What qualities should you be looking for?

Starting up a business requires directors and owners to understand a variety of business functions. One of the most important factors in maintaining SME finance is that of accounting. To ensure your company doesn’t fall into tax arrears, you must make sure all tax payments and returns are complete and delivered on time.

Similarly, you will need to produce a realistic budget, detailing previous history (you can use competitor accounts at Companies House as a starting point, if starting completely from scratch) and forecasts for your business.

Without a budget, you may fail to make repayments back to suppliers and lenders if you do not have the proper cash flow to do so (as outlined in the budget). Likewise, mistakes when submitting taxes can result in financial penalties, further affecting your startup company.

As such, we recommend seeking the advice of a qualified accountant to ensure your records are filed properly.

During start up

During the start up period for your business, a qualified accountant can provide invaluable advice for your business. Similarly, they can assist in making decisions that will maximise your profits. The right accountant will also guide you through the financial section of starting a business and outlining a realistic business plan to ensure your liabilities do not overtake your assets. If that does happen, you risk facing the possibility of company insolvency.

We also recommend speaking to peers within your industry as to the particular sector. For instance, share advice on the peak periods and expenditure.

During growth

The correct advice is critical during periods of growth for your company. Your business can benefit from the advice regarding business funding and any finance options that are available if you need to expand on stock etc. In addition, to the financial reports that indicate how your company growth should be handled, they may have further insights into alternative opportunities.

During financial issues

In many cases, a company will face cash flow issues – especially at the beginning of its life. An accountant can help mitigate the problems or identify any methods by which to bring the finances under control.

In the case of insolvency, an accountant will work with the insolvency practitioner to provide details on the financial issues the business has faced, and work to come to a solution that could even result in business rescue.

Can I hold my accountant liable for any mistakes?

As mentioned above, an accountant will, likely, take control of your accounts and any finances for your startup business. However, in the very rare case they file the wrong information, you may be seeking further advice. For instance, it’s critical you submit VAT and PAYE on time, or you will incur additional financial penalties – even by only one day. Almost every business owner who suffers this fate will likely attempt to point all liability towards the accountant. However, HMRC may not view it this way.

As part of your director duties, you must ensure the accuracy of all accounts and any business funding. Essentially, the accountant is an agent for your business, but the legal responsibility lies with the director. Therefore, the company will be responsible for any taxes, fees or financial penalties. If this does happen and you fail to make repayments, HMRC can move to close down your company.

To rectify this situation, we suggest contacting HMRC immediately to inform them of the situation. In some cases, they may be able to extend the payment deadline or negotiate a time to pay arrangement. More information can be found here.

What can I do next?

If your company is in financial difficulty, you should seem immediate insolvency advice. Our insolvency practitioners can work to assess the best finance options for your company. For example, refinancing may be suitable to provide the necessary cash boost for the business.

The input of an insolvency expert can be instrumental in gaining the trust of your bank or any other lenders. Similarly, an IP can provide advice and guidance on personal guarantees in various circumstances, and outline the very real consequences with every guarantee.

Ultimately, you must seek advice for any signs of financial distress. Doing so may also help you to come to an arrangement with your creditors, putting in place realistic monthly repayments and providing you with breathing space before they look to take any legal action against the company, or you personally.

You can speak to our BusinessRescueExperts regarding the best route to avoid closure of your company and any other business funding options that may be available.