Understand an Accountant’s role
A complete overview of an Accountant’s role
Accountants are the most trusted advisors of a business, this means becoming one is not simple. There are many questions asked about an accountant. A few of these are questions such as how to become one? how to hire one? and what is an accountant’s role?
Our specialist in-house training team has therefore curated an in-depth guide to help answer these questions regardless if you are a student looking to become an accountant, a business looking to select or change one or someone looking for a simple career change, this guide will answer most of your questions.
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Accounting can be traced back to the age of Mesopotamia and is the process of recording, summarising and presenting data in a way so as to show if a business or industry is profitable or not. The accountant’s role has evolved over the years from being a practice of transactional counting to the language of finance. Modern accountants are now expected to be actively responsible in effective decision-making, generating tax savings, growing profit margins, predicting future scenarios, amongst other things.
Even though the accounting profession enjoys a long history of more than half a century, the agenda around its research only occurred in the last decade of the 20th century as per The Accounting Historians. The profession now sees accountants working in various industries in different positions, influencing the growth of entities big or small through their input on topics ranging from accurate management of financial resources to cash flow, tax or audit. Accountants today, can be found working as Freelancers, Virtual Advisers, CFO’s, Business advisors, Financial analysts, CEO’s, Finance Directors, Management Accountants amongst many other roles. It can be said that the accountant’s role has evolved into one of a business adviser.
An accountant’s role varies, with their incredible analytical capabilities, years of practical training and a sharp eye for detail provide useful insights through reports and dashboards while keeping financial data up-to-date, they also ensure a company’s compliance with local laws & regulations and help entrepreneurs prepare for complex tax situations, which can be extremely crucial when expanding into new territories.
This article is our attempt to explain to aspiring accountants, businesses and future accountants an accountant’s role and the important value they add to the businesses they work with and the economy as a whole.
By the time you finish this article, you should be able to:
- Understand what an accountant’s role in your business
- Decide if you want to pursue a career in accounting
- As a business decide if you need an accountant and the type of accountant you require?
A varying accountant’s role means that they tend to specialise in different areas once they have qualified, the specialisations can be in any of the fields of accounting, which are as follows:
- Management Accounting: Management Accounting is the process of using financial information prepare to better the internal performance of the company. You can learn more about the preparation of management accounts to better your business performance.
- Financial Accounting: The activity of storing, presenting and reporting on a company’s financial transactions. In simplest terms, the process can be broken down into Bookkeeping and Annual Statutory Accounts preparation and submission.
- Public Accounting: The practice of providing accounting services to other businesses, these can include accounting, tax and auditing.
- Tax Accounting: This includes performing accounting work in line with tax rules and regulations.
- Auditing: Is the process of inspection of the books of a business under the International Auditing Standards to provide independent auditors report for various stakeholders.
- Internal Auditing: Is the process of objectively evaluating the internal controls of an organisation to minimise business risk within its risk limits.
- Forensic Accounting: Is a mixture of legal, accounting and investigation techniques used to uncover financial crimes.
- Service Charge Accounting: The Accounting for Service Charge monies held in trust on behalf of leaseholders of a property.
- VAT Accounting: The exercise of Accounting for Value added tax.
What is an Accountant’s Role?
The general role of accountants is to ensure the financial effectiveness of an organisation. They do this by making sure effective financial records are maintained, performance reports and dashboards are prepared and presented, efficient tax strategies are adopted and all regulatory financial and tax rules and adhered to. The role of an accountant changes based on the area of their expertise also known as specialisations. These specialisations have been explained above in detail.A good first step would be to sit for an aptitude test, these tests will help you understand your abilities to accomplish particular duties and respond to a variety of situations, confirming if you are a good fit for a certain role or not. Employers will normally require you to complete these before calling you for an interview, so if you are not good at certain skills you will not be called for an interview.
You need to have a minimum level qualification to be an accountant in the UK. Association of Accounting Technicians (AAT) is the minimum level qualification required, however, if you dream to progress into senior roles you will need to become a Chartered Accountant. For this you must complete any one of these professional qualifications and complete the required work experience:
2. ICAEW (Institute of Chartered Accountants in England and Wales)
You will find almost little to no difficulties while searching for employment in the accounting industry, as every business in the UK requires an accountant at different levels of their hierarchical structure. Specialising within Accounting will increase your demand and increase your chances of progressing faster, specialisation can be achieved by training in the relevant industry once you have achieved your professional qualification or sometimes even by targeting specialised qualification such as CIPFA (The Chartered Institute of Public Finance and Accountancy) for a role in public finance or CIMA (The Chartered Institute of Management Accountants) for a role in management accounting.
“Tip: It’s wise to determine your area of interest early on.“
Like every other profession, accounting can be categorized into two parts, financial accounting and management accounting. Before selecting your preferred choice, you need to understand the basic difference between the two:
Management accounting is all about managing and providing fruitful financial information to the people working within the company whilst Financial accounting involves organizing and presenting financial information for external stakeholders.
Under these categories fall further specialist fields such as tax accounting, and service charge accounting, etc.
The importance of financial accounting lies in the fact that it is legally required by the government and other organizations for tax-related purposes whilst practising management accounting is in the interest of the company and is not required legally. Graduates starting within financial accounting will usually end up working in auditing, corporate finance, forensic accounting and tax accounting.
“Tip: Your qualification will matter in the short and long run both, so work for it.“
Though it’s the practical accounting knowledge that will come in handy in the long run, it is equally necessary to have a qualification to help you progress within the industry. It’s always good to look out for jobs that offer training contracts because it enables you to gain professional experience while acquiring a recognized accounting qualification.
Other than searching for employment, look out for finance graduate schemes that offer you the opportunity to acquire a recognized accounting qualification such as an ACA or ACCA as a component of the entire programme.
If you want to achieve chartered status quickly, you can apply for accounting apprenticeships run by different accounting bodies instead of getting yourself enrolled under a university programme. These apprenticeships may be offered by professional bodies such as ACCA and ICAEW as well.
Finding your initial accounting job will not be easy. The initial process will require a lot of time and effort, from finding a job to being selected for one. Bear in mind that minor experiences either gained through internships or part-time jobs, will definitely increase the chances of finding a role. A good place to start:
- Make sure you have a presentable CV
- Search for Jobs through Job Boards, Linkedin or through Companies Internal Recruitment sections
- Apply for Jobs carefully, read the job description and make sure your CV and cover letter address the key requirements
- Prepare for an interview if selected
- Follow-up before and after an interview
- Be professional and ask your CV to be saved for future opportunities if not selected for the job
Interview questions to ask when hiring an Accountant
Selecting the best candidate when hiring can be tricky, as you need to assess a variety of the candidate’s characteristics in collaboration with things such as their qualifications, past experience, communications skills etc. before you can decide if the candidate is well suited for the role or not. The detailed questions for an interview will depend on the role you are hiring for such as a management accountant or a finance director role. There are however some general questions which need to be asked, to assess the competency of the candidate, you need to ask them:
- To walk you through the basic financial statements.
- To explain what they would do in the first 30 days.
- What they do to keep their accounting knowledge up to date.
- About their previous work experience and how the experience gained fits with the role they are interviewing for.
- To present with examples of how they added value for the previous company they worked with?
- How they handle the quality of their work and what they do when they make errors?
- The biggest challenge they have faced and why it was a big challenge?
There are many other questions you can ask, the gist of the interview should be to assess if the employee will be a cultural fit for your organisation and the value they will add to your business within the confines of their role.
An alternative to hiring can be to outsource your Accounting Department. Outsourcing specialists work with a number of clients, so they understand the details of how an effective accounting department should work, they will also have developed tools, teams and processes which will help you avail the benefit of a team of accountants for a fraction of the price of hiring a full-time accountant.
Good businesses begin with great ideas, hard work and adequate resources. Great businesses begin with everything above and a great Accountant. Afterall an exceptional accountant will protect your from HMRC, help you manage your resources efficiently and be the perfect business partner.
Related: If your accountants are not doing any of the above it might be time to think about switching accountants.
If you are starting a new business, your startup Accountant will be your adviser and mentor. They will help you to:
- Select the most optimal business structure and form the structure once finalised.
- Helping you prepare a business plan, a cash flow forecast and any applicable financial models.
- Introduce you to business connections which can help your business grow.
- Provide you with the tools to enable time-saving automation and growth.
- Carry out your Accounting and Tax duties
- Do Much more, visit our Startup Page to learn how we can help.
If you are a growing business, your accountant will be your strategist, business advisor and your performance dashboard. They will help you to:
- Review growth strategies to assess financial viability and scalability.
- Measure and report on growth in real terms to track predicted vs actual performance.
- Minimise risk and protect your business.
- Reduce Tax liabilities and improve the bottom line.
- Improve cash flow strain and keep an eye on cash burn.
- Do much more… visit our Growth Page to learn more.
Related: We have researched and presented an in-depth understanding of how Accountants can help you grow your startup.
If you are an established or expanding business your accountants will be your Business Consultants, Accountants and your Business Partners. They will help you to:
- Keep up to date with compliance and complicated regulatory requirements to stay on the right side of regulatory authorities.
- Devise smart solutions for financial performance and tax savings.
- Reporting on all matters of finance.
- Do much more…
Generally, accountants will help your business by organizing and compiling all of the important financial data in the form of financial reports and statements over time, accountants ensure that your business is on the correct path and help you stay compliant with the local laws and regulations.
With the help of financial records, they will help you track various finances of your company, for instance, expenses, income, taxes, assets and liabilities, etc. Their expertise helps your business by providing you with an accurate evaluation of the performance of your business.
Accountants will help you to make accurate and reliable future projections for your business with interactive financial models and by keeping accurate records of financial data.
Now that you understand the importance of having an accountant on your team, it is time you should think about hiring a professional accountant if you haven’t employed one already.
How do I find the best Accountant?
Finding the right accountant can become extremely complicated, this is the firm you will share all your confidential information with, changing accounting relationships can be painful and hard, therefore make sure you take your time and select the right firm in the very beginning. To do this correctly you need to keep certain factors in mind, for instance, the expertise, the experience and their location (location is not a key factor anymore due to online accountants and everything being in the cloud).
A good start would be to try looking for someone:
- That is a qualified Accountant.
- Has good customer reviews, at least more than 10.
- Understands your industry.
- That will provide a dedicated Accounts Manager.
- That has accreditations and awards.
- Any other differentiating factors.
If you feel unsatisfied after approaching a number of accountants yourself, you can always ask your business colleagues or your attorney to refer someone. You can also look at directories or comparison websites. Alternatively, search for an Accounting firm nearby on google and shortlist someone.
Related: You can learn more about the A to Z of hiring an Accountant .
Is an Accountant costly?
Yes, competitive qualified accountants can be expensive to hire and not every business can hire one. However, the value they add in savings might pay for their fees many times over. Here a number of reasons to consider why the cost of an accountant will be justified:
- An accountant ensures compliance with tax laws and regulation, thus saving you from losing money on fines and penalties
- An accountant provides you with correct advice after giving in a lot of time and effort to analyze financial data, which then results in better and reliable decision making
- An accountant drives up the company’s profit by providing real-time information and providing insight into how you can improve the efficiency of the existing processes in your company.
- One major reason is that competitive accountants will be high in demand and will, therefore, charge premium prices.
Is the fee of my Accountant tax deductible?
According to HMRC, it has allowed individuals to claim tax relief against the fee charged by your accounting firm for the services rendered. However, tax-deductibility of the bill provided by your accountant depends upon whether the services provided for your business were ‘wholly and exclusively’ for trading purposes or not.
What services can an Accountant provide to my business or me?
When it comes to the services that an accounting firm can provide, there is a long list. One might get surprised and wonder if accountants really are ‘The Avengers’ of the financial world? Here is a list of some of the services that they can provide your business with:
- Bookkeeping: This is the process of managing and keeping the financial books of the business up to date. Effective bookkeeping can actually help you grow your business.
- Accounting: As the names suggest, these are the primary duties of a typical accountant. Accountants can provide accounts preparation and submission services.
- Consulting services: After careful analysis of different areas of your business, an accountant can identify any weak operating areas and provide fruitful advice on what financial strategy you should adopt. In addition, they can also guide you to manage your taxes efficiently, so that you stay on top of your taxes and save more money than normal.
- Tax planning: Tax Accountants can help businesses save tax or filing tax returns.
- Secretarial services: Accountants can also provide secretarial services to Limited Companies, which is deemed to be of extreme importance as these services ensure that the company is maintaining its statutory registers on a regular basis.
Can I do Accounting for my business myself?
It’s understandable for small business owners to lack the funds to hire an accountant, in this situation they can try to manage the accounting by themselves, however, if things seem too complicated it is advisable to outsource the accounting responsibilities to an accounting firm to avoid future complications.
Larger business owners will find it extremely difficult to make time to personally manage their books while keeping in touch with changing rules and regulations. It is not a good idea for a large business owner to do the books themselves.
How can I do Accounting for my Business?
A good starting point would be to a basic accounting course, once done find a good online accounting software which will help you automate most of your tasks, such as issuing invoices and managing expense transactions. You can select the best software using our comparison guide. We have also explained basic accounting and tax terms to get you started.
Once you have mastered the key accounting and bookkeeping terminologies, you should then follow the step-by-step guide laid by our team of in-house accountants by us to ensure reliable accounting and bookkeeping processes. Here’s how you can begin.
- Separate your business finances by opening a business bank account:
This is indeed one of the most important steps that every business owner should take. Separating your personal finances from business finances is the first step towards managing your financial books efficiently.
You don’t want to get all mixed up with your personal and business finances, as this will take time and may result in inaccurate bookkeeping and management of the company’s valuable books. Banks offer special accounts for startups with few to no employees, talk to a bank representative and learn about the benefits these types of accounts offer.
- Employ a bookkeeping system:
You need to first figure out what kind of bookkeeping system do you want to employ in your company. It can be a single-entry system or it can be a double-entry system.
For your information, a single-entry bookkeeping system is a simple system that takes into account the recording of every financial transaction as a single entry in the ledger. Many small businesses employ this kind of system due to its simplicity, and cost-effectiveness. In addition, you don’t need to have any formal training to use this system.
On the other hand, a double-entry bookkeeping system takes into account each detail of a transaction and requires the accountant to add entries into different accounts for every single transaction. The name double suggests that on every single transaction, there will be more than one entry into different accounts, in other words, this bookkeeping system takes ‘credit’ and ‘debit’ into account and expects both of the amount in these accounts to balance when closing the financial books for a particular accounting period.
Any discrepancy or imbalance indicates that the entries might be incorrectly entered or recorded.
- Work out your expenses by categorizing them first:
Organize your business finances over time to ensure quality financial reporting and access to a reliable database. You don’t want to waste time on tracking your expenses if the taxman shows up at your doorstep. You should try sorting out all of the expenses first, after sorting, you should then categorize and name them appropriately. For your understanding, we have listed down some of the important expenses that your business will definitely incur.
- Payroll expenses
- Fuel expenses ( business vehicles)
- Office expenses
- Office supplies
- Rents and bills
- Travel expenses
How do I find a good Accountant in London?
Finding a good Accountant in London should be simple, simply search for Accountants in London online. However, you may still be confused as to who to approach after going through a long list of options. To clear this confusion, you need to thoroughly research their expertise, their qualification background and their reviews. You can also ask someone to refer someone to you.
Can Accountants help me grow my business?
In simple terms, the main focus of an accountant’s role should be able to help you grow, as they should be your advisors, your guides and your financial mentors, so it’s quite evident that your accountant will assist you at every stage of the business cycle. They should be there from the onset of your business set up to when your business grows and requires cost-effective business strategies.
To elaborate on how accountants can help you grow your business, we have listed down 4 reasons:
- They will help you identify the most relevant KPIs which help your business grow after inspecting the true nature of your business.
- They will help you gather all the relevant information required for a break-even analysis, which then helps you prepare for the best and the worst situations.
- They will provide you with insight into your current and future cash flow situation, so that you understand the impact on cash flow when hiring new employees, expanding the range of your products & services or increasing the budget for a particular area of your business.
- They will provide you with the necessary business valuation services to understand what your business is worth and what needs to be done to achieve your exit strategy?
Is there a difference between an outsourced Accountant and an in-house Accountant?
Yes, there is a considerable amount of difference between an outsourced and in-house accountant in terms of payment, location and limit of services each provides.
An In-house accountant is the one you hire to manage your business’s finances as an employee who is on your payroll. You employ them under a full time or part-time employment contract, and you are also responsible for managing their taxes, overtime wages and holiday benefits. Your in-house accountant will generally provide you with the services that were initially agreed as per their contract.
An outsourced accountant is someone you hire to complete your financial duties without employing them on the payroll. You can select the level of services required and can add or remove any services anytime as you see fit. You don’t need to manage their taxes and you will not be liable to offer them holiday or other benefits. There is no need to set a separate room or desk in your office them as they will work from their own premises, the scope and range of the services that they offer will depend entirely upon the package you have paid selected with them.
Clear House Accountants are specialist Accountants in London, we value the training and development of all our Accountants and have therefore built training systems and processes to help them grow and develop.
Jibran Qureshi FCCA is the Managing Director of Clear House Accountants, and has over 10+ years of experience in practice and across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. It was this dexterity that led him to be Enterprise Nation’s Top 50 Advisors.
Jibran is fueled by his passion for helping businesses. He unequivocally believes that as business advisors and accountants for our clients, it is our responsibility to work with them as business partners. As specialists, it is our duty to help our clients navigate through the complexities of constant change and the implications that come with it.
Over the past decade, innovative disruptions have changed the way businesses work, everything from cloud software, innovative business models, to AI and machine learning, have impacted how businesses operate, grow, and expand.
Jibran recognized the need to manage these disruptions sustainably, early on and shaped Clear House Accountants to not just be compliance specialists, but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive.
Jibran developed his prime role as the Managing Director to build Clear House’s capabilities so it can add value for their clients. He is of firm belief that this can be done through consistent high-level training, building the right tools, and creating roadmaps to help businesses cope with prospective disruptions. He envisages that every client that comes on board, is provided maximum value through onboarding, ongoing services and the right mix of tools to help them become the best in the world.