Heena Abbas

Article Summary:

In the age of bookkeeping being done by computer, what role should your accountant play in your business?

Role of an Accountant

Lots of small business owners question the need for an accountant. They say that they have invested a fortune on buying a computer and also that they have heard from someone reliable that they can do their accounts on the computer instead of hiring an accountant. Back in the old days when there were no computers people collected all their invoices and statements into a box and sent them off to the accountant who manually entered all the information into the ledgers and prepared financial statements. Entering all the information into the ledgers was always called bookkeeping. Now we have computers for all that.

The job of an accountant doesn't stop at bookkeeping though. Having a computer do the bookkeeping helps but a lot has to be done afterwards.

The accountant has to make sure that all the expenses have been classified correctly mainly for tax reasons. You are not allowed certain expenses for tax reasons. A good accountant will have good knowledge of which expenses are allowable and which ones are not. You need to know that the profit taxable and the profit that your accounts show are different and declaring the wrong profit to the taxman can get you a lot of stress and a heavy tax penalty.

Apart from that your qualified accountant may also be able to advise you on many tax issues regarding your business. He or she may be able to show you some ways of saving tax legally. Accountants are not tax specialists but they certainly know how to save their clients from paying unnecessary tax.

Most accountants nowadays also help their clients with managing their business by giving them appropriate business advice. Since your accountant has many clients in the same business as you, s/he can tell you about ways of better management which could be helpful for you too. For example better control over your finances.

Some accountants like to give their client staff training on using the most appropriate accounting software. This helps in the long run because it cuts out their time on the bookkeeping aspect.

Accountants also help businesses prepare accounts for the bank. If your business needs a loan the bankers will certainly need a credible set of accounts. If your accountant can state that he or she has checked your accounts and in his opinion that they show a fair picture of your business then certainly the accounts will carry the weight required for your banker to consider your loan application.

Other things that accountants help with include filing your accounts with the appropriate public office and also with the tax authorities. This is a requirement by law in most countries.

You could also ask your accountant to help you with budgeting or cash flow forecasting as well as how to arrange for finances. What's more he can also help you forecast how much surplus cash you may have in the coming months so you can invest it in the appropriate investments which could earn your business some extra income.

It's true that computers have simplified your accountant's work but there are a lot of things that s/he can help you with now. Before your accountant was busy preparing the figures with little time for business advice. Now your accountant helps you with managing every aspect of your business be it raising finance or increasing your customer base your accountant will definitely have some good advice to give you so why not call them now for help.

Heena Abbas is a qualified and experienced accountant. She writes on various finance and other business related issues specifically aiming towards small businesses.

Read all advice by Heena Abbas; Find more Accounting experts

More advice on Accounting
» Role of an Accountant
» Business Finances: 10 Ways to Organize your Business Finances
» all Accounting articles