Everyone wants an accountant’s help when tax season strikes. Few people, however, know the kind of value accountants can add outside of the systematic and detailed recording of financial transactions. Accountants can assist SMEs in numerous ways that will help their businesses grow into thriving, compliant entities.
This is because today’s accountants are much more than just number crunchers; they’re also leaders, strategists, technologists, advisors, and business specialists. Before discussing the value of some of these roles, we need to define ‘value’ in a business context.
What is value?
Value is created and maintained through tactical choices and strategic investments into the right resources and relationships to create and improve assets and competitive capabilities. These assets include innovations, infrastructure, people, and intellectual property.
Achieving a robust and sustainable business model is challenging, and a broader set of data, information, and insights is needed to provide a holistic picture of how value is created. When adding value to a business, the factors to consider are focusing on priorities such as the best use of cash, tax strategy, capital structure, employee remuneration and benefits, and social and environmental outcomes.
Creating and conserving value through knowledge and creativity is how businesses ensure longevity. An organisation needs a comprehensive, precise, and workable perspective on value to effect sustainable growth. This value creation outline helps move the business outlook from short-term to long-term value.
This is a significant challenge for organisations. For the accounting profession, however, it presents a unique opportunity. Accountants can bring a unique skill set that goes far beyond just working with historical data.
10 ways accountants add value
Here’s how accountants add value beyond number-crunching:
Meeting deadlines and avoiding penalties
Accountants help ensure that you don’t miss tax filing deadlines and the resulting penalties. Laws and regulations are constantly changing, but proper accounting systems and processes will help guarantee statutory compliance for your business. The accounting function will ensure that liabilities such as sales tax, VAT, income tax, and pension funds, to name a few, are taken care of.
Minimising your tax bill
Accountants can help you minimise your tax bill by helping you save on deductibles, keeping your financial information up to date, taking advantage of tax exemptions and incentives, and ensuring that you always receive the most up-to-date advice.
Determining your business structure
As your business grows, the legal structure that worked for you in the past may not be ideal going forward. An accountant will look at the advantages and disadvantages of each business structure, taking into account its tax-saving and non-financial considerations, and can advise you on whether to set up as a sole proprietor, partnership, or limited company. While a sole proprietorship is the easiest to run, it doesn’t offer the business owner any support or protection against business losses, debts, or business liabilities, for example. Your accountant can advise on this.
Registering for VAT
Once you know which company structure is most applicable to your needs, you need to register as a VAT vendor if your earnings exceed a certain threshold amount. That threshold often changes annually, and your accountant can keep you informed on any developments. If your business earns less than the threshold amount, registering for VAT is optional, but there are some good reasons for voluntary VAT registration, as it can save you money in the long run.
Accountants can help you save money and increase profitability by analysing expenses and looking at possible improvements in cash flow management, reducing debts, negotiating with suppliers, cost control, forecasting, maximising pricing, planning for profit, and better reporting of information to facilitate better decision-making.
Financial records show the results of operations and the financial position of your business, but accountants can help you understand how your business is tracking financially. An accountant can develop performance evaluations that help ensure your business is growing in line with projections. These evaluations can save you money by determining how your operations and people are performing. They will help clean up your records, get them up to date, and assist you in keeping track of expenses and debt. Your accountant can also help you compare your current data to your previous accounting records and help you allocate your budget appropriately.
As opposed to traditional financial reporting, integrated reporting offers a better foundation for creating value. It provides greater accountability, better communication, and increased transparency. It also means that the business can better understand and communicate the added value. Using integrated reporting means that a company can think and perform in an integrated manner, doing away with siloed information, thus allowing the executive to make better decisions with complete and contextual information. The more integrated thinking is entrenched into a business’s daily activities, the better the integration and flow of information into analysis, management reporting, and decision-making. An accountant requires essential knowledge and insights into the business to effect change where necessary. Integrated thinking allows a business to move from accounting for balance sheets to accounting for business wellbeing.
Having correct budgets and forecasts can be what makes or breaks a business. Projected financial statements consider past financial trends, market conditions and likely changes, and business expectations to arrive at a future financial scenario. Projected financial statements will help you plan for the future. Accurate financials play an essential role in these plans. Well-structured accounting processes most appropriately provide historical financial data as it helps keep your operations profitable.
Filing financial statements
Businesses are required to file their financial statements with the Registrar of Companies. In contrast, companies listed on the Johannesburg Stock Exchange (JSE) must file them with stock exchanges for direct and indirect tax filing purposes. Accountants play an essential role in the filing of these financial statements.
Best use of technology
Does your company use cloud-based software or SaaS? If so, an accountant can help you interpret the data, providing you with the insights your business needs to flourish. Accountants can also help you leverage technology and data to deliver the best value to your business in the most effective ways by helping you make the most of your software’s functionality.
Accountants provide much more value than simple number-crunching; they help ensure businesses have the knowledge, resources, and agility to remain successful over the long term.
An accountant who is commercially minded, as well as business-savvy, can be a huge asset to your growing company. Their advice can assist you in improving cash flow, forecasting financial performance, and providing a clear picture of the levers you can pull in your company to increase profitability, all of which leads to an increase in shareholder value.
White paper: Small businesses and accountants are ready to try again
We surveyed 1,947 South African small businesses – the majority of which offer accounting and bookkeeping services – to find out how they’re coping in the new world of work. We were curious to know what they’re doing to strengthen their defences against the next disruption and how optimistic they are about the future – and we were pleasantly surprised.