What Does a Great Accountant Actually Do? (It’s More Than Filing Tax Returns)
When most business owners are asked what an accountant does, they typically respond with:
They do file tax returns.
Even though it is important to be compliant with tax regulations, having only filed paperwork isn’t what an accountant is about.
The business landscape is now more competitive, more regulated and more data-driven than ever before. While operating their daily business, business owners are expected to make better decisions, run their business, navigate business tax regulations, handle increasing costs, ensure healthy cash flow and plan for sustainable growth.
This is a time when it’s no longer sufficient to have someone file your business on an annual basis.
By definition, a great accountant is a strategic business partner who will help you understand your selecting a better profitability, help you see what opportunities are available to you, help you save by unearthing unnecessary taxes, and make decisions throughout the year and not just at tax season.
This article will delve into what it takes to make an ordinary accountant an extraordinary one and how selecting a better financial adviser is one of the best investments your business can make.
The Role of an Accountant Has Changed
Ten years ago, compliance was the main concern of most accountants. Ten better profitability were medium sized with compliance. Twenty years ago, the main concern of most accountants was compliance.
They were mainly responsible for:
- Preparing annual accounts
- It is our duty to submit Corporation Tax returns
- Submitting VAT returns
- Managing payroll
- Helping to meet HMRC deadlines
While these tasks are still vital today, today’s companies demand a lot more.
Business owners do not simply want somebody who records financial history.
They are looking for someone to influence financial decisions.
This change is impacting the accounting profession throughout the UK.
The Office for National Statistics (ONS) estimated that there were roughly 5.5 million private sector businesses in the UK. Most of them are small and medium-sized businesses (SMEs), and most of them are dependent on professional accounting services to stay compliant and take informed financial decisions. Businesses increasingly need advisers who can give them more administrative support; rather, they need strategic insight.
In a digital era, the importance of having a great accountant is no longer based on data alone; it’s based on interpretation, planning and strategic advice.
Why Business Owners Need More Than Compliance
Suppose we have two businesses.
Both of their taxes on time.
They both pay their taxes properly.
Each receives an annual report from their accountant.
Both companies are officially “equal,” on paper.
However, while one business continues to thrive, another is facing cash flow problems, reduced profit margins and doubts about decisions to be made in the future.
Why?
But compliance isn’t growth.
It simply prevents penalties.
Growth is about being familiar with your numbers and leveraging them to help you make better decisions.
A proactive accountant can help with answers to questions like:
- Am I making a profit in my business?
- Why is my cash flow under strain despite rising sales?
- Do I need to hire more staff?
- Is now the right time to invest in new equipment?
- What types of operations in my business have the largest margins?
- Where am I losing money without realising it?
These are strategic business questions and not compliance questions.
Unfortunately, data assessors receive them.
The Hidden Cost of “Year-End Only” Accounting
Many business owners in the UK are under the false impression that accounting only comes into play when tax time arrives.
In fact, there are opportunities to get good deals on your finances all year long.
Think about getting financial statements monthly and not reading them.
Or determining prices without checking your margins.
Or employing new employees without knowledge of your cash flow.
These aren’t compliance issues.
They’re business decisions.
All of them have monetary implications.
Companies that communicate with their accountant only once a year are likely to lose out on:
- Improve profitability
- unnecessary expenditure
- Optimise tax planning
- Forecast future cash flow
- Get ready to grow your business
- Handle monetary hazards before they get costly
Those opportunities may have been missed by the time annual accounts are drawn up at year-end
A good accountant does not just tell you what has occurred during the previous year.
They assist you to shape the subsequent action.
Compliance Keeps You Safe. Strategy Helps You Grow
Think of compliance as the foundation of your business.
Otherwise, you risk penalties, deadlines and unnecessary stress.
However, the right accounting is only required for the right accounting business.
Growth requires planning.
Forecasting.
Financial visibility.
Strategic thinking.
This is where great accountants create value.
Rather than asking,
“Have your tax returns been submitted?”
They ask,
“Where do you want your business to be twelve months from now?”
That discussion alters the very nature of the relationship.
Your accountant isn’t just someone who files paperwork; it’s someone you can trust to help make important financial decisions.
The UK Business Landscape Is Becoming More Complex
There is nothing like business as usual these days, even five years ago.
For business owners, the challenges now are:
- Rising operating costs
- Inflation
- Higher borrowing costs
- Changing tax legislation
- Digital reporting requirements
- Increased competition
- Tightening up cash flow
The UK’s most recent measured tax gap is still in the tens of billions of pounds, and tax compliance continues to be a complex issue for businesses and individuals, according to HM Revenue & Customs (HMRC). A significant proportion of this difference is due to errors, misunderstandings and non-compliance, but it is equally a strength and emphasis on seeking professional guidance and good financial control.
Meanwhile, cloud accounting software, automation, AI are changing the way financial data is created.
With the bulk of routine processing done by software, accountants are increasingly expected to provide what technology cannot:
- Context
- Interpretatio
- Commercial advice
- Strategic planning
- Human judgement
The accountant of tomorrow is not a computer replacement man.
It’s a person who uses information software to make better decisions for businesses.
A New Standard for Modern Accounting
Today’s business owners want more than completed tax returns.
They expect answers.
They expect insight.
They want someone who knows their objectives, not just their numbers.
A good accountant gives you peace of mind in times of crisis, clarity in times of expansion and direction in times of major financial decision making.
That’s what makes the difference between an average accountant and an exceptional one.
In the next section, we’ll look at some of the unique ways that great accountants can help businesses become more profitable, more cash flow positive, tax-efficient and better decision-makers throughout the year.