Do I really need an actual accountant? Can’t I just use accountancy software and do it myself?
This week’s Secret Soloist is answered by Paul Clements, founding principal and CEO of Clements Dunne & Bell, a chartered accountancy and business advisory service.
To answer this question, we firstly need to consider what the accountancy software provides the small business owner and then the external accountant's role, expertise and service offering to the small business.
It is true that there is a great range of accountancy software options available and this software is becoming more and more sophisticated with further development and integration to other mediums including websites, tablet computers, smartphones, etc.
Accounting software records financial data to enable the extraction of business reporting such as profit and loss statements and balance sheets, as well as control and management of a business's other financial areas such as accounts, inventory, payroll, and job and product costing.
Used effectively, this software can be a very important and useful tool in managing a business and maximising the performance of a business.
However, this software is a tool. Providing me with some great tools such as cordless drills, lathes and chisels does not make me a carpenter.
External or public accountants are highly trained and experienced across a range of financial and taxation areas and work with businesses to assist with financial reporting/accounts, tax planning and compliance including BAS, FBT, CGT, Corporations Law compliance, financial data analysis, asset protection, business valuations and succession planning, to name just a few things.
Tax, and other legal compliance, is very complex. It can be a minefield for the business owner that not only carries significant risk but also contains opportunities that can enhance the overall financial position of the business against competitors.
Successful businesses, including start-ups, maximise their position by having a strong network of professionals such as accountants, lawyers and other specialists that partner with them with the sole objective of protecting and enhancing the business.
Accounting software allows accountants to spend less time – and therefore less of the small business's limited budget – on bookkeeping and entering source financial information to prepare accounts and tax returns. It means more time and resources can go to higher value services that can really assist the business owner to maximise performance and profitability.
So we generally find that the best approach is for the business owner, bookkeeper (if there is one) and external accountant (and other stakeholders if appropriate) to work together and determine and document the respective roles and duties of each party. This then means that the expertise of the external accountant can best be utilised within an agreed budget to enhance overall business performance and position.
This may include review of monthly or quarterly reports, analysis of key performance indicators and attending and perhaps even chairing regular meetings with the business owner and relevant stakeholders.
The business owner's skills and experience are best utilised where they add most value to the performance of the business. Generally this is not trying to be an expert in tax or accounting but rather working in partnership with external experts.
However, utilising the significant power of software including cloud options can assist greatly in maximising business performance and ultimately the success of the business.