Accountants help you keep an eye on major costs as early as the start-up stage, a time when you’re probably preoccupied with counting every paper clip and postage stamp. Accountants help you look at the big picture.

In fact, perhaps no other business relationship has such potential to pay off. Nowadays, accountants are more than just bean counters. A good accountant can be your company’s financial partner for life, with intimate knowledge of everything from how you’re going to finance your next forklift to how you’re going to finance your daughter’s university education.

A general accounting practice covers four basic areas of expertise:

1. Business advisory services
2. Accounting and record-keeping
3. Tax advice
4. Auditing

These four disciplines often overlap. For instance, if your accountant is helping you prepare the financial statements you need for a loan, and he or she gives you some insights into how certain estimates could be recalculated to get a more favourable review, the accountant is crossing the line from auditing into business advisory services.

The best way to find a good accountant is to get a referral from a business colleague, maybe even in the same industry. Don’t underestimate the importance of a FCA (chartered accountant). This title is only awarded to people who have passed a rigorous training and examination process.

The first step in setting the stage for a successful search is to take an inventory of what you will need. Given the level of fees you are prepared to pay, you must decide where your responsibility stops and where the accountant’s begins.

Once you have compiled your documentation and given some thought to your expectations, you’re ready to interview your referrals. Two or three candidates is a good number to start with. For each candidate, plan on two meetings before making your decision. One of these meetings should be at your site; one should be at theirs. Both parties need to know the environment the other works in.

During the ensuing interviews, your principal goal is to find out about three things:

Services
Most accounting firms offer tax and auditing services. But what about bookkeeping? Management consulting? Estate planning? Will the accountant help you design and implement financial information systems? Other services an FCA may offer include analysing transactions for loans and financing; preparing, auditing, reviewing and compiling financial statements; and representing you before tax authorities.

Although smaller accounting firms are generally a better bet for entrepreneurs, they may not offer all these services. Make sure the firm has what you need. In addition to services, make sure the firm has experience with small business and with your industry.

Personality
Is the accountant’s style compatible with yours? Be sure the people you are meeting with are the same ones who will be handling your business. At some accounting firms, partners handle sales and new business, then pass the actual account work on to other partners.

When evaluating competency and compatibility, ask candidates how they would handle situations relevant to you. For example: How would you handle an HMRC investigation seeking verification of vehicle expenses? Listen to the answers, and decide if that’s how you would like your affairs to be handled. Realise, too, that having an accountant who takes a different approach can be a good thing. Be sure that the accountant won’t pressure you into doing things you aren’t comfortable with. It’s your money, and you need to be able to sleep at night.

Fees
Ask about fees upfront. Most accounting firms charge by the hour; fees can range from £50 to £200 per hour. Quite often the fees depend on the service being provided. However, there are some accountants who offer a fixed fee spread with monthly payments. Figure out what services you are likely to need and which option will be more cost-effective for you. Get a range of quotes from different accountants.

Try to get an estimate of the total annual charges based on the services you have discussed. Don’t base your decision solely on cost, however; an accountant who charges more by the hour is likely to be more experienced and thus able to work faster than a novice who charges less. At the end of the interview, ask for references or testimonials, particularly from clients in the same industry as you.

After you have made your choice, ask for the terms of the agreement in an “engagement letter” that details the returns and statements to be prepared. This ensures you and your accountant have the same expectations and helps prevent misunderstandings and hard feelings. All professional accountants should be doing this as standard.

Make the most of the accounting relationship by doing your part. Don’t hand your accountant a shoebox full of receipts. The better you maintain your records, the less time your accountant has to spend, and the lower your fees will be. Ask your accountant if they provide accounting software, good accountants will have several cloud solutions available.

It’s a good idea to meet with your accountant periodically. Review financial statements and go over any problems so you know where your money is going. This is where your accountant should go beyond number-crunching to suggest alternative ways of cutting costs and act as a sounding board for any ideas or questions you have.

A good accountant can help your business in ways you never dreamed possible. Spending the time to find the right accountant, and taking advantage of the advice he or she has to offer, is one of the best things you can do to help your business soar.

Business plans aren’t just used for tempting investment; they should also drive your company in the right direction and provide a benchmark for ongoing evaluation. Here are some key points that a good business plan should include.

Many entrepreneurs fall into the trap of diving in before they have fully planned their new venture and then they wonder why it fails. If they had put the time into researching and writing a business plan, they would either have predicted the company wasn’t viable, or addressed the business model straight away.

This infographic was produced by Sage

Short of simply working fewer hours and running the risk of tanking your business how do entrepreneurs achieve a better work-life balance while increasing their bottom-line?

In a word: Focus

The late Steve Jobs said focus isn’t deciding what to do, it is deciding what not to do. People rarely disagree that narrowing one’s focus can be helpful, but few actually do it. That’s because it’s often unclear how to focus at a practical level.

Here are six simple steps to help you strategically focus on what’s most critical in your business life so that you can earn more while working less:

1. Monetise your to-do list. Determine the financial value of completing every task on your list, then write those amounts next to the corresponding items.

For example, if the task is to prepare a proposal to land a £150,000 contract, write “Finish Proposal (£150,000).” If the task is to return a phone call from your number-one customer, who generates £1 million in annual sales, write: “Return Mary’s phone call (£1 million).”

2. Sort your list in descending order. Start with the highest amount at the top and the lowest amount at the bottom.

3. Draw a line through the middle of your list. Split your list in half with the top most important tasks at the top and the least important 50% on the bottom.

4. Spend four days a week working on the top 50% of your list. Focus on the number-one item on the list and finish it completely before you begin the next item. If you find that you can’t finish this item until someone else does something first, move on to the next item on your list.

5. Spend one day a week on the bottom 50% of your list. By forcing yourself to work on the less important (but seemingly urgent) tasks only one day a week, you won’t be able to complete them all. You’ll find that some tasks remain on the bottom 50% for many weeks at a time. You should expect this to happen and realise it’s a deliberate by product of this approach.

6. Re-evaluate the bottom 50% of your list weekly. Drop the tasks that become obsolete. If you’re forced to procrastinate on the unimportant tasks, they’ll stay on your list week after week, and you’ll quickly realise just how unimportant they are. It would be better to leave these items off your list in the first place, but sometimes people have a major aversion to dropping things from their to-do list. Using this approach, the items just become obsolete on their own, which makes them easier to ignore.

For example, if you have several £100,000+ opportunities at the top of your to do list, it makes sense to have the bottom of the list include items like reworking your company logo, scheduling lunch with someone who wants to pick your brain for free advice or price shopping to lower your insurance rates by £750 a year. Focus is not free. To get extreme results from less work, you need to be willing to sacrifice good opportunities to focus intensely on great ones.

You want to dedicate the majority of your time and energy at work to your most important, highest impact activities. When you follow these steps repeatedly for a long enough period of time, your sales and income will increase substantially. With more money in your pocket, you’ll be able to outsource and hire people to work on the bottom 75% of your to-do list, while you shift even more of your time to the top 25% of your tasks.

The key to focus is to ignore trivial tasks while doubling the time spent on the things that make a big difference. Only by doing so will you start to like your new boss a little more.

There are so many financial fires to put out in a given week that it’s hard to find the time to do any short or long term financial planning. But failing to plan may mean that you are unwittingly planning to fail.

Business budgeting is one of the most powerful financial tools available to any small-business owner. Maintaining good short and long term financial plans enables you to control your cash flow instead of having it control you.

The most effective financial budget includes both a month-to-month plan for at least a calendar year and a longer quarter-to-quarter plan you use for financial statement reporting. It should be prepared during the two months preceding the financial year-end to allow ample time for sufficient information gathering.

The long term plan should cover a period of at least three years (some go up to five years) on a quarterly basis, or even an annual basis. The long term budget should be updated when the short term plan is prepared.

While some owners prefer to leave the one year budget unchanged for the year in which it provides projections, others adjust the budget during the year based on unplanned events, such as an unplanned equipment purchase or a higher than expected upward sales trend.

Using the budget as an on-going planning tool during a given year certainly is recommended. However, here is a word to the wise: budgeting is vital, but it is important to avoid getting so caught up in the budget process that you forget to keep doing business.

It is important to budget both your profit & loss and balance sheet. This enables you to consider potential cashflow needs for your entire business, not just as they pertain to income and expenses. For instance, if you had already been in business for a couple of years and were adding a new product line, you would need to consider the impact of stock purchases on cashflow.

Budgeting only the profit & Loss also doesn’t allow a full analysis of the effect of potential capital expenditures on your financial picture. For instance, if you are planning to make a major investment in machinery for your business funded with a loan, you need to budget the effect the loan interest and repayments will have on cashflow.

In the future, a budget can also help you determine the potential effects of expanding your facilities and the resulting higher rent and rates payments.

In the start-up phase, you will have to make reasonable assumptions about your business in establishing your budget. You will need to ask questions such as:

1. How much can be sold in the first year?
2. How much will sales grow in the following year?
3. How will the products and/or services you are selling be priced?
4. How much will it cost to produce your product? How much stock will you need?
5. What will your operating expenses be?
6. How many employees will you need? How much will you pay them? How much will you pay yourself? What benefits will you offer? What will your payroll taxes be?
7. What will the income and corporation tax rate be?
8. What will your facilities needs be? How much will it cost you in rent for these facilities?
9. What equipment will be needed to start the business? How much will it cost? Will there be additional equipment needs in subsequent years?
10. What payment terms will you offer customers if you sell on credit? What payment terms will your suppliers give you?
11. How much will you need to borrow? What will the collateral be? What will the interest rate be?

As for the actual preparation of the budget, you can create it manually or with the budgeting function that comes with most bookkeeping software packages. And remember that your accountant will be able to help you with this, give you impartial feedback and advice and help you to achieve a balanced and realistic budget.

Digital wallets usually take the form of a smartphone app. They’re always on hand, connected to the internet and make it easy for coupons, deals and more to show up on the user’s device, sometimes based solely on current location.

Is it time for more small businesses to start accepting payments via digital wallet? “Yes, but thoughtfully,” says Aditya Khurjekar, a mobile-commerce expert who co-founded Money2020, a conference on emerging payments and financial services.

He points out that the question of whether to work with digital wallets is akin to the decision businesses had to make 40 years ago about whether to accept credit cards. Because consumers wanted the convenience of cards, businesses had to determine if they wanted to pay the associated costs and, if so, which cards they would accept.

Similarly, businesses today need to determine which digital wallet supplier is best for their bottom line. Khurjekar recommends starting with the payments and financial service providers with whom you already have relationships. But keep in mind that consumers will be the ultimate judge of which digital wallet providers win in the long term and which fall out of favour.

Part of your decision will hinge on your customers’ preferences, especially in terms of security. The best way to find out is to ask them: “Are you comfortable with your payment information being stored on your phone (like it is on your credit or debit card)? Or would you rather use a system that stores your data in a cloud-based secure server, where your smartphone is just a conduit to access the account?”

Secure wallets like the one offered by Isis, for instance, store payment information directly on the smartphone, unlike cloud-based wallets from PayPal and Square.

Khurjekar admits that whichever digital wallet solution you pick has a real possibility of leaving some customers on the outside looking in. Right now the burgeoning scene is like the Wild West. But going back to the example of the nascent credit card industry, he expects that consumers will likely encounter rebranding of their digital wallets as the first wave of providers merge, get acquired or fall by the wayside.

Mark Barrett, Accountant at Cannon Moorcroft and a Sage Business Expert,
offers his thoughts and predictions for next week’s budget. 

With the economy casting a gloomy shadow and the loss of the coveted AAA rating it’s unlikely we’ll see any big changes in the 2013 budget. The Chancellor has found himself on the points of a two pronged dilemma: trying to cut spending but encourage growth. As there’s little wiggle room within the budget due to constrained economic conditions, we shouldn’t expect to see any real cuts without corresponding increases to balance the books.

Anti-avoidance measures

I predict the main focus of this budget will be anti-avoidance measures for those who the government see as aggressive tax avoiders. It’ll be a delicate balancing act though as we trade in a global economy and the Chancellor will not want to discourage foreign investment.

Company-wise, the focus of the budget will probably be at the larger end of the scale. I predict a further reduction in Corporation Tax by 1%, bringing the large company tax rate in line with small company at 20%. The aim being to discourage avoiders transferring “management fees” to other companies within the group based in lower tax countries. Although the tax rate would be lower as a percentage, the tax paid should be higher as an amount.

The disappointing results of the 4G auction, (which fell £1.2 billion short of the sum estimated in the Chancellor’s Autumn Statement), will have left a hole that needs to be filled. With no impending sell-offs due, anti-avoidance measures are likely to be the salve for this wound.

Personal allowance

There is likely to be a further move towards the target of a £10k personal allowance starting in the 2014/15 tax year, although this may be held off until the 2013 autumn statement as a political ace to keep up his sleeve.

Fuel duty

Fuel duty may feature, although as each 3p cut in duty costs £1.6 billion, it may be that any increase is postponed for 6 months or reduced to a lower-than-inflation rate. Reductions in this area are important to small business as fuel costs can account for a disproportionately high amount of their spending.

National Insurance

The Conservatives have historically criticised increases in employers’ National Insurance Contributions as a tax on jobs, but have done little to tackle this. The cost to a business of employing staff is one of the most significant, so any reduction here will have a direct benefit on all companies, and could encourage jobs growth.

VAT rate

Growth could be achieved with a reduction of the current rate of VAT rate. If prices on the shelves were lowered by 2.5% to 5% a larger volume of goods would be sold, generating increased revenue which would mitigate against the reduced rate. This would also help towards lowering costs of those small businesses not VAT registered.

Annual Investment Allowance

With the Annual Investment Allowance already having been increased to £250k for two years in the Autumn Statement, it’s unlikely we’ll see movement on this. The Chancellor will probably wait to see if, over its two years, it has achieved its goals of increasing investment in plant and machinery to help support engineering and manufacturing. If it has worked, it will likely be announced in future budgets as there is no benefit to making changes now.

Green issues

With the government continuing to champion green issues, albeit mostly in word rather than in deed, it may use further investment allowances for companies investing in the research and/or production of green technologies to encourage development in what is widely seen as an important future growth area.

Employee Share Schemes

With the EU vote on banker’s bonuses going against the Chancellor, we may see further amendments to the taxation arrangements of employee share schemes to create a workaround to EU legislation. This already allows companies to pay out bonuses as shares, but we may see a more incentivised way of delivery that reduces the tax burden on the employees. It would be useful to see these schemes improved to benefit smaller PLCs, as it has been shown that when employees become shareholders it increases productivity. Just look at John Lewis’s figures last year, and the 17% bonus being paid out to its staff.

Real Time Information

Real Time Information (RTI) comes into effect in April, which should achieve savings within the tax credit system as the aim is to make changes more quickly based upon employees’ actual situation. We may hear about further consultation on how this model can be utilised further, particularly for sole traders who currently have a large grace period between tax incurred and tax paid, although the payments on account system is meant to iron this out.

A monthly RTI style system for small companies and non-incorporated traders, based on cash based accounts, looks highly likely to be approved (maybe even in this budget), so payments on account may become more frequent and more accurate. This would smooth out the cashflow from taxes that the government receives; so that instead of a large inflow of corporation tax in December and personal tax in January the inflow would be spread across the year. This would mean more administration for small businesses, which is unwelcome and generally viewed as unhelpful, but may help reduce the month to month borrowing needs of the government which are in some part a result of inconsistent cashflow.

Capital Gains Tax

Capital Gains Tax rarely features in budgets, with it being limited to slight annual increases or freezes. It may be that with Lib Dem pressure the current 28% top rate may be increased to 30% to 35%. This type of tax affects more top earners than middle earners typically, particularly with the sale of valuable assets such as second homes or works of art. An increase here could be seen as a Conservative answer to the Mansion Tax, and is certainly fairer than retrospectively taxing an asset currently held, especially as those assets are, usually, paid for out of taxed income. Any increase wouldn’t attract too much criticism either as it would affect relatively few tax payers, but would be seen as asking the rich to pay a bit more, which seems to be a constant argument from the opposition.

Little room for maneuver

In conclusion, we can’t expect to see too much change as there’s little room for maneuver. There will be a couple of headliners for the next day’s newspapers, but even they won’t be earth-shattering. Anti-avoidance is likely to be the biggest focus, especially as it will be popular with the media. Realistically, it is unlikely that the VAT rate will change, even though some are calling for an increase, but it may be that more types of purchases are brought under the VAT umbrella. Fuel Duty has been a popular area in previous budgets, so we can expect to hear something, even if it’s just a freeze. And finally it’s likely that green technologies will feature, particularly as the UK is struggling to meet its legally-binding commitments to renewable energy and carbon emissions.

Mark Barrett, Cannon Moorcroft

Find out what the Budget 2013 means for your business and sign up for Sage’s free Budget 2013 guide today.

Share your comments and hopes for the Budget in the comments below.

Give me a shout in a few months. I’d love to hear about their work. My guess? You won’t have time to talk. You’ll be too busy hiring a professional designer to fix your website and doing brand-rep damage control because your niece tweeted from the wrong account during an all-night party.

Yes, it’s tempting to take the cheap route. At first it seems like a bottom-line-enhancing promise to improve your balance sheet in all the right ways.

And you’d be a fool to walk away from a great deal, right? Not so fast.

It’s time to start brushing off the allure of the cheap. Follow the path to better spending.

Take your time. When rushed, we tend to make less-than-optimal decisions. Time is your greatest ally on the value front. Take as long as you possibly can to calmly explore and analyse available options, rather than automatically writing a check for the one that’s least expensive.

Get flexible. Every business owner has to stretch the budget from time to time. But if you stretch yourself too thin, you’ll break. Instead, commit to being flexible and adjust your spending, when one balance-sheet line item goes up, another should go down. This will help you meet your business’s needs and protect your company’s longevity.

Look twice. Buy once. Real value is out there. But every time you think one of those deals is in front of you, there’s a chance it just seems really good because you’re comparing it to something pricier. If the cheap choice blows up and you have to pay to fix it, your budget will blow up, too.

The cost is important, but the value is more important when making good decisions.

1. Protecting your personal credit rating. Often, small-business owners don’t consider how their company can affect their personal credit rating, says Bill Collier, author of How to Succeed as a Small Business Owner … and Still Have a Life (Porchester Press, 2006). For example, if you sign a personal guarantee when buying from a supplier, you are liable should your business be unable to pay within the typical 30-day term. If you don’t come up with the money, your supplier can file a report with one of the credit rating agencies and damage your personal rating. “Keep yourself from being personally obligated to the business’ debts as much as possible,” Collier advises. If you are worried about making payments on time, seek suppliers who don’t require you to sign a personal guarantee and are willing to extend credit terms to the business.

2. Diversifying your portfolio. Some small-business owners gravitate toward personal investments in companies in their same industry, says J. Jeffrey Lambert, a Sacramento, Calif., financial planner and co-author of Ultimate Guide to Personal Finance for Entrepreneurs(Entrepreneur Press 2007). That lack of diversity can make an entrepreneur even more vulnerable to an industry downturn. For example, the owner of a technology business may like investing in other tech-related companies, but both his business and his portfolio could face many of the same risks. To protect your wealth, Lambert recommends aiming for no more than a 5 percent investment in any one company. Furthermore, consider broad-based mutual funds that are not concentrated in your industry and include a mix of stocks and bonds, large and small companies, and international as well as domestic investments.

3. Choosing the right business entity. Be it a partnership, sole trader, or Limited company, the choice of business entity will affect your personal finances. It’s wise to investigate the tax laws, as well as seek an accountant’s advice about the best type of business entity for you. As a sole proprietor or partnership, you would be held personally liable if your company faced litigation or creditors demanded payment of business debts, while a Limited company is held liable instead of you personally.

4. Discussing finances regularly with your spouse or partner. Small-business owners can get so wrapped up in their company that they make the mistake of leaving family finances completely in the hands of their spouse or partner. If you and your partner are not talking regularly about your personal finances, you should set a date on the calendar once a month to make sure you confer. It takes a lot of energy and focus to manage a business; sometimes it’s easier to let our personal finances slide. If you just make it a priority and look at the numbers every month, you can make a lot of progress.

5. Keeping personal credit cards out of your business. While a personal credit card may seem like an easy source of cash for your business, you can quickly incur high interest costs. Unless your business is very new or you have a poor credit rating, a better option is a loan from a small bank at a much lower interest rate than most credit card issuers charge. While it may take extra work to secure a bank loan, it will help you establish a solid credit rating for your business in the long run.

6. Aligning your salary with your business cash flow. Small-business owners often don’t adjust their own salaries to match their company’s fluctuating cash flow and end up borrowing money to pay themselves. Taking borrowed money and turning it into taxable income is not a good idea. Instead, you should be diligent about matching your own pay with the cash flow of the business and taking home less when your company’s cash flow is lower.

Kickstarter first announced the expansion earlier this month. Until now, users from the UK had to set up a U.S. account to launch a campaign on Kickstarter. There is no UK-specific site; instead, all UK projects are now listed alongside U.S.-based projects.

For regular users of the site, things won’t change much. Everyone will be able to pledge to UK-based projects, which are listed in pounds sterling with an approximate conversion rate to US dollars for those outside of the UK.

Furthermore, UK project backers will have to enter their payment information directly on Kickstarter instead of Amazon Payments. The actual payments will go through another third-party processor.

“The request to expand internationally has long been one of our most requested features,” Kickstarter’s head of community and co-founder Yancey Strickler told the BBC.

Kickstarter launched in 2009 and has so far raised more than $340 million for more than 70,000 projects.