Do you dread going to see your accountant and dropping off your annual tax records? Is it intimidating because you don’t know what questions to ask your accountant?
This article explains how to develop a valuable business relationship with them and the types of questions to ask them.
A good accountant will be a key player on any successful business’ team. They’re offer more than a layer of defence against IRD’s prying eyes and scrutiny. They should become a trusted advisor, a reliable business “partner”, and dare I say it…a friend.
They should be able to demonstrate: a professional education; knowledge, skills and experience; and impartiality.
An accountant with these attributes should provide value to any business. They enable small-business owners to focus on running their business, knowing their business is in capable financial hands.
I’d like to share some important questions to ask your accountant. You’ll then be better prepared, which should help you save time and money. You’ll also set solid foundations to establish a solid business association with your accountant.
1. HOW AM I AND MY BUSINESS PERFORMING?
Having enough cash in the bank to pay bills on time means you’re doing well, right? Not quite. Small-business owners constantly struggle to gather useful information to answer this question or to evaluate their business’ financial health.
An accountant is trained to sort the “wheat from the chaff” and make sense of all this data. They will illustrate how well your doing by carefully analysing your numbers.
Ask your accountant these following questions in regards to your businesses performance:
Do I have sufficient cash?
It’s vital you know precisely how cash is received and spent in your business. Accountants often use the expression “cash should arrive quickly but leave slowly”.
Am I being rewarded for all my effort?
Second possibly to the pride of running their own business, many entrepreneurs start their businesses to make money. For many, it’s the primary reason. Either way, small-business owners deserve to be rewarded for their investment and efforts.
How can I generate more profit?
Accountants have an arsenal of tips and insight to help improve a business’ profit. Ask them for advice. You don’t have to follow every recommendation so choose the ones that suit your needs.
Is the tax department happy?
Your accountant should help you keep your tax affairs in order. They should advise you how to maintain proper accounting records, file your tax returns, and remind you to pay tax on time. If your tax department audits you, your accounting records should stand up to its scrutiny.
2. “CAN I ACHIEVE MY GOALS?”
A key element when setting goals is to be able to measure them. Business owners often set financial goals or milestones. For example, it’s relatively easy for them to monitor if they are on course to achieve $100,000 revenue by the end of the year.
Developing specific, measurable, goals will help your accountant help you. They’ll be able to provide feedback on your first three questions – am I being rewarded for all my effort?; “How Should I Grow My Business?” and “Where Can I Reduce Costs?”.
When you know your goals, it’ll be easier to ask for your accountant’s advice to help you achieve them.
3. “HOW SHOULD I GROW MY BUSINESS?”
Growing your business is likely to be vital to you being successful. You must continually cultivate interest in your services or products and convert prospects into customers.
Ask your accountant to explain the difference between good and bad growth. Do you know there’s a big difference? Bad growth is likely to inhibit or stunt your business growth more than losing customers.
Ask your accountant to help you determine the right growth strategy for you by knowing the following:
Calculate the total cost of staff
It’s important to understand the true cost of recruiting a new employee before you take them on. Their “true” cost may include your business’ Kiwisaver contributions, the cost of new equipment and office furniture for them, as well as their salary.
Knowing this will help you evaluate whether the benefits they will provide you outweighs their salary and associated expenses.
Determine the quality of your plant and equipment
Using outdated plant and equipment can be inefficient and detrimental to your business.
Your accountant should be able to advise the best time to buy or replace old plant and equipment. They will also be able to advise you if have enough funds to invest in new plant and equipment. And of course, they will know what tax advantages buying and selling it may bring you.
4. “WHICH AREAS CAN I REDUCE COSTS?”
Becoming too closely attached to your assets (such as a vehicle, office and staff) can be a disadvantage. How will you know if they continue to provide you good value for your investment? “Breaking-up” is often hard to do but if you don’t, it could be bad for your business.
Ask your accountant to review your expenses. A regular review can highlight unnecessary expenses and give you the chance to significantly reduce your expenses. For example, identifying recurring monthly subscriptions to software you no longer use.
5. “IS THERE SOMETHING ELSE I CAN DO?”
It often needs a “different set of eyes” or independent review to identify areas to improve. You’re probably an expert in your field of expertise and knowledge but you’d be superhuman if you were an expert at everything.
And if you claim to be, many would argue that you may be a “jack of all trades but master of none”. That could be highly damaging to your business.
Ask your accountant to look at your end to end business’ financial processes. They can recommend alternatives, such as how to manage and optimise your debtors, payroll and bill payment processes, amongst others.
View your accountant as an investment, not a cost. Their advice and support will be valuable to your success. As they saying goes, “the quality of the answer is often dictated by the quality of the question”.
Follow these important questions to ask you accountant during your next visit.
If you’d like to discuss further accounting queries, please contact us.