Accountants Scotland-wide are used by businesses to help keep track of all the ins and outs of their finances. However, despite the widespread usage of chartered accountants, many running smaller businesses still don’t quite understand what it is that accountants do; and what makes certain accountants better than others. Of course, part of the role of an accountant is to manage and update an organisation’s accounts – but there is much more to this profession than number-crunching and accuracy! What services you require from your accountants really depends on the size of your business – but how do you choose the right accountant for your needs?
What Do Accountants Do?
An accountant is either a person or company that records, analyses, and presents accurate figures relating to a business’ financial accounts.
Within smaller businesses, this role generally involves collecting the relevant financial data (e.g. receipts, invoices, refunds, miscellaneous credits and debits); entering that data into, for instance, specialist accountancy software; and creating informative reports based on these figures.
Larger companies, however, will need accountants to act as advisors and interpreters of data who will analyse all the figures and generate reports for both internal and external use. Such businesses may also use various accountants Scotland-wide to perform more advanced roles, such as creating and maintaining databases full of financial information and developing procedures to improve the flow of finances.
Irrespective of whether you are running a smaller or larger firm, the general role of accountants remains much the same: to collect financial data, as well as maintain its accuracy and ensure it’s up to date and complies with the legal requirements within that jurisdiction for financial record keeping.
Now that we’ve covered the basic concept of accountancy, it’s time to move onto some of the financial statements produced by accountants that business owners should understand.
Statements To Expect From A Financial Advisor
For smaller business managers, there are three main financial statements to be concerned about: income statements, balance sheets and cash flow statements.
An income statement is a report produced by a bookkeeper that depicts the performance of a business within a particular accounting period. This could be within a week, over a quarter, or an annual record of profitability. This report encompasses two aspects: the revenues (the amounts earned) and any expenditure required in order to earn those revenues (e.g. travel costs to the site of a job).
It’s important to note that, despite how simple the terms ‘revenue’ and ‘expense’ can be explained, there is actually a complexity at work when producing such statements. It is always recommended that a financial advisor should be consulted if an accurate income statement needs to be produced.
Balance sheets are another form of financial statement, however, these detail the assets, liabilities and owner(s)’ (or stockholders’) equity. Rather than covering a period of time, these statements are true on a particular date (e.g. assets and liabilities on 1st May 2017).
Lastly, a cash flow statement details changes in cash held within a business’ accounts over a period of time. You can think of it simply as a bank statement; but it should be noted that it is also much more than this and it’s vital it is kept accurate with all money coming in or leaving the business.
What To Look For In Accountants In Scotland
So by now, you will hopefully understand a little bit more about what an accountant does. It should be noted that while many of the above concepts have been simplified, it takes a great level of skill to be able to analyse all figures and produce accurate forecasts and projections, as well as make informed decisions about the business. It is therefore critical to ensure that the accountants that you choose are highly experienced and have dealt with many different situations, and can react quickly to any issues that may arise.
A good first thing to look for in an accountant is whether or not they are signed up to a professional accountancy body. Any accountants Scotland-wide that you deal with should be members of organisations such as the Institute of Chartered Accountants of Scotland (ICAS), which is the oldest professional body of accountants in the world. They may also be members of international bodies such as the Institute of Financial Accountants and the Association of International Accountants.
Secondly, always ask about the qualifications of the individuals who will be working on your business’ accounts and make sure that your accountant has received the appropriate training and qualifications in order to accurately manage and compile your statutory and other financial statements.
Ways To Spot A Good Financial Advisor
Beyond adherence to guidelines set by regulatory bodies and qualifications, there are many other signs that you are dealing with a good financial advisor:
Firstly, ask your accountant some basic questions about how they usually manage the accounts of small/medium/large businesses. You should receive a clear and concise answer that you can understand. If you are being fed lots of jargon that doesn’t make sense to you, or are told by an accountant that they need to research that answer, look elsewhere. Experienced financial advisors will not only be able to explain things clearly in a manner that you will comprehend, they will also be the first to admit when they are not particularly versed in particular aspects of accountancy.
It is often beneficial for small businesses to hire the services of an accountancy firm, rather than an individual, as a firm will include a number of different accountants with different specialities. It’s also important to choose an accountant that has experience working with your particular industry (or a closely related one), and additionally knows how to help businesses similar to yours in size grow and expand.
At MMG Chartered Accountants, our team has over 500 years of combined experience in providing a vast range of accountancy services to small, medium, and large businesses alike.
Why choose MMG Chartered Accountants?
MMG Chartered Accountants’ experience is unmatched amongst accountants Scotland-wide. We opened in 1920 in Dundee, and we’ve just celebrated our 100th anniversary. Throughout the years, we have built up a group of loyal clients who trust our expertise and judgement on all aspects of accountancy. We also have specialists who are highly skilled at managing the accounts of smaller businesses.