Accountants in Medway
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On the hunt for reliable and credible accountants in Medway? Then look no further than Medway Bookkeeping – the first port of call for all accountancy needs and an accountant Medway residents trust.
The process of accountancy and bookkeeping can be difficult to comprehend. To answer some queries that might arise, here is some invaluable information.
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How to Invoice Expenses Properly
When operating as a small or medium-sized business, it’s important that business owners know how to claim for expenses. As the expenses need to be paid from the business’ bank account and submitted consistently every month, it’s essential that outgoing cash is monitored for tax purposes.
When invoicing for business expenses, the following information needs to be gathered in advance:
- Any sales and purchase invoices.
- VAT returns – many small businesses wonder, what is VAT? To put it simply, VAT (or value-added tax) is a goods and services tax that’s frequently added. To comply with HMRC, this will need to be stated before it can be claimed back.
- Employee wage slips.
- Any fuel receipts.
- Any receipts from travel.
- Credit notes.
- Bank statements.
- Any other business expense receipts – without these receipts, the business may not be able to benefit from tax relief. This is not only crucial for small to medium-sized businesses but limited companies and umbrella companies.
To do this effectively, many people use an accountant or accountancy software to help keep track of any expenses, prepare VAT returns and submit them throughout the year.
Any expenses that aren’t considered to be linked to the business will not be included. For example, clothing that employees are wearing – which aren’t directly associated with the business.
What Are the Duties of an Accountant?
An accountant has many duties that they perform within their role, including:
- Providing financial information through a report to the business by analysing and researching business data.
- Preparing business accounts, liability and asset entries by compiling account information.
- Using account information to create financial transaction documents.
- Paying expenses that have accrued and ensuring that they are (along with Financial end of year returns) submitted to HMRC using the business’ UTR number (unique taxpayer reference number) as mentioned above.
- Analysing accounting options and recommending any suitable financial actions for the present and future.
- Preparing balance sheets, profit and loss statements and other crucial reports by analysing the business’ current financial status before logging them on the system.
- Auditing documents and substantiating any financial transactions throughout the years.
- Preparing and recommending any procedures and policies in order to maintain accounting controls effectively – i.e any new accountancy software that would have a positive impact.
- Ensuring that all financial records are maintained in compliance with the law.
- Completing database backups to secure financial information.
- Responsible for paying wages and paying dividends within the business.
- Forecast the future financial position of the business and complete risk analysis regularly.
- Analyse business plans.
- Take charge of any insolvency cases that arise.
- Maintain high ethical standards throughout their time at a company.
What are the Daily Activities of an Accountant?
As mentioned above, a business accountant Medway businesses or businesses in other locations use have numerous responsibilities in their day to day role. Not only will they refresh the business’ financial data by analysing the monthly outgoings and ingoings (whilst recording it through software), but they will examine any receipts for expenses and reconcile transactions.
However, the daily activities will, of course, depend on what the business sells – whether it’s services or goods and whether they are specialised within their field (i.e a tax accountant). To identify the right accountant for a business, it’s first important to determine the type of accountant that’s required;
- An Auditor – these are external accountants that will check the business’ annual report that includes a statement of the business’ accounts. Analysing the accuracy of it, along with ensuring that the business’ financial practices are up to scratch, they will give an invaluable insight into business finances by showcasing their findings via a report.
- Financial Accountant – this is a traditional type of a business accountant that will keep track of a business’ financial transactions, produce financial reports for external regulators, utilise accountancy software, etc. daily.
- Management Accountant – although many of the daily activities are similar to the above, a management accountant will create reports that are used within the business. This financial information is used by business owners and managers in order to make crucial business decisions. They will also use statistical techniques and make recommendations regarding business finances daily.
- Tax Accountant – deals with the business’ tax liabilities, interpreting changing tax legislation and tracking all transactions every working day. However, as mentioned above, a business accountant can incorporate this responsibility into their role.
IR35 Explained – as a business, the term ‘IR35’ might come up. This is two sets of tax legislation which is designed to combat any tax avoidance by employees within a firm. However, it does not apply to small organisations. If there are any queries about this, a tax accountant or business accountants in Medway that are responsible for the tax can answer this.
What is a Cost Sheet?
A cost sheet is a report that includes all of the business’ costs throughout the year. It’s used to determine the margin that’s earned based on a particular sale or project and can be used as a basis for the setting of prices in the future.
It can also be used as an invaluable medium of communication between all levels of management due to its lucid and simple form.
A cost sheet format will typically include:
- The total cost of a service/product or the cost per unit of a product.
- Any other costs associated with it – such as warehousing, distribution, production, etc.
- The percentage of each expenditure to the final cost.
- A comparison of two periods of time and any possible inefficiencies.
What Can an Accountant Do that a Bookkeeper Can’t?
Bookkeeping and accounting roles are very closely related but they are not the same. There are a few key differences that every small or medium-sized business needs to be aware of between the two when choosing which one they require within their organisation.
A bookkeeper’s primary concern is to accurately record a business’ financial data throughout the year – that is the basis for their entire role. Whereas an accountant is responsible for the entire accounting process – from analysing the financial data to preparing financial statements and performing audits throughout the year.
Holding a professional degree in accounting and an AAT (whereas a bookkeeper might only hold a certification through a college course or an apprenticeship), they have far more responsibilities than that of a bookkeeper and can sometimes take on the role of a bookkeeper. Far more involved in the business, they are called upon to review accounts and advise on the next financial steps for the organisation.
A business will sometimes use a separate bookkeeper and an accountant, or find an accountant that offers a combination of the two roles. As a bookkeeper’s duties lay the groundwork for an accountant’s role, it’s essential to consider which option is better before taking the leap.
Do I need a Bookkeeper or an Accountant?
Following on from above, it might be time to determine whether a bookkeeper or an accountant is needed within the business. As a small or medium sized business, it’s often recommended to seek professional help when it comes to dealing with the business’ finances. But which is better – a bookkeeper or an accountant?
This will very much depend on what they are needed for. If a business requires transactions and for their financial books to be maintained, then a bookkeeper is the most suitable professional to look for. Advising on the best ways to collect and store crucial business information, they are vital when it comes time to submit the business’ books at the end of the financial year.
Although an accountant could also create these reports if they are working solo, they typically analyse them, prepare balance sheets, audit documents, etc. As they tend to offer an ‘all-in-one’ package, they are ideal for businesses of all sizes.
Of course, if a business is looking to save money and doesn’t require a complete solution, then a bookkeeper could be the better option.
What Do Accountants Do?
The primary task that accountants do – whether they are internal or external to a business is to prepare and examine any financial records that they have. Ensuring that they are accurate and that they are no discrepancies, they are key to a business’ operations.
Is the business making a loss? The accountant will be able to identify why and bring it up with the business’ management team. Or perhaps the business is not VAT registered? The accountant will take this responsibility on, ensuring that the business goes through the VAT and PAYE registration processes. If it’s a startup, they can help with the registration bank account process so that the new business can operate.
Not only will they guarantee the above is under control, but they will save a business from costly mistakes. For example, if a business does not keep accurate accounting records, the HMRC can fine them. Similarly, if there are any outstanding invoices or loans, they could find themselves in debt very quickly.
Without the right financial accountant and accountancy software in place, a business could start to become disorganised and their finances can be put on risk – which is why so many people seek professional help rather than taking on the responsibilities themselves.
There are plenty of accountants around the country, including highly-trained and skilled accountants in Medway.
Is a Financial Controller an Accountant?
The simplest way to distinguish the difference between the roles of an accountant and a financial controller is to look at their specific roles within the department and the level of hierarchy they are at in the organisation.
Although an accountant will analyse how a company is financially performing, a financial controller, on the other hand, will oversee the production of each of the financial reports and monitor a business’ cash flow. Responsible for the money and a team of accountants, as well as ensuring that the business’s financial processes align with government reporting requirements, they can be pivotal within an organisation and are considered to be the ‘chief accounting officer’.
Typically when working within smaller companies, they will also set up the entire accounting infrastructure and perform any bookkeeping tasks (if there is not a separate bookkeeper already present within the company).
Although an accountant tends to have work experience and a degree in accounting, a financial controller will have a wider focus other than accounting. Many have attained a Master of Business Administration or a relevant advanced degree within finance as well as taking on years of accounting experience beforehand.
Starting Up With An Accountant
A start-up business will find it useful to have an accountant due to the duties that they will take on. But it can be difficult to know how to select an accountant or an accountancy firm when it’s the first time choosing them.
There are certain criteria and things that should be considered when looking at different accountants – whether they are accountants in Medway or within a different location in the UK, including:
- What experience they have in the industry.
- If they have positive testimonials from past clients.
- If they have the right qualifications (whether that be a degree, apprenticeships, internships, etc.)
- If they have accountancy insurance (if working with a freelance accountant or external agency).
- That they use state-of-the-art software (such as Quickbooks).
- That they are a member of the Institute of Chartered Accountants or the Institute of Certified Bookkeepers (Medway Bookkeeping are proud members of this).
Is a Bookkeeper the Same as an Accountant?
No, a bookkeeper is not the same as an accountant. Although they both deal with a company’s financial accounts, a bookkeeper will only record the transactions, whereas an accountant can interpret, analyse and summarise the data. Holding different qualifications, they can either work separately or hand in hand within a business.
It’s fair to say that a bookkeeper’s role is more administrative and transactional, whereas accounting can be more subjective – giving a business a useful insight into their financial position.
However, when working hand in hand, the organised records and correctly balanced finances that a bookkeeper produces, coupled with the smart financial strategy and maintenance undertaken by the accountant can contribute directly to a business’ long-term success.