For most businesses, whatever their size, support from an accountant or finance manager is usually something that is needed at some point during a business year. Whether it is someone to manage bookkeeping, format and submit account to HMRC, manage payroll, audit accounts or simply offer advice to help you make the best decisions, it is unlikely that you will be able to grow your business without this support.
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For most small businesses, hiring a bookkeeper or an accountant is normal and usually enough to get through day-to-day life. But for growing businesses, increasing staff and revenues usually lead to more complicated arrangements and eventually the need for an in-house finance professional. It is therefore important to be able to identify when it is appropriate to manage your finance operations in-house.
What is the difference between an accountant and finance manager?
Job titles and roles will vary from company to company, but an accountant is generally responsible for preparing accounting information. The accounts will be used to inform decisions and must also be submitted to HMRC and, if relevant, Companies House. Whether you are trading as a sole trader, partnership or corporation will determine your accounting and reporting requirements.
Finance managers, however, tend to use the accounts to make investment decisions and allocate resources. If you are a sole trader then you are the decision maker and will most likely be responsible for how money is spent. Whereas larger businesses generally have multiple decision makers who rely on the accounts as well as internal forecasts to set budgets, make investment decisions and optimise how resources are allocated.
Should I hire someone to manage my finances?
Well this is really only a question you can answer yourself. If your company is growing and you are finding it hard to manage various aspects, you are starting to invest large sums of money, or need someone to better manage the allocation of company resources, then you may well benefit from hiring a finance professional. There may also be legal factors or caveats set by lenders that require you to hire an in-house finance manager.
The good news is that if you are considering hiring a CFO or someone for a similar role you could save money by hiring them on a part time basis. Given the current economic climate, hiring a part time Finance Director is becoming even more popular. It gives you access to someone with the expertise and qualifications to help you make the best financial decisions, but without the cost and commitment of a full time CFO.
Why are finance professionals essential to start-ups and growing businesses?
Whether you are looking to grow your business or not, it’s unlikely that you’ll be happy losing money unnecessarily. Contract accountants can help you to some extent manage your affairs to reduce your tax liability based on what you are currently doing. However, in-house Finance Directors and CFOs are better positioned to help you make the right decisions from the outset. Responsible for managing and allocating financial resources, not only can they save you from paying unnecessary tax, but they can make decisions that will grow the business.
For start-ups, doing things right from the start will make things easier going forward. The wrong decisions can be costly in terms of time and money. It is highly advised that you make use of professional advice from the outset; then when the time is right you should look to hire a finance professional that not only has the experience to grow your business, but someone who understands your industry, your goals and is committed to seeing your business succeed.