Regardless of their qualification, there are two types of accounting functions that you need performed for you business: (1) The compliance accounting function and the (2) management accounting function.
A compliance accountant is only interested in you completing the task required under the law whilst a management accountant will also be vitally interested in the financial performance of your business and in providing appropriate correctional advice where necessary.
The compliance side of accounting deals with such issues as:
- Your business structure (i.e to trade as a sole proprietor or as a company)
- The status of your workers (i.e. contractors or employees)
- Taxation registration and lodgment including any value added tax like a Goods and Services Tax
- Licenses and permits required
- Business name registration
- Bank account setting up
- Your tax invoice layout and substance
- Your full and lawful taxation claims
- Workers Compensation Insurance (if applicable)
- Public Liability Insurance (if applicable)
- Your bookkeeping system (i.e MYOB)
- Your asset register for depreciation expense claims
The managerial side of accounting deals with such issues as:
Your cashflow management – To set you up with a rolling 13 week cashflow plan that predicts shortfalls in cash and offers advice on ways to deal with those shortfalls long before it becomes a crisis.
Your pricing management – Ensuring that you are protecting and increasing your gross profit margin through strategies like merchandising your margins, subjective margins, price increase strategies and cost controls.
Sales analysis – Ensuring changes in sales are quickly identified and responded to, that identified opportunities are exploited and that multiple sales are being properly achieved via sales person’s efforts and product layout and positioning.
Cost control – Ensuring that costs remain in line with expectation and that they are responded to immediately when there is a blow-out. This can be done via a monthly spreadsheet showing the costs each month and via variances to preceding averages.
Loan support – Ensuring that you can present the best possible case when applying for bank loans. Good managerial accountants know how to make a case for funding by presenting your figures in the best possible light. They take the time to separate out the one-off payments from the on-going expenses, they capitalize formation costs rather than expense them against a fledgling enterprise and they are prepared to produce realistic budgets in terms of future earnings
it is vital to select an accounting firm that can do both your compliance and managerial work which is why we always select a second tier firm (rather than the one-man-band) that have the expertise and depth in personnel to do both.