What does an accountant do? Everything you need to know
If you’ve ever wondered, “What does an accountant do?”, you’re not alone.
While 91% of small businesses are already using an external accountant, many people are still unclear about the specific roles and responsibilities accountants undertake to support businesses and individuals.
Accountants play a vital role in keeping businesses and individuals financially organised, compliant, and prepared for the future. Whether it’s managing budgets, filing taxes, or offering strategic advice, their expert accounting services ensure that financial decisions are sound and sustainable.
What does an accountant do?
An accountant is a financial professional responsible for managing, analysing, and interpreting financial information to ensure accuracy, compliance, and informed decision-making. Their expertise lies in maintaining financial records, preparing reports, and offering insights that help businesses and individuals achieve their financial goals.
Accountants play a crucial role in organising and evaluating financial data, ensuring it aligns with legal requirements and best practices. They assist with tasks ranging from tax preparation to budgeting and provide guidance on financial strategies to optimise performance and minimise risks.
There are several types of accountants, each specialising in different aspects of finance. A few of these include:
- Public Accountants: Professionals who provide accounting, auditing, and consultancy services to individuals, businesses, and governments.
- Management Accountants: Specialists focused on analysing financial information to aid internal decision-making within organisations.
- Forensic Accountants: Experts who investigate financial discrepancies, often supporting legal cases involving fraud or disputes.
Traditional Accountant Roles: What Most People Expect
When people think of accountants, they often picture tasks like:
- Preparing annual accounts: Generating income statements, balance sheets, and cash flow reports to meet legal requirements.
- Handling VAT returns: Ensuring businesses stay compliant with tax regulations.
- Offering tax preparation and filing: Minimising errors, ensuring deadlines are met, and avoiding penalties.
These functions are important but only scratch the surface of what accountants can contribute to your business.
The modern accountant and their role in your business
In today’s competitive landscape, small businesses need more than compliance support—they need strategic advice to navigate challenges and seize opportunities. Here are five ways modern accountants add value beyond traditional roles:
- Business Advisory for Growth and Financial Planning
Accountants can analyse your financial data to identify trends, set realistic goals, and develop growth strategies. Whether you're expanding into new markets or launching a new product, they provide insights to guide smart decision-making. - Cost and Cash Flow Management
Managing expenses and ensuring healthy cash flow are critical for small businesses. Accountants help track costs, streamline spending, and forecast cash flow to avoid bottlenecks. - Tax Efficiency and Relief Opportunities
Beyond compliance, accountants identify ways to reduce your tax burden. They uncover opportunities like R&D tax credits, investment reliefs, and deductions you may not even be aware of. - Technology and Process Improvements for Bookkeeping
Modern accountants leverage cloud-based tools like QuickBooks or Xero to automate tasks, improve accuracy, and save time. They can recommend the right tools for your business and train your team to use them effectively. - Risk Mitigation and Compliance
From financial audits to regulatory advice, accountants help identify vulnerabilities before they become problems. Whether it’s avoiding penalties or addressing fraud risks, they provide peace of mind.
By taking on these broader roles, accountants act as trusted advisors who empower businesses to thrive in a competitive market.
Choosing the right accountant for your business
Not all accountants are the same, and finding the right one for your business can make all the difference. Here's what to consider:
- Experience and Industry Expertise: Look for accountants familiar with your industry’s unique challenges and opportunities.
- Qualifications: Prioritise professionals with recognized credentials like Chartered Accountant (CA) or membership in ACCA.
- Services Offered: Ensure they can handle not only tax preparation but also offer advisory services like financial forecasting or cash flow management.
- Technology Skills: Modern accountants should be proficient in tools like Xero or QuickBooks to streamline your processes.
- Communication Style: A good accountant should simplify complex concepts and provide clear, actionable advice.
Arrange consultations to gauge whether they understand your business and can build a collaborative relationship.
Skills and qualifications of an accountant
Accountants are highly trained professionals whose expertise stems from a combination of formal education, professional certifications, and honed skills. Below, we explore the qualifications and key competencies required to excel in this critical role:
Educational Background
A strong foundation in accounting begins with formal education. Most accountants hold a degree in accounting, finance, or a related field, which equips them with a thorough understanding of financial principles and practices. In addition to undergraduate qualifications, many pursue advanced certifications to enhance their expertise and credibility.
Key certifications include:
- Chartered Accountant (CA): Awarded by professional bodies such as ICAEW or ACCA, this is a highly regarded qualification in the UK and globally.
- Certified Public Accountant (CPA): An internationally recognised certification, particularly relevant for those working in the United States.
- CIMA Qualification: Offered by the Chartered Institute of Management Accountants, this is ideal for management accounting professionals.
These credentials demonstrate an accountant’s commitment to professional development and adherence to high standards of practice.
Essential Skills
Beyond their formal qualifications, accountants must possess a range of technical and interpersonal skills to perform their duties effectively:
- Analytical Thinking
Accountants must be able to interpret complex financial data, identify patterns, and provide actionable insights. Strong analytical skills enable them to solve problems, assess risks, and support strategic decision-making. - Attention to Detail
Precision is vital in accounting, as errors in financial records can have serious consequences. Accountants must exhibit meticulous attention to detail when preparing reports, reconciling accounts, and ensuring compliance with regulations. - Communication Skills
Accountants often work closely with clients, colleagues, and stakeholders to explain financial concepts and provide guidance. Effective verbal and written communication skills are crucial for conveying complex information in a clear and concise manner. - Time Management
Given the cyclical nature of financial reporting and tax deadlines, accountants must excel in time management to meet tight schedules without compromising accuracy. - Technical Proficiency
Familiarity with accounting software, spreadsheets, and data analysis tools is essential in today’s digital landscape. Expertise in platforms like QuickBooks, Xero, and Microsoft Excel ensures efficiency in managing financial data.
Why are accountants important?
Accountants are indispensable to both businesses and individuals, offering expertise that ensures financial stability, compliance, and strategic growth. Their value lies not only in their technical skills but also in their ability to provide insights and advice that drive better decision-making.
For businesses, accountants play a pivotal role in maintaining accurate financial records, which are essential for tracking performance, managing cash flow, and meeting legal obligations. They ensure that organisations comply with tax laws, avoiding penalties and reputational damage. Furthermore, accountants assist in strategic planning, helping businesses allocate resources effectively, identify growth opportunities, and mitigate financial risks. For example, an accountant’s analysis of market trends might inform a company’s decision to expand into new territories or optimise its pricing strategy.
For individuals, accountants simplify the complexities of personal finances, from tax planning to managing investments. They provide tailored advice that helps people achieve their financial goals, such as saving for retirement or purchasing a home, while ensuring compliance with relevant regulations.
In essence, accountants bring clarity, organisation, and strategic foresight to financial matters, empowering businesses and individuals to thrive in an increasingly complex economic environment.
What are the risks of not having an accountant?
Choosing not to engage an accountant can lead to significant risks, both financially and operationally, for businesses and individuals alike.
For businesses, one of the primary risks is financial mismanagement. Without an accountant, maintaining accurate records and tracking cash flow can become challenging, leading to errors that may go unnoticed. This can result in missed tax deadlines, incorrect filings, and potential penalties. Non-compliance with tax regulations or accounting standards can damage a company’s reputation and even result in legal action.
Individuals, too, face risks without professional accounting support. Managing personal finances and navigating tax laws without expert guidance can lead to overpayments, underpayments, or missed opportunities for tax relief. Additionally, without an accountant’s strategic advice, individuals may struggle to optimise their savings, investments, or financial planning for future milestones.
Another significant risk is the loss of time and focus. For businesses, this means diverting attention from core operations to manage financial tasks. For individuals, the complexity of self-managing taxes or investments can lead to stress and financial missteps.
Ultimately, the absence of an accountant increases the likelihood of costly mistakes, missed opportunities, and inefficiencies that could otherwise be avoided with professional expertise. Engaging an accountant mitigates these risks and provides peace of mind, ensuring financial matters are handled accurately and strategically.
Why choose Pulse Accountants?
At Pulse Accountants, we understand that managing your finances can be complex and time-consuming. That’s why we’re here to take the stress out of accounting, offering tailored solutions that meet your unique needs. Whether you’re a small business owner looking to streamline your operations, an individual planning for the future, or a growing organisation seeking strategic advice, our team of experienced professionals is ready to help.
What sets us apart is our commitment to delivering more than just numbers. At Pulse Accountants, we build lasting relationships with our clients, providing proactive support and actionable insights to drive growth and success. Our comprehensive services include bookkeeping, tax planning, payroll management, financial forecasting, business consultancy, and so much more, all delivered with the highest standards of professionalism and care.
Accountant FAQs
1. Do I need an accountant for my small business?
While it’s possible to handle finances yourself, an accountant can save you time, ensure compliance with tax laws, and provide valuable advice to help grow your business. Their expertise can prevent costly mistakes and free up your time to focus on running your business.
2. How much does hiring an accountant cost?
The cost varies depending on the services you require and the complexity of your financial needs. Small businesses might pay anywhere from £50 to £200 per month for basic services, while more comprehensive support can cost more. Always request a clear breakdown of fees before hiring.
3. When should I consult an accountant?
You should consult an accountant at key moments, such as starting a business, preparing for tax season, or planning for growth. Additionally, seeking advice before major financial decisions, such as securing funding or investing, can be highly beneficial.
4. What qualifications should I look for in an accountant?
Look for professionals with recognised qualifications, such as Chartered Accountant (CA), Certified Public Accountant (CPA), or membership in organisations like ACCA or ICAEW. These credentials ensure adherence to professional standards.
5. Can an accountant help me with taxes?
Yes, accountants are experts in tax preparation and planning. They ensure compliance with tax laws, identify deductions, and help minimise your tax liabilities, making the process efficient and stress-free.
6. What’s the difference between an accountant and a bookkeeper?
Bookkeepers focus on recording daily transactions, such as sales and expenses, while accountants analyse financial data, prepare reports, and provide strategic advice. Many accountants offer bookkeeping services as part of their role.
7. Can an accountant help with business growth?
Absolutely. Accountants can analyse financial data, forecast cash flow, and provide insights to support expansion plans. They also assist in securing funding by preparing professional financial statements and forecasts.
8. Do I need an accountant if I use accounting software?
While accounting software is helpful for basic tasks, it cannot replace professional expertise. Accountants can interpret data, provide strategic advice, and ensure compliance with complex regulations that software alone cannot handle.
9. How do I choose the right accountant?
Start by identifying your needs, such as tax preparation, financial planning, or auditing. Research accountants with relevant expertise, verify their qualifications, and read client reviews or ask for recommendations. Arrange a consultation to ensure they’re a good fit.
10. Can an accountant help me save money?
Yes, an accountant can identify tax-saving opportunities, improve financial efficiency, and provide strategic advice that reduces unnecessary costs. Their expertise often results in long-term financial benefits that outweigh their fees.