Accountant reveals why simple compliance should be filed away

While many business owners across the region believe that calling on the services of a ‘number cruncher’ to simply ensure compliance and help file end of year returns is going far enough, Matt Jordan, Director of Shrewsbury-based DJH Accountants, argues such an approach does little to help a company in the long-term.

He claims that by utilising the expertise of their accountants more proactively in a broader advisory role, business owners will see a far greater return on investment in fees, but more importantly, also see real business benefits.

“Traditionally, the vast majority of an accountant’s fees – sometimes as much as 90% - are devoted simply towards statutory compliance and filing year end accounts,” Matt Jordan explained. “This sort of approach means there’s very little scope for added-value advice. The service on offer is dictated by deadlines, with the focus very reactive and always looking backwards. This does businesses a real disservice, as it takes little notice, or no notice at all, of looking ahead and planning tax liabilities.”

Matt recommends that business owners divide their fees more equally between compliance and ongoing advice to reap far greater rewards. “This approach is much more proactive and will lead to far more tangible, long-term benefits. Even if it’s something as simple as inviting your accountant to sit in on monthly or quarterly board meetings, such increased contact leads to far greater knowledge transfer between the two parties, which can only help in the long run.”

Such a relationship can shift the emphasis onto future events and encourage better forward planning, giving the business owner greater flexibility to make more informed decisions depending on how the company is performing, whilst also giving the accountant more up-to-date information to tax plan more effectively.

“Another advantage of this forward thinking approach is that the accountant can play a leading role in producing regular – either monthly or quarterly – management accounts, including timely details of a firm’s balance sheets, cash flow forecasts and income statements, that can be used to identify trends, both good and bad, and analyse a business’s performance. By answering fundamental questions such as ‘how much money are we making?’, ‘where are we spending money?’, and ‘are we in a position to grow?’, businesses can make more informed decisions moving forwards, while accountants can proactively plan ahead for a company’s Corporation Tax obligations, and offer ways of reducing the Corporation Tax bill, where commercially appropriate,” Matt concluded.