Choosing the right accountant for your small business can mean the difference between success and failure. Here’s how to find and choose the best accountant, how much to pay and what a good accountant can do for your business.
A good accountant can prove invaluable at all stages of a business’s development. When setting up your business a good accountant can help develop your business plan, create bookkeeping systems and provide efficient tax handling by filing annual tax returns and company accounts. All of which lets you concentrate on the important matter of running your small business.
As your business grows a good accountant can help streamline your business’s operations so it’s more commercially effective and tax efficient as well as help it grow by securing financing options.
And don’t forget, a good accountant will save you more money than you spend on their services so it’s worth taking the time you to choose the very best one for your business.
Why should I get an accountant for my business?
A good accountant can help your small business in numerous ways including:
- Accounting and bookkeeping – For most companies, operating a legally and financially robust accounting and bookkeeping system is a core requirement. A good accountant will help you set up a bookkeeping system and payroll scheme so you can keep on top of your company’s finances. They can spot issues early such as problems with cashflow and increased supplier and rental costs before they impact your balance sheet. Depending on your company’s needs they’ll prepare and file accurate self-assessment tax returns, VAT returns and annual company reports.
- Tax advice – A good accountant can advise on tax compliance and tax planning and make sure your business claims for all the tax deductions it’s entitled to make. This can help reduce your company’s overall tax burden which in turn may help it stay afloat and grow and could more than cover the fees charged by the accountant.
- Business insight – A good accountant can bring experience and financial insights into your business – useful if this is an area you are not strong in. They can help you create a realistic business plan and financial forecasting or advise on financial decisions, identifying potential areas growth by analysing pricing, cash flow patterns, inventory and production costs.
- Auditing – Essential when looking to secure a loan or funding, your accountant will put together accurate financial reports and conduct audits of your suppliers, expenses such as staff costs and provide a health check on suppliers or customers. They can take an active role in credit control as well, ensuring customers pay outstanding invoices.
Do I need an accountant for my business?
There is no legal requirement for a small business to hire a qualified accountant. As a small business owner you’re free to deal with finances and tax liabilities yourself. If you’re just starting out or have simple financial affairs such as few customers and costs then handling your own finances is a very viable option. Online bookkeeping software such as QuickBooks makes managing finances relatively straightforward.
Most start ups do however look for an accountant to help them complete self-assessment tax returns or annual accounts when deadlines loom, and involving an accountant in your business on a regular basis, not just at tax time, can improve your bottom line significantly. While this may seem an unnecessary cost for start ups with limited resources, an accountant’s services can be claimed as a business expense, reducing the amount of tax you have to pay.
When hiring an accountant you should first decide exactly what you need them to do. Do you need someone to handle weekly bookkeeping duties or do you need an accountant on a periodic basis to evaluate the health of your business? Knowing the scale of work involved will allow you to agree fair and accurate charges.
How much does a business accountant cost?
How much you’ll need to pay an accountant depends of a number of factors such as if the accountant is an independent practitioner or part of a large, small or online accountancy firm.
Expect to pay between £50 and £80 per hour for an independent accountant (although most charge on a per project basis). Many charge around £200 to £300 to complete a tax return for a small business, with this increasing to £500 for larger, more complex businesses. If you opt for an online accountancy service instead you can pay as little as £50 for a completed self-assessment form.
If you choose to use an online service, research it carefully to check exactly what you’re getting. Many in the accountancy industry are critical of the quality of online services, complaining that at best they’re simply a data-filling service, most of which you could do yourself at no cost. Inaccurate or incomplete forms can cost your business dearly so it makes sense to pay for a good accountant if you are unsure you will get a quality service from an online provider.
Where can I find a good accountant?
It pays to shop around to find a good accountant. Personal recommendations are best so ask friends, family and other small business owners who use qualified accountants who they would recommend. Local, long established accountants with a good reputation are a safe bet.
Checking an accountant is fully qualified is important as legally anyone can set themselves up in business as an accountant or tax adviser. The two leading accountancy qualifications in the UK are Chartered Accountants (look for the letters ‘FCA’ or ‘ACA’ after an accountant’s name) or Chartered Certified Accountants (with ‘FCCA’ or ‘ACCA’ after their name).
Alternatively find a certified accountant through one of the professional industry bodies. This way you can be sure they have the knowledge, experience and professional ethics to advise you correctly. As members of their association they’re obliged to keep their skills and knowledge up to date. They must also offer a complaint procedure and professional indemnity insurance which means any loss your company makes due to bad advice from your accountant will be covered.
Go online to one of the professional accountancy bodies to search through their membership list to find a suitable accountant. These include:
How to choose the best accountant for your business
When choosing an accountant you should try to meet with at least three candidates – preferably face-to-face – before making a decision. Be clear about what you’re looking for in an accountant. Ask for client references or testimonials. A good accountancy firm shouldn’t have an issue providing these.
You should prepare a list of questions you want to ask prospective accountants on the following areas:
- Qualifications and associations – Ask what professional qualifications they hold and if they’re a member of a recognised accountancy association. If so they will be regulated by the association so you can expect a good level of service. You can also complain to the association if you’re unhappy with your accountant.
- Services offered – What services do they offer such as general accounting and bookkeeping, tax advice and auditing? If you have specific needs, choose an accountant with experience in that area. Small accountancy firms may not cover everything you need but often have professional relationships with other accountants that they can recommend. Look for an accountant that has experience of dealing with other similar sized businesses in your industry. That way they’ll understand the challenges and opportunities facing your business. For example, if your business is internet based then make sure the accountant is familiar with e-commerce, or if you deal with overseas markets and suppliers the accountant needs to know about international tax.
- Customer service – You’ll need to agree the level of service you’ll get so consider what you want, including how often you can contact your accountant and by what means. Less contact means less cost but you may need more hand-holding at various times such as tax deadlines or in expansion stages. Check who will handle your business on a day-to-day basis so you’re not left at the mercy of a junior accountant after being been signed up by a senior sales partner.
- Fees – Make sure you are clear on fees and costs upfront to avoid billing shocks later on. Many accountancy firms charge monthly retainers while others bill an hourly rate. Ask for an estimated annual charge based on the services you need. Discuss if you can minimise fees by doing some work yourself using compatible accounting software, with the accountant offering a checking service. While budget is important don’t choose an accountant purely on cost alone. A more experienced accountant may work faster and save you more money in the long run.
Once you choose a candidate you should then receive a letter from your accountant setting out the terms of the engagement so both parties are clear on what has been agreed.
Maintain a good relationship with your accountant
Once hired, establish a good working relationship with your accountant. It’s a good idea to meet or speak at least once a month, when your accountant should be available to advise on a range of financial issues.
Help maintain a good relationship by being organised yourself – don’t hand over a shoebox stuffed with faded receipts when self-assessment deadlines come around. The better you are at keeping records of income and outgoings, the less time your accountant will have to spend filing tax returns and annual reports and in turn the less you’ll be charged. Review charges regularly and check that your accountant continues to provide all the services you need.
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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.