This is a question or a situation that I come across quite regularly in my working life particularly in relation to the start up market.
As a well known advert says “it’s never too early to call your solicitor”. This is actually true – the earlier the professionals get involved the better. The Accountants (like myself) fall into the same category.
Quite often there can be resistance from the market place to engage with the professionals at an early stage due to the perception that the business person will just rack up a batch of fees with no real added value – I disagree.
I recently came across a client who came to see me after trading for about 12 months. They had set up a limited company (because they thought that was the only option) when in fact during any year they will only ‘trade’ for about 8 weeks.
With the burden of legislation now upon the incorporated entity it means they are having to cope with filing deadlines, statutory format accounts, annual returns and additional paperwork for HMRC. All of this completely unnecessary for the size of business. The cost of compliance far outweighs the benefits of incorporation.
Thankfully going forward we will be able to shape things into a better format for them but they still paid the price this year.
If a professional had been involved at the outset that business would have been able to understand all of the options available to them and come to the right solution that matched their needs. The client should be in a position to understand the implications of the trading structure they choose and discuss other start up issues (to name just a few) such as VAT registration, taking on staff, funding issues, bookkeeping requirements and any tax breaks such as the ‘NIC’ holiday.
The same theory can also be applied if there is a potential sale of a business. With a bit of smart thinking the Accountant can often come up with a different shape to a deal where it costs the purchaser less and the seller keeps more! It always makes sense to get the right people looking at ‘Heads of Terms’ rather than getting them involved when it is time to sign off the ‘Sale & Purchase Agreement’.
Going back to the cost issue – any professional who is giving worthwhile advice should also have the business sense to take a view on their fees when dealing with a start up. If you want to work with good clients going forward then you have to help them build for the future. You grow with the client and the relationship will flourish for years to come.
Until next time,
Simon can be contacted on 0141 290 0262 or follow him on twitter @simonmurrison