someone who is already within the organization. They might need a pay rise or promotion, but it’s not going to be as expensive as what it would be to hire someone completely brand new and have another responsibility to pay out for as a business. Try to not make rushed decisions when it comes to recruitment because it can often happen, and that ends up being a regret which might end up affecting the financial health of it too.

Get A Loan For Big Expenditures

Loans are a good way to spread the costs of bigger expenditures for your business that maybe you just can’t afford in one go. It might be for something fairly important and an opportunity that is too good or detrimental for your business to miss out on. When getting a loan, you want to make sure you’re picking the right one and that a fast business loan is what you want and can afford to pay back. Remember that this is not your money, and therefore, you need to be careful with how much you’re asking for and how quickly you can pay it back. Loans are good for short-term borrowing, but it’s important to not get tied into something for too long that you start losing more money than you intended through crazy interest rates and hidden fees.

Invest In Quality

Quality is going to save you money because most of the time, it’s not going to let you down. A lack of quality will, and it’s good to remember this when it comes to whatever you buy for the business. Whether it be your manufacturing process and the suppliers you use or the type of workstations you have for your employees. Everything needs to be something you invest your money into because it’ll hopefully avoid you having to pay any of it back in the future. Quality won’t let you down when it’s good, and when it comes to business, you don’t want that to be something that’s happening when it could potentially affect your clients or customers. The lack of quality you have in your business as a whole, the more you’re going to find yourself paying out in the future. When you’re trying to save money, that’s not what you want to be happening.

Outsource Where Possible

Outsourcing is considered to be a popular thing for all businesses to do when they maybe don’t have the space or financials to pay for an extra person to work at the company. At the same time, it’s also good to be able to find an alternative when the task or job that’s required, doesn’t need someone full-time. You might want to consider doing this if you were thinking of hiring someone. It’s a good in-between until you find that you do need them. When outsourcing, make sure you’re doing your research to find the right companies and don’t forget to keep tabs on them. It’s important to make sure that whomever you pick, is someone you can keep up communications with to ensure everything ticks along perfectly.

Do Regular Budget Meetings

Keeping tabs on your money starts with budget meetings. These are worth being quarterly to make sure that you’re keeping up to date with everything that’s changing within the company’s departments. Budgets can change, and although some departments may stick to their budgets, others might not, and so it’s also important sign-off is something you make a thing when it comes to dealing with the finances of the business. That means someone or more than one has to oversee those big expenditures that could cost your business thousands. It’s a safety net worth having so that your accounts team are aware of any big costs that might affect the business for the rest of the financial year.

Using money in your business is something that should always be monitored as your business changes and develops. Focus on regular budget meetings and not making rash decisions when it comes to recruitment or taking risks. Outsource where you can and make sure you’re investing in quality when it comes to your business, in whatever way that might be.