How to Select a Good Accountant
The quick and easy answer to how to select
a good accountant is to say, “Select me!” That, however, is not the purpose of
this article, so we will provide you with some additional criteria for the
selection of an accountant for your business. Before we discuss the attributes
of a good accountant and accounting firm, let us review why you need the help
of any accountant, good or bad.
At the very least, you will require an
accountant to assist you in the preparation of your tax return. The tax
department views your business as a series of taxable income and deductible
expense transactions. The income tax return summarizes these transactions and
calculates your contribution to the national revenue system. Unless taxation is
a major hobby of yours, you will need an accountant to sort this out for you.
Therefore, it is in the area of taxation that you need a good accountant.
The next reason to use an accountant is to
prepare your monthly, quarterly and annual reporting to the government. Each
report to the government, be it sales tax, payroll taxes or whatever, requires
the completion of forms that are governed by strict regulationsâ¦
regulations that, if not followed, will result in the taxing agency levying
heavy fines. Again, unless you have a outside interest in this, it’s best left
to people who work with it every day.
You may be thinking that the above reasons
for using an accountant imply that you will be financially punished by the
government if you do not do so. Partially, this is true. Inadvertently, the
powers that be have devised a tax collection and reporting system that places a
large burden on the independent business owner. With few exceptions, the
reporting required by a five-person operation is similar to the reporting
required by an organization employing thousands of people. The difference is
the resources available to accomplish the task.
Now let us turn to some positive reasons
for using an accountant in your business. After handling your compliance issues
with the various levels of government, a good accountant should go further and
help you with the financial circumstances of your business. This leads us to
the first major criteria of a good accountant. Will you and your accountant be
able to fully understand each other? It is extremely important that the lines
of communication are clear, and the accountant takes the time to review the
financial information provided. A good accountant will drop the jargon and
speak to you in a way that helps you better run your business. When selecting
an accountant, select someone who appears interested in your business and
someone with whom you feel you can develop a rapport. The second step is to
ensure that this person is the one with whom you will talk. Is the person selling
the service the one who will work with you? How will this contact be made? On
what schedule and under what circumstances will your calls be returned? You
cannot expect this accountant to be available 24 hours per day, but it is
reasonable to expect a return call within 24 hours.
How to Choose a Good Accountant
With so many accountancy firms to choose
from, how do you choose a good accountant? Remember, what’s good for one
business, may not be quite right for the next. Certainly, with your startups’
finances, you’ll want to choose an accountant you can trust. Not only that, but
one that’s qualified and ensures you’re compliant with Companies House and
HMRC. Therefore, choosing an accountant for your startup is definitely an
important decision. The right accountant will keep on top of your accounts. In
addition, mitigate fines and penalties and any other unwanted tax bills.
Ultimately, this supports good cash flow & your ability to grow, so choose
the right accountant for your startup.
How to Choose a Good Accountant?
It’s a good idea to ask people in your
network. For instance, ask them how they went about choosing a good accountant
and do they have an accountant they trust. Most importantly, what has been
there experience with the accountant(s) they’re using or previously used? Try
to drill down as much as you can. Whilst it may seem like a ball ache, avoid
choosing an accountant without checking them out for the sake of ticking it off
your to do list.
In addition, compare this with a general
online search for local accountants. Compare at least 3 accountancy businesses
and weigh up the pros and cons for each. As a startup and particularly in the
early stages, cost is a driving factor for a lot of the choices we make. On
average, you’re looking at around £500-750 for annual accountancy services. For
example, for account filing and tax returns, although the more complicated and
niche your startup, the higher the price. Your location may also affect price,
but as a ballpark figure in and around London, this is what you can work towards
and compare quotes with.
Choosing an Accountant for your Startup
First of all, decide what accountancy
services you need and why. It’s important to be clear in your mind about what
you need and who can provide this to your expectations. Remember, accounting
and financial reporting requirements differ according to your business
structure.
Secondly, check that your shortlisted
accountant(s) are qualified. For example, the Institute of Chartered
Accountants in England and Wales (ICAEW) and the Association of Chartered
Certified Accountant (ACCA). This gives you the chance for recourse in the unfortunate
event that mistakes, or other issues crop up.
How to choose the best contractor
accountant
The right contractor accountant will take
care of your tax paperwork and help you make sure you don’t pay more than you
have to. More importantly, they’ll advise you on complicated rules like IR35,
so you can crack on with your work without having to worry about what would
happen if HMRC were to investigate you.
When should you hire a contractor
accountant?
Before we discuss how to choose a contractor
accountant, a quick word on when to hire one. While you might think it’s a big
expense — especially if you haven’t made any money from contracting yet — it’s
worth hiring one before you even start
What qualifications do they have?
It goes without saying, but you should only
work with an accountant if they’re suitably qualified. At a bare minimum, they
should have an AAT foundation certificate. This is an entry-level qualification
which gives a good grounding in bookkeeping, costing, and other basic issues
around financial administration.
Do they specialise in contracting?
As a contractor, you have to comply with
complex and tricky legislation such as IR35 and the rules around expenses.
These can have dire financial consequences if you get them wrong.
Individuals vs accountancy firms: who
should you go for?
Like other businesses, accountants can vary
enormously in size — from one-man bands to large firms with thousands of
employees across the country (or even across the globe). Both have their pros
and cons.
How to choose a good accountant for a new
business?
When starting a new business, what are some
important considerations for choosing a good accountant? What should one look
for / ask for? What are some red flags?
Choosing the right accountant is one of the
most important steps a new company can make. Here are some tips to consider
while choosing for an accountant:
Consider a certified of chartered
accountant – a qualified accountant will be able to add value to your company,
especially if you expect your business to grow
Relevant experience – could be beneficial
for you if the accountant you choose has experience and expertise in the market
sector or industry of your business
Accounting software – if you already have
an accounting software set up it’s best if your accountant already has
knowledge on it
Ask for referrals
Determine the fees and costs – the
accountant could offer various services for which other fees may apply, have a
clear communication regarding payments
Consider whether you would prefer to hire
an individual accountant or an accounting firm depending on your business’s
needs
Some red flags to watch out for:
Communication and the lack of
They don’t know your industry, especially
if it is something specific
They only have short contracts in their
portfolio – clients would not want to let go of a good accountant
Bending the rules – a good accountant will
always maintain their integrity as otherwise could get you into trouble
They are vague when answering your
questions
You don’t feel confident in choosing them
How to choose the right accountant
When it comes to choosing an accountant,
you’re looking to build a business relationship with someone, who ideally
you’re going to be with for long haul. Of course it’s possible to switch and
change, but it’s not ideal, so it’s definitely worth putting in the groundwork
right from the start so you can find the right solution.
THE FIT
The first consideration is the fit. Think, are you happy discussing the inner
workings of your business with the accountant you’re considering? Would you be
comfortable asking them various questions about your accounts and would they explain
things in a way that you understand? Do they appreciate the general ethos of
what you’re trying to achieve with your business?
CREDENTIALS
In short, is the accountant you’re
considering up to the job? In this video
I explain that accountancy isn’t actually a regulated profession, which means
anyone can potentially call themselves an accountant. So you might want to
check they’re a member of a professional body
THE LEVEL OF SUPPORT
It’s important to think about what support
you’ll need. Remember, you don’t need to have an accountant. So start
considering what’s required and whether your potential accountant can support
you with what you want now.
And also perhaps more importantly, coming
back to the idea of building a relationship with someone, can they support you
going forward with where your business wants to be? There’s no point in working
with someone who will be great for a year or two and then suddenly you’ll have
to swap and change. So try and think a bit longer term.