Accounting is the process of organising, regulating, documenting and evaluating an individual’s or business’s financial records.
On a personal level, accountants can advise on financial decisions such as investments, loans, savings or potential salaries. On a professional level, accountants can deal with payroll, audits and tax obligations for businesses of any size, from sole proprietorships to large multinational corporations.
In accounting there can be a fair amount of terminology and financial jargon. To get your head around some of the terms commonly used, please see our accounting glossary.
In order for an accountant to gain a comprehensive idea of your or your business’s financial state, you will need to provide certain information. Accountants handle 5 main parts of a business’s finances: Assets, Liabilities, Equity, Expenses and Income.
Yes, there are two main types of accounting:
A financial accountant will gather financial data into financial statements. These statements will be used to organise all records required by internal and external stakeholders.
A management accountant will use a business’s financial information to aide managers with any business decisions such as expansion, change of direction, merging, collaborations etc.
Having an accountant is absolutely not a legal requirement for small companies, so hiring one is not a necessity. Providing detailed and accurate records of your business, however, is.
The only time there is a legal requirement is if the company is big enough to require an audit.
It is perfectly possible for you to do your own accounting, yes – but only if you know exactly what you’re doing. When it comes to DIY accounting, you’ll need to know all the rules, all the deadlines and all the standards. For more information about how to handle your own accounts, please visit our accounting services pages.
If you are struggling to keep up with your business’s financial accounts, or wish to focus more on other aspects of your business, then you may want to consult an accountant for help. An accountant will undertake all accounting duties and remove the responsibility of tax deadlines from your shoulders, freeing up your time and energy so that you can concentrate on other parts of your business.
Starting a new business can be a monumental task. A start-up involves, along with a million other tasks, market researching, choosing a company name, designing logos and business cards, branding, networking and product sourcing. It’s easy to get carried away with aesthetics and forget about the numbers. An accountant can get your business running, show you the ropes, free up your time and avoid any mistakes that that could be detrimental to a young business.
Proprietors thinking of expanding their businesses, whether to move abroad, upgrade to bigger offices, provide more services or take on more employees, need to handle the transition process delicately. Making the wrong decisions at this transitory stage could ruin the whole business. An accountant will help proprietors control costs by drawing up realistic budgets and using evidence to determine whether or not the planned changes are likely to benefit the business.
Accounting isn’t just for businesses. As an employee, you may face certain points in your career where expert financial advice could come in useful. For instance, an accountant could help with tax, pensions or salary and job changes. In day to day life, situations arise where we may need to spend or handle a substantial sum of money- like marriage, planning to have children, getting a mortgage, handling savings, inheritance and so on.
People who earn substantial amounts of money may benefit from consulting an accountant. An accountant can help with distribution, taxes, investments, shares etc. Remember you only have to book a short appointment every once in a while – hiring an accountant is not the same as employing an accountant. Two hours of advice at crucial times in your life could make a positive difference to your life decisions.
This is entirely up to you. How often you see your accountant will depend on your personal or business requirements. If you are an individual seeking personal finance advice, you may only want to see an accountant once a year. Similarly, if you are the proprietor of a small business, you may only require an accountant to help with your annual tax returns. If you wish to have absolutely no hand in your accounts, you may want to be in contact with an accountant on a more regular basis. When you contact an accountant, be sure to state your exact requirements and they will be able to predict the length of the job and how often you will need to be in contact.
The term ‘accountant’ is not regulated in the UK. Essentially, anybody who wants to call themselves an accountant, can do so. Of course, most businesses would be unwilling to hand over delicate business information to complete strangers without being assured of a certain set of standards. There are a number of regulatory boards for accounting in the UK.
There are a number of different accounting bodies in the UK, all of which have their own regulatory rules, standards and registration requirements. In order to ensure the highest possible ethical and practicing standards, Accountant Directory only accepts accountants who are registered with approved and recognised accounting bodies. Accounting bodies only accept accountants with certain qualifications and experience, so, whoever you choose, you can be assured of receiving a secure and highly professional service.
Handing over your business’s sensitive financial information can be a delicate process that involves a lot of trust. It is advisable to take your time over your decision and find out as much as possible about the services different accountants offer before deciding.
Accounting costs can vary widely depending on the practices of the firm or individual you choose, along with the nature of your own accounting needs.
Basic bookkeeping and tax affairs may cost no more than £200-£300 per year, but this really is dependent on your own accounting needs.
For larger businesses with more complex financial accounts, it will cost much more.
Although many people are drawn to DIY accounting because they’re put off by the costs, it is widely thought that businesses eventually recoup the cost of a good accountant in the amount of tax and fees accounting expertise can save.
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