How to choose an accountant
November 3, 2014
Hands up, who enjoys visiting their accountant? No, thought not. It's right up there with looking at other people's holiday snaps and taking the kids shopping for school uniforms.
While a trip to your financial guru might not be fun, however, it is important. A good accountant can save you thousands.
As such, choosing the right one is vital. And it's all about figures, fees and doughnuts.
All businesses need to file their accounts with HM Revenue and Customs (HMRC). While it's entirely legal for the self-employed, partnerships and small limited companies to do it themselves, I wouldn't recommend it. It's more than likely you'll either commit some error which will give HMRC the hump or forget to do something that could save you some tax. Or both.
Get an accountant. They deal with the behemoth that is the tax man every single day and understand his little quirks. They know every inch of a tax return and some, I've heard, even enjoy their work.
The perfect accountant is a mix of number crunching automaton, HMRC defying superhero and nurse. You need someone who is going to fill in the forms correctly first time, fight your corner vigorously when it comes to clawing back tax and soothe your aching brow when you pitch up 24 hours before tax deadline day with a shoe box full of receipts shouting “I can't do this any more.” Oh, and there must be doughnuts in meetings, all meetings (I prefer glazed ones with jam if anyone wants my business.)
The basic requirement of any accountant is that they must save you more in time and money than they are charging you in fees. No doughnuts is one thing: costing you cash is something else altogether.
The level of support you need depends on what services you can run in house. Accountants can do everything from setting up your sales and purchase ledger systems and day to day book keeping, to the preparation and submission of audited accounts and payroll services.
Some firms will also offer tax planning and budget and performance monitoring.
Naturally, the more they do the more it costs, so you need to have an idea of what you want before you knock on their door.
Be realistic about who you approach. As important as your £30,000 turnover dog sitting business is to you, it's unlikely that KPMG are going to be interested.
Choose a firm that is going to be able to meet your aspirations for a reasonable fee. As a rough guide, your business should use a firm of accountants that is about the same size. Have a look at their client list and see if you would be a good fit.
There's nothing like a word of mouth recommendation, so ask business acquaintances (preferably ones who aren't under investigation by HMRC) for some names. Your local friendly solicitor and bank manager will have worked with a few. The Chamber of Commerce is also a good source, as are the four accountancy bodies.
You'll need to find out things such as what the firm's strengths and weaknesses are, how much they charge and how easy they are to deal with.
Make sure your accountant has appropriate qualifications. Unqualified ones are restricted in what they can do, while qualified ones are answerable to their professional bodies.
Are they accessible? Short notice access to a partner can be invaluable (another reason for choosing an appropriately sized company).
Having narrowed it down to a short list, pay them a visit. See at least three and make it like a job interview. After all, you are paying them to do a job of work for you so it's important that they are competent and that they will fit in with your way of doing business. There is nothing worse than being made to feel small by a professional just because you don't understand every nuance of corporation tax.
Will they be an asset to your business and how much will they charge? Be clear what you want them to do and what they expect of you. Do you want someone to submit a return or help you grow the business?
After the meeting, go away and think about what you've discussed. If you like them, can you see yourself having a long working relationship with them? Put everything in writing (including the doughnut clause) and it could be the start of long and financially rewarding relationship. But it may not do too much for your hips.
And finally … remember that despite appearances, accountants are human beings too, so do your bit to make everyone’s life a little easier. Make sure the figures are accurate, get them in on time and don't ask them to bend the rules. And as you are the client, the last doughnut on the plate, is of course yours.
Luisa Grey is a director of Eazipay Ltd, the UK’s largest and fastest growing Direct Debit processing company. Eazipay provides regular Direct Debit collection and processing services to thousands of SMEs and corporate organisations in a wide range of market sectors throughout the UK, Europe and beyond. For more information visit www.eazipay.co.uk