Whether you are a new start up agency or an established recruitment business, getting the correct advice and figures from your accountant is vital to ensure your business is performing to its optimal capacity. Many new-start agencies will engage a cheap accountant who only looks after their VAT returns and year end accounts but gives minimal help and advice along the way. Most agencies will not be receiving regular management accounts in order to make current business decisions and advice will often be chargeable so directors will often not ask. Even established agencies will be getting regular figures on profitability of the sales but no real understanding or analysis of all the figures being presented and how to make a difference to them.
Below is a list of the practical services your accountants should be providing and why they are important to the growth of your agency:-
- MANAGEMENT ACCOUNTS
- VAT RETURNS AND REPORTING
- EXPENSES ADVICE
- YEAR-END STATUTORY ACCOUNTS
- TAKING MONEY FROM YOUR COMPANY
- COMPANY STRUCTURE PLANNING
When running a company it is important to understand on a regular basis not only how much profit is being generated but also what overheads are being spent and whether the company is on an upward or downward trend. Getting this information on a regular basis and understanding the figures is necessary for any business owner to make a decision on whether to continue on the same path, make changes or look to increase spending on certain areas such as extra staff, new offices or better systems.
Having a discussion with your accountant about how your VAT reporting is going to be handled will allow you to understand how this will affect your company cash-flow and also decide if it works for your future business plans. Discussing the frequency of your VAT returns (monthly, quarterly or annually) will allow you to plan when the payments will be made or when you will be able to claim VAT back. Understanding if you should be on a Flat-Rate Scheme, Cash Accounting Scheme or Annual Accounting Scheme will ensure you are paying the correct amounts at the correct times.
Claiming expenses as a company can be a mine field and different people have different views on which overheads are allowable and which are not. Discussing which expenses you are planning on spending as a business can ensure that you are not trying to claim something that cannot be offset on your accounts. Reviewing how to claim for mileage, entertainment overheads and VAT on your expenses will help you to understand the tax implications and how these will be reflected on your accounts. Also unless you have the discussion you may be missing out on claiming for some expenses you are allowed as a business.
If your management accounts are being produced on a regular basis then the completion of the year-end Statutory Accounts will be easier to plan. You have 9 months after the year end to submit your year-end accounts which should give you and your accountant plenty of time to sit down together to discuss what will be shown and if there are any changes or additional information that need to be reflected.
Planning with your Accountant how much money you need to take from your company and how to take this is a necessary conversation to have to ensure you know how the taxation will be handled and whether the company can afford this. Deciding if you take funds as a salary, as dividends or as a mixture of the two methods. Each method has its own merits regarding tax planning for the company and the directors. However, you cannot vote dividends unless the company has made enough profit after Corporation Tax and any dividends that are voted need to be reflected on a personal tax return (where further higher rate tax may be payable).
Your accountant should also be helping you to decide and organise the best course of action for your agency based on your future plans. Whether your plans are to grow a large or small agency, grow a lifestyle agency or an agency to sell in a number of years; planning the company structure and exit strategy, if done correctly and at the right time, can help you to set the wheels in motion to ensure that any plan you roll out works for you and your employees. Organising the company shareholding, preparing group structures and planning acquisitions or exit strategies are just some of the things your accountant should be able to advise you on.
At Total Back Office Solutions Ltd we feel that all of these services are important in order for all of our agencies to grow and develop. TBOS provides a fully comprehensive back office and accounts service which includes all of the practical services above as part of our fee structure. Our service includes monthly management accounts and a helpline for any of our agencies to ask any questions they may have on company/tax planning and expense advice. We also have regular planning meetings with our agencies to help them to discuss their future plans and advise accordingly.