While most people in the UK, indeed globally, realise that thanks to big business, who file full accounts by the way, small business is in big trouble. However, some UK accountants obviously have nothing better to do than to contemplate making life just that little bit more, yes more difficult for small and micro business like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, not to speak of startups.
Example – Richard Murphy of accountingweb.co.uk writes:
While he makes the point about hidden risks in banks balance sheets being the reason for the credit crunch – and yes I would disagree with that as well – he obviously fails to see the irony in his position to ban the abbreviated accounts for small business. Then there are the even more obvious reasons of:
- Accounts are the past often more than 12 month old.
- It takes another little advantage from small business.
- It does not protect against said credit problems, bad debts, etc.
Some of the comments to this post of Richard are very interesting too, you should read them. But the point I’m making here is accountants are not all the same. If you want to start a small business, run a small business or think about starting a small business, don’t go to accountants with such a simplistic view of the micro business and small business world. What we need are accountants who will sit down with you to talk about small business issues like planning, cash-flow, setup requirements and giving you some sound business advice.
Richard has a point about bad debts being a big risk for companies but there are better way to deal with those, like references from other suppliers or a down-payment for instance. I would have usually included here getting a bank reference, but for obvious reasons that is out from now on. Not that I ever had much trust in those references anyway.
Maybe Richard should talk to some small business bankers and see how they would read a balance sheet or profit and loss account, if he finds one that can do it well, let me know. He also does not explain how small business owners are going to read and understand these “detailed” accounts, which can just as easily be ambiguous. We could of cause run to our accountants and have them read for us every-time we trade with someone. Hey, we could even make that mandatory, that way the credit crunch would at least be over for the accounting profession. I’m just not sure how my micro business and small business clients will be able to pay for that service, which let’s be honest, would be pretty useless anyway.
Be very careful who you choose as your accountant/advisor there are many good ones out there, you just need to look. –ST.