16 February 2011

Finding A Business Accountant

So guys, I finally managed to get over to a business accountant to discuss my ideas and how I plan to execute them. The accountant I saw was very good and came recommended from a work colleague whose husband has a small business of his own. Initially when we go down to talking I gave him a brief overview my business was about and what I was trying to accomplish.

The conversation that followed was very informative, and most of it focused on determining the best structure for my business. He taught me about the pros and cons of each business structure, and helped me to become better informed as to which one would probably best suit my own business needs. He also explained in greater detail the services that an accountant could offer if you were willing to pay for them! 

They can help you with things such as the following:- registering your business, determining the right business structure, help with the selling of the business should it become profitable, write realistic financial projections for you, help secure essential start up capital, assist in filing tax returns and much much more. These were things that I didn’t really know so it was all very useful stuff. 

A partnership was something that I was never really thinking about considering and so in terms of business structure some of the pros and cons that I picked up in other areas are documented here for you guys:-

Operating as a sole trader

Using this structure would benefit and disadvantage me in the following ways. Setting up a sole tradership is very simple to do and very simple to operate, which means that for very little money and time I can be up and running. In my current situation where lack of money is still an issue, this could be something to consider. 

One of the disadvantages of using this kind of structure is that you typically will remain small as the growth of the company is limited to your own hard work. Another disadvantage of a sole tradership is that should the company go broke the liabilities are not limited, which means that as an individual you stand to lose a hell of a lot.

Operating as a limited company

When operating as a ltd company, if it all goes to pot your losses are limited which can do a lot to ease the devastating feeling of failure. Another advantage of operating as a ltd company is that you can make adjustments for tax purposes which is absolutely fantastic if you want to pay them at a later date etc. Provided it is all for good reasons and not being used as tax evasion, its very possible to accomplish. As a limited company grows it also gives a much better image so when it is time to sell it is much more attractive to investors. 

One disadvantage, if you are that way inclined, is that when operating as a limited company, you cant simply dip into you asset bank whenever you like, for example, if I want to take the kids on holiday I cant just remove money from the business and get on the runway!! Lol. It is also considerably more expensive to start up and involves more documents. The yearly payments required to maintain the account are also higher and a lot more is expected and required of you from the powers that be.

My next move will be getting my business registered. Of course in doing this I will be recognized as a legitimate business and will be ready to go to the next stage in my entrepreneurial process which of course I will documenting here for all to see, successor failure! Lol. Once I do this I will be taking steps to get some financial projections sorted out, which is important for getting some investors to part with their cash!  

The accountant I saw mentioned that I may want to consider starting off as a sole trader and changing my business structure if and when I expand. I think however that after some thought I will go straight for the ltd company so I can focus my efforts on building the business and growing large without having to come back and touch the structure again until I’m ready to sell and move on to the next project!!


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