Financial management plays a key role in any successful business, but why is accountancy important in the hospitality industry?
Recent economic conditions have been hard on hospitality. As hotels, restaurants and cafés started recovering from the effects of the Covid-19 pandemic, soaring inflation rates hiked up food and drink prices. Not to mention the added pressure from skyrocketing energy bills and supply line issues.
This means many businesses are passing the cost to customers — who are already cutting back on non-essential spending.
Good accountancy practices can help businesses navigate these challenges by giving them more control over their finances.
Why is accountancy important in the hospitality industry?
Budgeting and forecasting
An accountant can use what they learn from your past accounts to predict your business’s fiscal future.
This is particularly beneficial for hospitality businesses, where revenue often fluctuates from month to month. By looking at your financial data from previous years, you can anticipate seasonal spending patterns and budget accordingly.
In-depth cashflow forecasts can help you plan for increased staffing levels over holidays and calculate how much you’ll need to save to get your business through quieter periods.
Budgets and forecasts also play a vital role in your business plan. By understanding your finances better, you can set realistic goals and make informed financial decisions. This can help build trust from investors, making it easier to secure funding.
Compliance
Failure to meet corporation tax deadlines or making mistakes on your tax returns can result in time-consuming enquiries from HMRC and costly non-compliance fines. Meeting your reporting obligations is therefore essential.
It’s your accountant’s job to keep you updated on taxation rules and regulations. By keeping accurate financial records throughout the year, qualified bookkeepers can reduce the chance of errors on your tax return.
They’ll also be able to inform you of any changes to legislation that may affect your hospitality business so you can plan ahead to stay compliant.
Tax planning
Accountancy also opens the door for more tax planning opportunities. As tax experts, your accountant can claim allowable business expenses on your behalf and offer advice on industry-specific tax reliefs and allowances.
For example, retail, hospitality and leisure relief may be available for a wide range of hospitality companies, including:
- restaurants
- cafés
- pubs
- hotels
- music venues.
Comprehensive tax planning services can help you minimise your tax liabilities, giving you more money to reinvest in your business.
Time management
Many of our clients in the hospitality industry share the same complaint: there are never enough hours in the day. Finding time for accounting tasks can be challenging between ensuring the day-to-day operations run smoothly and keeping customers happy.
Hiring an accountant can relieve some of that burden. We provide a wide range of accountancy services to save you time, money and stress. With us taking care of the numbers, you can focus your efforts on running your hospitality business.
Time to get in touch
If you have any questions about your finances or need expert advice on growing your business, we’ll be happy to help. Years of experience supporting the hospitality industry means we know how to make your business thrive, whether you run a small coffee shop or an established hotel chain.
Contact us to find out why accountancy is so important in the hospitality industry.