Earlier this week we held a cake sale to raise funds for our charity of the year and looking at the lovely cake that Sabina, our bookkeeping team leader, produced gave me (writes Rachel) the perfect analogy for two different roles that your accountant might play for you.
Most business owners would expect their accountant to help them measure how they did during a year – this is a little like cutting up a cake: a slice for staff, a slice for your other costs, a slice for tax and hopefully a slice of profit for the owner.
You might expect your accountant to help you look at the size of the slices – for example finding ways to ensure that you don’t pay too much tax (while making sure that you don’t break the rules).
However, while that’s important, and in parts a legal requirement, it’s arguably missing a really important idea.
One of my clients came to see me last month and told me how happy she was about her tax bill. It had gone up. She is an extremely community minded person, but that wasn’t the reason she was happy to have a tax increase.
It had reminded her that her business had grown – and she was proud of that. Which leads to a second point – rather than worrying about just how much of a slice you have to hand over to HMRC, why not also consider how you can grow your business. When you see ‘management accountancy’ offered by a practice it can seem like a nice to have add on, but in fact it can be some fo the most beneficial support your business can invest in: management accountancy is all about how you can understand your costs, revenues and make your business more successful. In other words, not just how much of a slice you get, but how you can make the whole cake bigger…