All businesses are advised to have an accountant. Nevertheless, in order to make sure you get the most from your chartered accountant, you need to ask some key questions. In this post we will reveal some of the essential questions you should always ask when working with an accountant for your small business finances.
How can I lower my expenses without compromising quality?
This is something all businesses want to achieve. You want to increase your profit margin as much as possible, yet you don’t want to compromise quality by doing so. It is a balancing act. Taking control of your expenses is paramount if you are to reach optimum profit levels. Your accountant will help you to assess areas where you are spending a considerable amount of money. You can then determine whether it is possible to lower your costs without having a detrimental impact on the quality of your products or service.
What is included in my cost of goods sold?
Cost of goods sold is an important element of your business that needs to be assessed. This has a direct impact on how much money you make. If you are able to lower your cost of goods sold then you will be able to increase your gross profit. Thus, by evaluating all of the costs that can be directly attributed to producing a sale then you can see if there are ways you can make improvements.
Would my business be able to survive an economic downturn?
We all know about the hugely devastating impact the recession had on a lot of businesses. Ask your accountant for an insight into the current financial position of your company. Would you be able to survive an economic downturn if one was to occur? If you have too much debt then your company may be in a risky position, yet too little debt means you may not be taking advantage of certain opportunities so you always need to think about ways to raise business funding . It is a good idea for your accountant to present you with your debt to equity ratio. This will give you a good insight into how much of your business is being financed through debt in comparison to your own equity.
What tax opportunities can my business take advantage of?
You want to be sure that your business is making the most of all tax opportunities that are available to it. Research and Development credit is a prime example of something that may be of a benefit to your company. There may be some local tax opportunities that your accountant can also enlighten you to so it is always worth taking expert tax advice .
How does my business compare with my competition?
It is always important to have a good idea of how you are performing relative to other businesses in your sector. Your accountant should be able to provide you with benchmarks that are relevant to your industry and businesses that are of a similar size. They will be able to give you a good understanding of how you are performing in comparison. This is an effective way of highlighting areas that may need some tweaking, i. e. you could be spending too much on a certain aspect of your business.