You can now ask ChatGPT a tax question and have an answer in seconds. Accounting software can process transactions, generate reports and automate tasks that previously took hours. So, it's understandable that business owners are starting to question whether they actually need an accountant.
We think it's a fair question, particularly as AI continues to improve. At ClearSum, we're big advocates of using technology to make things easier. We use AI ourselves, and we can see how much potential it has to improve the way accountants work.
But there's a difference between having access to financial information and knowing what to do with it.
What can AI actually do for your business?
Quite a lot, and that's a good thing. Modern accounting software, including Xero, is already making day-to-day financial management much easier for small businesses. AI-powered tools can help with bookkeeping, processing invoices, categorising transactions and identifying patterns in financial data.
You can also use tools like ChatGPT to explain accounting terminology, answer general questions and help you understand unfamiliar topics. For business owners who don't have hours to spend on administration, these developments are genuinely useful.
And from our perspective, if technology can complete a task accurately and efficiently, there's little reason to continue doing it manually. The difficulty comes when you need to move beyond the information itself and make decisions based on it.
Having the numbers doesn't always give you the answer
Let's say you've got £30,000 sitting in your business bank account. You're considering taking some money out of the company, investing in new equipment or perhaps employing somebody for the first time.
Your accounting software can show you what's in the bank, how much profit you've made and what your expenses look like. AI can help you analyse those figures and explore different scenarios. But there's more to consider.
How much of that money needs to be set aside for Corporation Tax or VAT? What other payments are coming up? If you're considering taking dividends, does the company have sufficient profits available to distribute? And perhaps more importantly, what are your plans for the business over the next six months?
An accountant who knows your business can help you work through these questions and understand the implications of your decisions. It's not necessarily about having access to better information. It's about having somebody who understands your circumstances and can help you make sense of it.
What about using ChatGPT for tax advice?
We wouldn't discourage business owners from using ChatGPT to learn more about their finances. It can be a useful starting point, particularly if you're trying to understand something before speaking to your accountant. But we'd be cautious about relying on it for specific tax advice.
Tax rules can be complicated, and the correct treatment often depends on details that aren't immediately obvious. AI can also get things wrong. It might reference outdated information, overlook something relevant to your circumstances or give you an answer that simply isn't correct.
The challenge is that those answers can sound very convincing, even when they're inaccurate. If you're making a decision that affects your tax position or financial obligations, we'd always recommend getting advice from somebody who understands your situation and can check that the information is correct.
What should you actually be getting from your accountant?
We think this is where the conversation gets interesting. If your accountant's only involvement in your business is preparing your annual accounts and submitting your tax returns, you might understandably wonder how much value they're adding.
Those things are important, but they're only part of what an accountant can offer. For us, good accounting is about understanding the business behind the numbers. It's knowing what our clients are working towards, being available when they have questions and helping them make informed decisions throughout the year.
Sometimes that's explaining an unexpected tax bill. Other times it's helping somebody understand whether they can afford to take on an employee or talking through the financial implications of a new opportunity. Technology can make those conversations more informed and efficient, but it doesn't remove the value of having them.
And we'd much rather spend our time supporting clients with those decisions than completing administrative tasks that could be automated.
So, will AI replace accountants?
We think AI will change the accounting profession considerably, and in many ways, it already has. Some of the work traditionally carried out by accountants will become increasingly automated. We don't see that as a bad thing.
If anything, we think accountants should be embracing these developments and using the time saved to provide a better service. But we don't believe that having access to AI is the same as having a good accountant.
For small business owners, there's real value in having somebody who understands their business, explains things clearly and is there to offer advice when they need it.
At ClearSum, that's exactly the kind of relationship we want to have with our clients.
We use technology to make accounting more efficient, but it's the personal support, professional judgement and ongoing involvement that we believe make the biggest difference.
If you're looking for an accountant who takes a genuine interest in your business, we'd be happy to have a conversation.
