It is generally assumed that chartered accountants are needed only for big businesses and the really wealthy people. But the truth is that there are CAs focussed on tax returns and financial decisions of small businesses and middle class individuals. CAs have a wealth of information and experience accumulated over years of rigorous training and you can make use of their expertise for your business accounts or financial decisions. They remain up to date on the latest financial information due to their ongoing professional education. They are bound by code of conducts and hold themselves to the highest standards. You can have a one-off consultation with a CA for a specific decision, or get ongoing advice for your business or personal investments on abeveda.com.
Make sure you look for the title ‘Chartered Accountant’. Anyone, even without qualifications, can call themselves an accountant, but only a CA has to go through years of training and match their professional training with work experience. CAs are also required to carry professional indemnity insurance, so that you are protected in case of problems arising from bad advice. In a way, using Chartered Accountants is also like taking an insurance policy for your business. Unlike the one size fits all approach of regular accountants, CAs understand the unique nature of business and are professionally equipped to tailor their services to your specific needs. Management of businesses, financial planning, auditing, tax services and accounting are a few of the services that CA’s provide.
For a new business
Most people think of Chartered Accountants once they have set up their business and are approaching the end of the financial year. But a consultation with a CA while your business is in the planning stage is a very good idea. Starting a business requires taking several decisions with regard to personal liability, capital, tax implications etc. A CA can give you inputs on whether to start your business as a sole trader, partnership, trust or a company. Each one has different risks and benefits, which a CA can accurately weigh depending on your unique situation. Being a sole trader is the simplest way to start a business, but risks and work load are more. Being in a partnership, means that you are liable for the other partners’ debts. A company is a separate entity legally, different from its shareholders, and there are tax consequences for taking money out of a company.
Chartered Accountants also help in book keeping, which is not just a good practice, but required by law. In the present day, computerised account keeping systems help you prepare up to date management accounts, which can help identify and tackle potential problems before they become bigger. This is helpful, especially in the initial months of setting up the business. Management accounts also help in creating cash flow projections by projecting the income from future orders against potential expenditure. Creating management accounts has a setting up cost, but it soon pays for itself in so many different ways. Cash flow projections are also valuable in negotiating loans or overdrafts with the bank. A small business which cannot afford having a CA on its roll can still have an initial consultation for help in creating an automated management account, or at least a manual template which you can then operate by yourself. Talking to a CA before starting the business can also help you in figuring out ways to legally reduce your taxes by managing your accounts, fixing salaries and other benefits of employees etc.
For an expanding business
A business that is expanding too fast has as much risk as a business that has to downsize. Chartered accountants can help in managing your business as it expands. Controlling your budget by properly choosing fixed and variable costs is extremely important while expanding. Fixed costs like a lease or machinery can be costly when turnover is low. Having the right balance between these two costs is thus extremely important. Talking to your CA before entering into any major transactions is also helpful in controlling your taxes. CA’s have years of experience and training which they utilize to figure out a way where you can legally pay the least taxes possible.
As the company grows, the level of personal control naturally lessens. A proper system of checks and balances has to be put in place so that the growth of the company does not result in its downfall, due to accidental errors or deliberate fraud.
It is also important for companies to consult Chartered Accountants before changing their accounting software while expansion. Different types of software are available in the market and each one is suitable for a particular type and size of business. Buying one simply on the basis of recommendation of friends or personal preferences is foolish. Having a CA involved in this decision making is the right way to make sure that the type of accounting software you are choosing is perfect for your unique needs.
For your personal finances
People usually think chartered accountants are for big businesses or for the super wealthy. If your financial affairs are complex and you are a retired businessman, you will need the help of a CA regularly to file tax returns, in order to make sure you are not paying more in taxes. But ordinary people often benefit from their advice. Employees can use their services to file tax returns. Filling tax forms alone is easier nowadays, but it is always better when a professional does it. You don’t have to worry about deadlines and spare yourself the headache.
You can also take a CAs advice when moving or switching jobs, earning gifts or benefits in kind, planning your retirement etc. During important events in your life like your wedding (whether to divide savings with your spouse to reduce taxes), when buying a house or car (to decide how big a mortgage or loan to take), taking control of your investments, or even after a death in the family (to understand inheritance laws and taxes), you can consult chartered accountants for expert advice. Gift and inheritance taxes especially are things which people often forget to consider.