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A Complete Guide to SME Accounting


Behind every successful entrepreneur is a well balanced business. That requires a touch of inspiration, a wealth of dedication and top notch SME accounting services.

It’s never easy for SMEs. In fact, as you set up your business, you tend to discover that initial success is less about your products and services, but more about everything else. You realise that you’ll have to review your marketing skills to reach customers, or that you’ll have to brush up on some developer knowledge to add some sparkle to your website.

But the biggest barrier of all is SME accounting.

Woman with long hair defeated by SME accounting

Why SME accounting is essential for success

You can’t build a house if the foundations aren’t in place. Well, when it comes to business, finance comes first.

It’s the reason why you created your business. The chance to earn your own money honestly, grow your startup and create something bigger. At the very basic level, business is about finance. Trades, shares, payroll, raw materials - they all involve finance.

That’s what makes accounting so essential. But as you’ll find out soon, it can also be the most effective tool in your business strategy kit.

The difference between SME bookkeeping & accounting

The majority of the time, you’ll find people using these words interchangeably. This is incorrect. While Bookkeeping is an essential part of accounting, it’s just the tip of the iceberg.

Bookkeeping is the stringent recording of information. Accounts, expenses, invoices - all these are recorded in professional bookkeeping software. Accounting covers a vast array of services involving the analysis of this information. The financial strategies from this can involve maximising R&D Tax Claims, reducing your burn rate, and making sure that your taxes are paid on time!

Bookkeeping = Recording & reporting financial information

Accounting = Analysing financial information to formulate strategies for growth

SME accounting: the basics

Let’s take a look at some of the essentials of accounting that every SME needs to know. Each one of these is either necessary for legal reasons, and/or for the incredible amount of value that they provide startups and SMEs.

Setting up your SME / startup

We know startups.

Our number of successful startup partners is 300+ and still growing, so we understand the difficulties of setting up your own business. That’s how we know that financial planning is one of the biggest barriers to overcome.

The financial model of your business plan is the most essential for SMEs. It’s a well researched, theoretical plan to ensure the future of the business. However, more often than not, a financial model is biased by optimism.

Office workers looking at SME accounting services

It is absolutely worth getting a second, professional opinion on your financial model. A third party accountancy expert with a clear view of your potential future can point out any flaws, iron out details and prepare you for the troubles ahead. They can even provide vital plans to reduce your burn rate and increase your chances of taking off.

Pay the right tax

As an SME or a Startup, one of the essential items on your mind will be taxes.

It isn’t just one kind of tax, after all, there’s an entire range of possible taxes that you and your business will have to pay depending upon location, profits and company setup. Suddenly it’s no longer just a simple calculation, but a growing maze of percentages and possibilities.

Unless you’re fully aware of the appropriate tax laws and changes, it’s recommended to take advantage of SME accounting services. You’ll pay the right amount of tax on time. Failure to do so will result in financial recriminations, and they will hurt your bank account.

Prevention is the best cure, so do it right the first time!

Reduce your tax

While we did say that the UK government will fine your business if you fail to pay enough tax, there is a way to pay less tax, legally.

There are several ways to reduce your tax in fact!

These can range from business and operating expenses, to taking advantage of SME R&D Tax Credits, as well as brand new government allowances that are rolled out every so often.

But if you claim expenses incorrectly - you will be fined again. So best leave it to the professionals!

SME accounting tax sheet with gold coins lined up

Set up a payroll system

At some point, your business is going to expand, and that’s a good thing! There’s nothing better than seeing your hard work and effort pay off. That demand for your products or services means that you have to reinvest into hiring help to run your business.

However, that means one more thing to take care of.

Each new member on your payroll is another set of PAYE to take care of, another bunch of costs, taxes and other benefits to include. Essentially it means more work for you to maintain payroll compliance.

You can find certain bookkeeping software to take the edge off payroll and make it a doddle. If you’re still working from an Excel spreadsheet, then things will become very tough pretty quickly. With the right software at your fingertips, you can add staff to payroll with a few keystrokes and alter salaries with the click of a button!

Fundraising for growth

It doesn’t matter how you started your business, your money will have to come from somewhere. For some businesses, you have some funding set aside from your own pockets or have a little help from family or friends.

For most, that requires seed money. To grow successfully in the future, you’ll require Series A&B funding.

Both of these involve convincing investors, banks or other entities to lend you money. In return, they’ll eventually get a return on investment, and most likely some equity and shares within the company itself.

Woman and man in blazers looking at SME accounting services

Now, a great idea or product will spark their interest. But the thing that convinces investors to support your business is good financial hygiene. If your books aren’t good, then no one wants to invest. However, if your SME bookkeeping is up to scratch, they’ll know that they’ll get a return on their investment and you’re a business to be taken seriously.

Now, while CFOs tend to create bespoke financial plans to blow investors out of the water, strong SME accounting services can keep your books tidy and presentable.

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Bookkeeping & accountancy software

As we stated before, accountancy is the analysis, reporting and planning of financial data garnered from your bookkeeping efforts. This means that you need the best bookkeeping software.

After that, you need to look at how to use this information to best attain your goals. Which leaks can you plug? Where is paying off the most? What spending could lead to a big payoff?

Both bookkeeping and SME accounting need good software and support. With that in mind, ask yourself these questions.

Man smiling at desk looking at SME accounting

Is it cloud based bookkeeping software?

If it isn’t, then bin it.

Any software that you use now should be cloud-based. Cloud based bookkeeping software autosaves your data and keeps it safe from bugs and crashes. It can also provide real-time data, accessible from anywhere in the world so you can stay on top of your finances when you want, where you want.

Is it intuitive?

Bookkeeping and accountancy aren’t about giving yourself a headache. They are both useful tools that should help you towards scaling up your business. If your bookkeeping software isn’t responsive and easy to use, then it is just wasting your precious time.

You should be able to generate understandable reports in an instant and gain a new level of intelligence about your company’s financial position. AI-assisted software will grant you user friendly help available to identify patterns within the chaos.

Is it good value for money?

Not “is it the most expensive?” Nor “is it the cheapest?

There’s no need to increase your overhead for shiny bobs and whistles that you’re never going to use. But you shouldn’t skimp and miss out on the quality either. You need to evaluate the current and future needs of your business finances and find the right fit for you.

Can it scale up with my business?

This is THE most important question. What’s the point in investing in bookkeeping software and SME accountancy services if you’ll have to change anyway?

The right services will scale up alongside you. They’ll adapt to suit your needs and be a supportive hand to lift you up rather than become a chore.

Remy Sleep was one of those businesses…

Man on phone looking up SME accounting services

Remy Sleep’s struggle with success

If your SME accounting services aren’t able to scale up with you, then you have a problem. Remy Sleep learned this the hard way.

Their business experienced exponential growth in a short period of time and they discovered that their accountants weren’t up to the task. Without flexible, professional accounting services, they couldn’t keep up with the mountain of rising accounting responsibilities.

Luckily they turned to us for help.

With our flexible, professional accounting services we used our signature blend of high powered AI tech and human support to give them back control of their growth. Our expert insights provided by our accountancy team allowed them to base their business decisions on clear, actionable financial information.

“We’re finally able to make business decisions based on forecast cash flow and financial health of our business. Their communication with our team has been extremely proactive, it feels like we have a CFO at our team with the service they’ve provided.”
Remy Sleep

Specialised accounting services for SMEs

Outsourcing your accounting services doesn’t mean that you can’t handle it. It means that you are making smart business plans. Your business can and should be your first priority.

We specialise in accountancy for startups. We understand the needs of startups because we were one once too! That’s why we blend expert software with accountancy professionals to deliver one service to cover all your needs.

With our blend of technology and human touch we provide all the financial support that you need to grow. Need us to take care of your taxes? Done! Struggling to work out SME R&D Tax Credits? Not a problem! Want a professional to break down the financial jargon and give you a clear picture? We’ve got you covered!

We offer the complete accountancy service. From Seed to Success, we support your business all the way. Talk to a finance specialist today to learn more about how your startup can benefit from SME accountancy services, and make sure to brush up on your business knowledge from our School of Startups!

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