Good accountants can be used as a key tool for growing your business, so here are our top five ways to get the most from them.

Give them the right information

In an ideal world your accountant would follow you around, recording and considering all of your financial transactions and advising you of the tax implications.

Fortunately, accountants generally don’t have the time or desire to stalk their clients 24 hours a day. Unfortunately, they depend on you to give them a complete and accurate summary of your financial year!

A good accountant can usually draw out the relevant information with some basic questions, but the more effort you put into the basics, the less time you’ll have to spend on getting what you actually came for – an informed opinion on how you did with your finances from a tax perspective, and advice on how to minimise your taxes going forward.

So in simple terms, your first step in getting the most out of your accountant is to create an accurate and concise snapshot of your finances.

Tap into their networks

>As a small business, it is likely that the accountant you’re using is also working for a host of other businesses. Ask your accountant if they’re willing to initiate networking opportunities between you and other clients. This could lead to business deals, partnerships or a support network of people facing the same problems as you.

Value their advice

Your accountant will have expert knowledge of not only your business but of others like it. This means they can help you uncover ways of expanding your business and reducing your costs, as well as indicating areas where you need to spend more. It’s likely that any problem you face will be familiar to an experienced accountant, so they will most likely know how to solve it. Trust them!

Never lie!

Doctors can save your life, lawyers can save your freedom and accountants can save your livelihood, so always tell them the truth. Accountants need to know every fact about your business so they can work out how much tax you pay and how your business can make the maximum amount of profit. If you lie to them about your finances, this could lead to mistakes in your bookkeeping and possibly even the downfall of your business.

Arrange regular catch ups

Accountants usually have a large number of clients, meaning you can’t rely on them to contact you all the time. You should arrange to have monthly meetings or weekly phone calls with them, allowing you to discuss any problems you have before they gets too big. If you delay speaking to them and then dump all of your difficulties on them at the end of the tax year, problems may escalate and cause a last minute panic.

 
Check out our accounting support hub for more help and resources, or to ask a tax question.

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Registration for VAT

A business must register for VAT when its turnover in any 12 month period reaches the registration threshold, which is currently £90,000. It is possible to register on a voluntary basis, as this can sometimes be beneficial to the business. For instance, early registration means a business which pays more VAT on purchases than it collects on sales is able to reclaim the difference.

Rate of VAT

There are three rates of VAT – zero, standard and reduced. The standard rate is 20 per cent, while the reduced rate is five per cent. The most commonly used rate is the standard, which is applied to most of the services and goods in the UK.

There are some goods and services that are zero-rated, including food other than hot food in a takeaway or restaurant meals. Other zero-rated items include clothes and shoes for children, newspapers and books, and public transport, along with other items.

The reduced rate is applied to car seats for children, sanitary hygiene products, and fuel and power for domestic use. There are many other items that attract a reduced rate of VAT. Check out HMRC’s guide to different VAT rates, and when to use them.

VAT exemption

There are some goods and services that are exempt from VAT altogether. Among those are insurance services, the provision of credit, education, and most of the services provided by dentists or doctors.

What’s the difference between exempt and zero-rated?

There is a difference between zero-rated and exempt items, although the rate for both is effectively zero. If a registered company sells zero-rated services or goods, it can’t charge any VAT but it can claim back the VAT which it has paid on its expenses. If goods are exempt, no VAT is charged but the company is unable to claim back anything paid on the expenses.

How do I report VAT?

Businesses which are VAT registered must complete a VAT return on a regular basis. This tells HMRC how much VAT you have charged on sales, and how much you have paid on your purchases. This helps them work out whether you need to pay the difference to them, or reclaim it.

Get an instant quote for accounting support with your VAT return, or ask an accountant a free tax question.

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