When starting up a business, it’s important that owners and directors are on the same page when it comes to the processes and functions of the company. Accounting in particular is one of the most vital factors in maintaining SME finances. You have a responsibility to prevent your company from falling into tax arrears by ensuring that all payments and returns are completed accurately and on time. Your budgets should also be realistic and accurately report your previous history. Without any budget in place, you run the risk of missing repayments to lenders and suppliers. Similarly, making errors when filling out tax forms can result in financial penalties, which startup owners will want to avoid. Business Rescue Expert recommend employing the expertise of a qualified accountant to keep things on track and running as smoothly as possible.
The start up stage
Accountants provide vital advice for business owners in the start up stage of the company. 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.
The growth stage
It is essential that you are given the correct advice during the growth phase of your new 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.
Solving financial issues
It is actually quite common for companies to face issues with their finances and cash flow in the beginning. 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.
Will my accountant be liable for any potential mistakes?
As previously outlined, hiring an accountant will mean passing over control of the finances for your start up. 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.
The accountant acts as a representative for your company, but any legal issues will be the responsibility of the owner. 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.
What should the next steps be?
If you do find yourself in difficulty financially, you should immediately look for advice. 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.
You should take action at the first signs of financial difficulty. 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.