Five questions you should ask your accountant

An accountant is more than an accountant. They should be trusted business advisers, tax planners, bookkeeping support and payroll preparers. Your accountant can be as involved in your business as you require.  

Using an accountant is a sensible investment in your business. They give you the best opportunity to thrive, grow and succeed.  

Accountants must stay up to date with changing accounting guidelines and tax legislation. They can help you stay on top of deadlines and filing requirements, limiting penalties and fines.  

Here are five vital questions you should ask your accountant to ensure you’re ahead of the game: 

Question 1 – What do I need to know about Making Tax Digital? 

Making Tax Digital (MTD) is the Government’s plan to bring the UK’s tax system into the 21st century. 

All VAT-registered businesses must now have signed up for Making Tax Digital. They must file their VAT returns using MTD-compatible digital software. 

The Government’s plan for Making Tax Digital for Income Tax Self Assessment (ITSA) means sole traders and property owners will also have to sign up. The requirements include having fully digitised accounting records and the submission of quarterly updates to HMRC. This will massively change the layout of filing requirements for self-assessment tax returns. 

There have been some delays in implementing the changes, the current dates for individuals to comply are: 

• Sole traders and property owners with earnings over £50,000 per annum – April 2026 
• Sole traders and property owners with earnings over £30,000 per annum – April 2027 

The Government also announced at the Autumn Budget that those with earnings over £20,000 will also need to comply by the end of Parliament with more information to follow. Your accountant should keep you informed of your requirements, help you with the transition and prepare you to embrace digital software. For more information on Making Tax Digital, visit our dedicated knowledge hub here. 

Question 2 – Is it possible to become paperless within my business? 

Modern accounting and bookkeeping package run in the cloud and can offer many advantages. They provide useful tools which can minimise the need for data entry. They enable businesses to scan, store and sort accounting records easily. This online software includes QuickBooks, Xero and Dext. 

Online software allows businesses to be more efficient, as well as getting prepared for Making Tax Digital obligations. Businesses can give their accountant access to their software, meaning the accountant can offer hands-on help without the need for a back up. Learn more about what to expect when your business goes paperless here. 

Question 3 – How can I improve my cash flow? 

It’s important to know when you’re expecting cash in and out to ensure you have enough cash to run your business. Improvements to online software mean it's easier than ever to keep track of where your money is. Online software has features including sending payment reminders to customers and a live bank feed. Sending reminders to customers is crucial in getting paid sooner.

You could look at creating a cash flow forecast, or ask your accountant to prepare one for you. A cash flow forecast takes historic financial data and trends and allows you to plan and track the business' cash flow. You can build in expected changes and update this to keep your finance predictions on track. 

Keeping a cashflow forecast should enable you to spot any cash flow issues before they arise so you can proactively plan and create a solution. 

It’s important to prepare budgets and forecasts so that you know where your business will stand at the end of the month, quarter or year. Analysis of financial reports can allow you to scrutinise spending and keep you on top of your business' finances. 

Your accountant can help you develop an organised, effective cash flow model. This will allow you to adjust your business to survive shortfalls, improving your cash in and managing your outgoings. 

Question 4 – Am I claiming everything that I can? 

Businesses can claim allowable expenses that are, exclusively and necessarily related to trade. These expenses will differ business to business, depending on your structure and specialism. 

Allowable expenses can include: 

• premises costs such as rent and utility bills 
• purchases to re-sell 
• office costs such as postage and stationery costs 
• professional fees such as accounting and legal fees 
• employee costs 
• advertising and marketing costs 
• travel and subsistence costs 

It’s important to ensure you’re recording all expenses accurately and including costs that are allowable. This will help to ensure your business is running effectively and reporting the correct information to HMRC. 

Question 5 – How does the budget affect my business? 

The Autumn Budget was held on 30th October 2024. The main changes are to employers' National Insurance Contributions (NICs) and Capital Gains Tax and you can find out more in our Autumn Budget 2024 summary. If you want to know more about how these changes will impact you and your business speak to your accountant.

TaxAssist Accountants can support your business 

Of course there are lots of other conversations between you and your accountant that may be valuable to your business. Other important topics may include tax planning, directors' remuneration and VAT registration. If you are unable to ask your accountant these questions or if they do not know the answers, contact TaxAssist Accountant. We can help you grow and position your business for success. Call us on 01636 402 425 or use our online contact form to speak to our accountants today. 

Date published 9 Nov 2023 | Last updated 19 Nov 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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