Without a doubt the single most common and completely avoidable mistake I see all the…
How to Use Your Accountant for More Than Just Tax Returns
Yesterday I met with my accountant for the first time in 2017. Once we’d dealt with the technical stuff, we spent some time chatting about the state of our regional economy, and what’s happening in business generally in our area.
Our conversation reminded me of one of the steps in our “Small Company, Big Business” Program that is entitled “Set Your Foundations”. In this section, we look at what is needed to get your business onto a solid foundation for growth. Everyone knows that you can’t build a multi-story building on dodgy foundations or it will fall over. Your business is exactly the same. There are certain things that you simply must have in place before you go out hunting for that big customer you want.
One of those essential elements is what I call your “External Team”, and I have never seen this addressed in small business workshops apart from mine. These are the people who are vital to the success of the business, but are not paid by you as a staff member. Your accountant is one of the members of that external team.
Accountant or Bookkeeper? Local or remote?
I’m talking here about your accountant, not your bookkeeper. There’s a world of difference between the two roles. A bookkeeper will handle the day to day transactions such as paying bills, entering data into your financial software, sending out invoices etc. Your accountant is a qualified professional who has undergone years of education and training, and is a trusted advisor. She is able to advise on taxation planning, business structures, succession planning and all that big picture stuff.
This is the person you need, not your brother’s cousin’s friend who does some tax returns for his friends on the kitchen table. You may think you are saving some money initially by going cheap, but the long-term cost may be ruinous. The Australian Taxation Office is not a very forgiving beast if you fall foul of their requirements.
Of course, with the wonders of modern technology, your accountant can be based anywhere in the world. But there is one other consideration that sways me in favour of using a local.
Your friendly accountant – an invaluable source of business intelligence
Just as, or even more importantly than their professional knowledge, a good local accountant will have many other businesses – including small businesses – as clients. They will be connected into the business community in your area. They may even specialise in your own industry.
With all that knowledge, your accountant can be a source of absolutely invaluable business intelligence. What trends are they seeing in the local economy? How are other businesses trending? Are the banks tightening their lending policies? Are there new regulations that will affect your industry? Of course, your accountant is not going to give you confidential information from other clients, but they will certainly be well aware of overall trends that can help you in your decision making. Research shows that better performing businesses do more information gathering about their operating environment. It clearly makes sense to tap into every source of information you can.
Phone a friend
Your professional accountant will also have existing relationships with other professionals you may find yourself in need of at some stage. The most common of these is legal advice. The work of an accountant and a lawyer overlap in many areas, and having them both working together towards the same outcome is vital. For example, choosing a business structure is one of the most important foundation decisions you must make when you establish a business. Your accountant, together with a lawyer, will be able to advise you on the best structure for your situation, and avoid an expensive re-adjustment later on.
We all know the jokes about accountants being boring* (What do accountants do for fun? Add the telephone book). Personality notwithstanding, your external team needs a good accountant who will add much more value to your business than simply completing the tax returns and ensuring you comply with the law.
Are you making the most of your relationship with your accountant?
*Disclaimer: My accountant is not boring.
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