Debitoor is pleased to announce the partnership with the Association of UK Accountants. This organisation works with 300 independent accounting practices accross the UK and all the accountants are Chartered Management Accountants. If you're on a lookout for someone to handle your numbers, just head over to the dedicated Debitoor page and pick your local from the Accountant list.
Following this, we had a chat with Steve Bicknell - the Business Development Director for the Association of UK Accountants to find out what the business he represents is all about and to shine the light on the most common accounting mishaps.
What makes 'the Association' different from other accounting organisations?
Unlike others, our accountants all worked in business before going into practice and we are focused on helping clients to maximise profit using management information rather than just helping with tax compliance. All of our accountants work together as a team sharing knowledge and experience, supporting each other.
Who is your typical client?
In our December 2014 survey 39% of clients had a turnover below £100k
Our survey also showed that the top 4 business sectors we work with were construction, manufacturing, professional service and retail.
Start up businesses try to do everything themselves at the very start, that also includes accounting. When, in your opinion, is the right time to get accounting services, rather than keep up on your own?
Often business owners wait too long before they realise that they need help from an accountant.
Key reasons are:
- not understanding the difference between a book keeper and an accountant
- thinking that an accountant will just be an extra cost – the reality is that most accountants will save the business many times their cost
- thinking that accountants are just bean counters.
But if you choose a qualified and experienced accountant they can bring huge benefits: management tools to improve profitability, cost controls, tax savings, growth strategies, business planning, business strauctures and much more. So don’t wait too long - getting an accountant should be a priority for all businesses!
In your experience, what are the most common mistakes that entrepreneurs make when they start doing their own accounting?
First off - not having a separate bank accounts. Many start ups try mixing business and personal transactions in their personal bank accounts, its a total nightmare, don’t do it, get a business bank account. Mixing things up will almost certainly have tax implications.
Not registering for tax or filing returns is another one. Getting things right at the beginning is extremely important and a CIMA Accountant can make sure that you choose the right business structure and will help you register for VAT, PAYE, CIS and other taxes. Choosing the right VAT scheme will save you tax. Not registering and filing returns will have severe consequences and lead to fines and penalties.
Also - contract mistakes.Ask your Accountant to review you contracts, they will be able to give you lots of useful tips.
Running out of cash: draw up a Budget and Cashflow and forecast how much cash you will need to run the business, looking at your cash cycle and managing it will be vital. If you need funding ask your Accountant for help, they will be able to look at all the options and help you choose the option that’s best for your business.
Accounting - many start ups fail to keep control of their accounting, by working with an accountant and using Debitoor you can avoid this problem.
Why would you recommend Debitoor to the new businesses?
I use Debitoor myself, I do business consultancy work and wanted an easy way to raise invoices and keep track of payments, Debitoor was perfect for me.
Cash is king for new businesses and raising invoices quickly and tracking payments is vital, Debitoor lets you do this for free. You can then move to paid versions of Debitoor and use Debitoor for all your accounting needs. It’s really easy to use, its low cost and fantastic value.
What are the most common business problems you have to deal with during the day?
So here are my top 5 common accounting problems we deal with:
1. Not doing any accounts – the shoe box approach to business
This is the most common mistake, book keeping is best done as you go along, putting all the paperwork in a shoe box or carrier bag is a really bad idea as you have no idea how your business is performing.
2. Not keeping receipts. Often small business miss out on claiming all their expenses because they fail to keep receipts and lose track of their spending
3. Not reconciling. Reconciling your bank statements to your cash book is vital to make sure that all of your income and expenses have been recorded in your accounts.
4. Using the wrong accounting system. For some businesses a manual cash book and records are fine but for many accounting software such as Debitoor will be needed to keep track of debtors, creditors and VAT. Make sure you understand your accounting system and operate it correctly.
5. Mixing business and personal expenses. Some sole traders even mix up business and personal bank accounts and in extreme cases don’t even have a business bank account. This can cause errors and often means that a sole trader will either claim to many expenses or to few.
Improve your chances of business success, avoid the common problems listed above.
Stereotypically, accounting doesn't come across as the most exciting field. What makes your job interesting to you and why do you think accounting is important?
One of the great joys of working as a ‘CIMA MiP’ (“Chartered Institute of Management Accountants, Member in Pratice”) is that we are generally dealing with ‘small’ and ‘micro’ client businesses (micro defined by EU regulations as firms with less than 10 employees/ £2m turnover; small defined as firms with less than 50 employees/ £10m turnover) and that we become involved in an enormous breadth and depth of subjects.
If you don’t have accounts, you will lose control of your business and fail to keep track of who owes you money.
What motivates you daily?
Helping businesses to succeed. We want to use our skills to help our clients to achieve their goals.
If there's one most important thing you would suggest to a new business to consider in the New Year, what would that be?
The best advice for all new businesses is to not put off doing your accounts, don’t take the shoe box approach, use Debitoor!