What Does an Accountant Do for a Small Business?

Running a small business is about more than just selling products and services. You also have to keep your books, understand your tax obligations, monitor your cash flow and make better financial decisions.

Those are all the roles of an accountant.

But what exactly does an accountant do for a small business, and do you really need one?

Accountants can take care of routine financial and compliance work while providing advice that helps your business stay financially healthy and prepares for further growth. Flintham Mackenzie provides accountancy, bookkeeping, taxation and business advisory services for small businesses throughout London and the UK.

What Does a Small Business Accountant Do UK?

So, what does a small business accountant do in the UK?

An accountant deals with a business's financial records to prepare the accounts, provide tax-compliance support and help the business owner better understand their finances. Depending on the size and nature of a business, their role can vary from basic accounting to strategic financial planning advice.

Typical responsibilities include:

• Preparing annual accounts and financial statements
• Preparing and submitting tax returns
• Supporting Corporation Tax compliance
• Offering VAT support
• Reviewing financial records
• Preparing management accounts
• Monitoring business performance
• Advising on cash flow and financial planning

Corresponding with HMRC when necessary — HMRC state that accountants and tax advisers may prepare profit and loss accounts, balance sheets, tax returns and VAT returns and give specialist advice.

For small businesses, this means having an accountant can become an ongoing financial resource rather than simply someone to submit accounts once a year.

Accountants Responsibilities for Small Business UK

The specific accountant responsibilities for small business UK will depend on the nature, size and complexity of the business. Sole trader, partnership and limited company accounts and tax requirements can differ, and a professional accountant can help identify what those requirements are and keep the relevant data well-organised.

An accountant can also help a business owner to understand cash flow, profitability and how well the business is performing financially.

Accurate financial records matter because they can help a business owner make smarter decisions. For example, FMLLP offers transaction recording, bank reconciliation, management accounts, accounts payable and receivable and tailored financial reporting. This can give the owner a better understanding of how much the business is earning and where expenses are being incurred, and help them to identify whether cash-flow problems might be developing.

What Services Does an Accountant Provide?

The answer depends on the accountant in question, but common services provided by accountants for small businesses include:

• Bookkeeping and accounting : Keeping financial records accurate and producing reports.
• Tax services : Preparing tax returns, advising on tax efficiency and supporting tax-compliance.
• VAT and payroll: Helping businesses manage VAT obligations and payroll regulations.
• Management accounts: Generating regular financial information rather than just the figures at year-end.
• Business planning : Helping businesses prepare forecasts and plan for growth.
• Business reviews: Examining a business's financial performance and identifying areas of inefficiency.
• HMRC support: Defending the business at HMRC where needed.

Flintham Mackenzie provides services including bookkeeping and accounting, taxation, payroll, business planning, business reviews, corporate tax planning and audit and assurance.

This broad offering can prove useful because a business's financial requirements may fluctuate as it expands.

Do I Need an Accountant for My Small Business?

The question of "do I need an accountant for my small business" has a simple answer. Some small business owners opt to undertake the simple bookkeeping and tax administration themselves, especially when the business is very small and its accounts relatively simple.

However, professional support can be increasingly valuable as transactions, employees, tax obligations and financial issues become more complicated.

An accountant can save a business owner time and effort and may help reduce the chance of mistakes. The UK Government has highlighted the benefits of hiring an accountant, including saving time, enhancing tax efficiency, helping with compliance and taking measures to improve the business's financial health.

The most common reasons why a small business might benefit from engaging an accountant include:

• Having a limited company
• Employing staff
• Registering for VAT
• Facing complicated finances
• Encountering cash flow problems
• Planning to expand
• Requiring financial or tax planning support
• Applying for finance
• Not having enough time to manage accounts

Single vs Double Entry Bookkeeping — Why Do I Need an Accountant?

It's useful to understand the difference between single and double entry bookkeeping because the roles can blur at times.

A bookkeeper is generally the one responsible for the daily accounting process.

This can involve recording sales and expenditure, creating the sales and purchase ledgers and reconciling entries. HMRC describes bookkeeping as maintaining primary business records that are then used to produce accounts and tax calculations. An accountant will usually take these records and use them to prepare accounts, individual tax calculations and wider financial data while providing financial advice.

A bookkeeper records financial transactions. But an accountant uses those records to produce accounts and tax data and offer wider financial guidance. Some firms, including FMLLP, offer both bookkeeping and accounting services .

Why Does My Small Business Need an Accountant?

It isn't always clear why a small business needs an accountant, because it isn't always just about producing the tax return and filing the end-of-year accounts.

An effective accountant can help business owners have a greater understanding of their finances. Instead of making decisions based solely on the cash in the business's account, they can base decisions on financial data that is accurate and current. An accountant can also help lighten the burden of business operations. FMLLP uses cloud accounting systems including Xero, QuickBooks and Sage and can offer consistent accounting help.

The core value of an accountant lies not solely in the tax return, but in helping the business stay organised and abide by its financial obligations.

For a business that is expanding or going to become more financially complex, professional accounting support can help provide relief and reassurance.

FAQs for Small Businesses

Q1. What does an accountant do for a small business?

An accountant can prepare accounts and tax returns, support VAT and payroll, analyse financial performance, advise on cash flow and offer business and tax planning advice.

Q2. Is an accountant the same as a bookkeeper?

Not exactly. A bookkeeper will generally take care of the daily financial record-keeping, while an accountant will make use of those records to prepare accounts, tax data and make financial proposals.

Q3. When should a small business hire an accountant?

Businesses could consider engaging an accountant from the outset, especially if they are a limited company or have intricate financial needs. An accountant can become even more helpful when the business expands, takes on employees, becomes VAT registered or needs to plan financially and for taxes.