It’s been defined that stress occurs when a person is faced with a challenge or problem, but can’t see a solution or doesn’t think they have the resources to manage it. And if you’re a small business, sole trader or limited contractor, you’ll know that dealing with your accounts, cashflow and forecasts can be a source of stress.
In this article, we’ll examine the moments in small business accounting where uncertainty can seem high and stress can mount up, and take a look at how working with a professional accountant can help rebalance your mental health.
Overcome the first hurdle: dealing with compliance
Knowing how to deal with government bodies like Companies House and HMRC and understanding what they want and how they operate can be the first hurdle. What weighs in an accountant’s favour is that we deal with them on a regular basis. We’re familiar with their systems, how they approach people’s submissions and also how they are likely to behave in any given situation – good or bad.
When you look at the nature of these establishments, it’s easy to see why they can cause many people anxiety. With Companies House, the information and reports you supply are in the public domain and accessible to anyone who wants to examine your business. HMRC is different in that it is private, but the nature of the organisation is regulatory – it’s there to check over everything you supply and what’s happened in your business with the aim of ensuring compliance with rules.
It’s never a comfortable feeling to be judged by people (or automated systems, for that matter). Companies House and HMRC are necessary bodies in a functioning world that enable businesses to operate smoothly. But they also exist to find fault and check for poor behaviour, and the fact that they could find something wrong – however unintentional – is a big worry.
Wrong-footed by language
To add to this, as government bodies, the language they use throughout their platforms, letters and messages has to be neutral. They have to be seen to be dealing in a detached manner, without prejudice.
But it is exactly this neutral language that can leave people feeling anxious. They phrase every line or request such that it doesn’t give anything away. You have few clues as to the urgency or importance of your actions, or more importantly how their instructions might relate specifically to your business.
This means people are often not sure about:
- What’s required of them
- If they are being tripped up into making a mistake or led into giving something away they shouldn’t
- If they are doing something wrong, entering unnecessary information or putting information in the wrong place
What’s important to realise, though, is that all these organisations want to know is the truth – and that they generally don’t want to see someone go out of business. For the national economy to keep going, they need people to be active in it.
While their people, messages and systems can seem intimidating, we can safely say they are not as scary as you think when you deal with them regularly. And we know that they would rather find ways to resolve any issue than throw you to the proverbial dogs over it.
Having an accountant on your side really can remove the stress of filing your accounts to the official bodies – not only because you won’t have to interact with them yourself, but also because they can spot any potential issues before they become a problem, file your accounts completely correctly and liaise with these organisations to make any unpleasant situation far easier to navigate.
Where an accountant brings peace of mind
If you’ve built a trusting relationship with your accountant, then you’ll know you can have an open conversation with them about your business. Sometimes it’ll be about your ideas and ambitions. But more likely it’ll be about an issue that’s cropped up. And this is where the value really lies.
Clients come to us with questions like: “I can’t afford this tax bill – what can I say to HMRC?” or, “I didn’t anticipate my tax bill being this high – how can I work with this to reduce it or take the sting out of payments?” (Yes, it’s mostly about tax!)
Almost always, there’s a way we can help. Often, we can go over your case with HMRC and find ways to defer payments in line with your cash flow. Or it may be that you hadn’t told them some information that should be taken into consideration to mitigate your tax exposure. Whatever angle we take, we know that communication matters. It’s far better to open a dialogue with the authorities rather than let an issue fester – far better to work out a solution or a way forward than sit there thinking neither is possible. That’s fertile ground for stress.
The problem is, accountants are typically looking at the past – accounting figures for small business and sole traders usually date from quite a while ago, sometimes 18-24 months. Understandably, nobody has a complete recollection of what exactly was going on around that time, which makes things tougher than they need to be when it comes to justifying spending or reconciling payments and receipts. This also adds stress to your workload.
Following this scenario, it’s actually much smarter to start thinking about your future accounts before you need to. This will eliminate the need to dig into your financial history at a later date like an archaeologist (and not be sure where to find things, or what you might unexpectedly dig up), and hopefully prevent unwelcome surprises such as a nasty tax bill in the future.
Future value: reducing stress and uncertainty
Seeing the problems many of our clients had with having to sift through old receipts, spreadsheets, statements and invoices, we started offering future positions advice.
Using modern accounting software brought their books onto more of a real-time footing, solved organisational problems with paperwork and helped to reduce stress over future accounting all at the same time.
Clearly showing what the client has done more recently and then using those figures to predict the next financial year goes beyond what’s possible with simple ledger-style spreadsheets. It gives us the ability to do financial modelling and planning around your business, which can be a powerful tool to reveal possibilities and inspire opportunities.
We can look ahead and anticipate your cash flow and tax exposure according to the options and openings available to you, and the choices you might want to make. On a practical level, we can show you how if you chose to take X amount of money out of your business as a salary, this is what your position looks like. But if you choose to take less or more, and allocate other amounts in different ways within your business assets, then this is what it will look like, and you can make informed decisions based on your outlook, priorities or aversion to risk.
Helping you make decisions – fast
Every client has considerations and questions about their accounts – some more frequently than others, and with varying levels of stakes. And, sometimes, the pace of decision-making and change can also be a source of stress to a client. It’s frustrating when things can’t move as fast as you like, or, conversely, if external factors like deadlines, creditors or contracts are coming to a head too quickly.
In time-sensitive situations, it’s important to know that any and all of these aspects can be resolved quickly. If uncertainty is allowed to linger then it always grows larger in people’s minds, which in turn leads to greater impact on your mental health. And poor mental health often leads to poor decision-making and lapses in professional performance.
We always encourage clients to get in touch quickly with any questions on their mind – the sooner the better.
A quick email or WhatsApp message about a tax question, business investment query or an initial idea about a new line can result in answers (and peace of mind) within hours, if not minutes. A well-intended quick query is never a bother for us, and usually prevents more work, if not a crisis, later on.
We have seen how the pace of response can be of huge benefit to our clients. They can see a solution, understand an issue and take action fast. This removes uncertainty, frees you up as a business owner and significantly reduces stress. Stress is displaced by agency.
It’s all about finding ways to remove stress
As we’ve just outlined, taking action reduces stress. And you can determine what action to take by talking over your issue, seeing it for what it is, getting a new perspective and figuring out where to go.
Talking is always the start – it’s the part we can all do. But we can’t all figure it out – we don’t individually have the necessary knowledge to do so (or we’d never have a problem!).
This is where you need to find the person who complements what you do and fills in what you can’t do. As accountants, that’s our job – to complement our clients’ businesses and perspectives, and give them the benefit of our expertise.
And remove stress in the process.
If you want to talk to us about any accounting-related issue, don’t hesitate to drop us a quick message.
