Two Types Of Auckland Accountant – Which Do You Need?
Most people think that one accountant is much the same as any other. After all, they all work with the same tax laws and regulations so there can’t be much room for flexibility or creative thinking.
All that is true but there are two types of accountant you need to know about.
First, there are those accountants who simply offer compliance services. They generate your annual accounts then prepare and file your tax returns. This is the majority of accounting firms. They help you with the financial compliance and your tax obligations but that is it. They add little value to your business and generally leave you alone to carry on with your business.
The second category is a small group of tax and financial accountants who also act as business advisors. They spend time with you explaining how your business is performing and show you what you can do to make more money, for example:-
- Which costs you could reduce or eliminate.
- How changing prices can affect your profit or your sales volume.
- Or perhaps, the effect on your business of your debtor-days (what people owe you).
Unless you spend time with a business accountant who understands these different options, your business will probably carry on in the same way at best or more likely, it will run into problems. A good accountant will identify potential issues for you before they become a problem so you can take action to safeguard your livelihood, maybe even your home if that is used as security with a lender.
This sounds like a good idea, working with someone who is an expert with financial numbers and reports but again not all business advisors advise. Plenty of accountants claim to offer business advice yet few actually do so.
One of the problems for many accountants is that they do not get out to see businesses operating and to fully understand the demands of the market on a business. Knowing how to interpret a financial report is one thing but actually understanding what makes a business better or how a local market operates is a different thing all together.
One of the keys here for small business owners is that the accountant should understand local markets. Almost by definition, a small business operates in a small market, often a very localised market. If your accountant lives 50 miles away, it is unlikely that they know what is happening in your locality.
Another great benefit a good accounting firm can bring to your business is a network of powerful and worthwhile connections. A good business accountant will have strong local relationships and be able to make introductions for you to other local businesses that you may not know.
Three keys to choosing an accounting firm
First, look for a local accounting firm your small business so that they can understand your local marketplace.
Secondly ask the accounting firm what sort of local networks they have.
Finally, does the accountant really understand the concept of providing business advice or are they just saying so to look better? Check what improvements they have been able to bring about for other businesses.