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The importance of accountancy services for small businesses

Running an SME is hard work, as there is an awful lot to think about and do.

From keeping pace with your customers’ needs and changing regulations, to marketing, ordering materials at the best price, and sourcing the right equipment, it all takes up time that you seemingly don’t have.

With so much to do, it’ll be all too easy for important tasks like gaining new clients and maintaining your accounts to be done haphazardly. When this happens, your company will suffer.

Therefore, if you want your small business to prosper, take a look at the following negative consequences of not keeping up to date with accounts to know what to avoid:

Late or incomplete tax returns

The first and probably most damaging issue is that without up-to-date accounts, it is impossible to file an accurate tax return. It is also difficult to file it on time. An inaccurate tax return, or sending it in late, can result in fines and prosecution.

Cash flow issues

Maintained accounts are the best way for firms to get an accurate picture of cash flow. Using the right reports, it is possible to look several months ahead and spot financial pinch points before they occur. This is vital for businesses, because it allows short-term finance to be arranged or changes to workflow to be made to avoid these hard times.

Companies that do not look ahead like this run the risk of going bankrupt or not being able to pay their suppliers on time. Late payment of invoices can lead to prosecutions, damage a firm’s credit history, and make it difficult to secure supplies and materials at a good price.

Poor profit and loss analysis

All enterprises need to monitor their revenues, whether positive or negative, but there are a number of fluctuating variables, including the cost of materials, fuel, and the price that customers are prepared to pay. This means that a product that makes a firm a healthy profit one month can end up generating losses the next.

For this reason, SMEs need to monitor profit and loss closely, adjusting prices accordingly or sourcing cheaper materials to stay ahead of the game. The only way to monitor profit and loss effectively is to keep up-to-date and accurate accounts.

Given the importance of accurate accounting, it makes sense to spend a little money on employing a qualified accountant. Any company that does so will know that its accounts are always going to be up to date, while being able to use accounting reports to inform important business decisions.

Posted by Mark
March 9, 2015

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