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How to choose an accountant for your small business

Money Matters

How to choose an accountant for your small business

Starting a new business means you have many plates spinning in the air as you try to manage the many different things needed to get your business off the ground.

Getting the right support to set up your small business accounting and manage finances is important.

Finding an accountant that really understands your business needs and gives you the peace of mind that the financial side of your company is safe in their hands is vital.

Why an accountant can help your business

Accountants are a vital service for any business.

At the very least, they take care of the vital financial admin that you might not have the time or the knowledge to undertake.

But they’re also experts in virtually all matters relating to business finance, as well as tax and the compliance issues this brings.

It might be tempting in the early days to go it alone with your business finances to save on accountant fees, but it’s a false economy.

Business accounting is about more than ensuring you tell the government how much you’ve earned.

A good accountant will know exactly what your business can claim as expenditures, for example, which can significantly lower your tax bill.

They know what HMRC expects from businesses of your type and size.

But modern accountants are moving beyond simply number crunching.

Increasingly, they’re taking on more of a partnership role, using accounting software to monitor a company’s finances, which allows them to warm business owners of problems before they arise and discuss opportunities.

If your business is aiming for growth, for example, an accountant should be the first port of call.

Not only will they advise you on practical aspects, such as how to run a payroll, they can also help you create business plans and cash flow forecasts that might be vital for loans or grants.

Difference between an accountant and a bookkeeper

A common question asked by business owners and operators is the difference between bookkeepers and accountants.

Aren’t they the same thing?

The roles can overlap, but accountants tend to have more of a 360-degree view of business finances and its compliance requirements, as well as its relationship with your overall business goals.

Bookkeepers tend to focus on the more here-and-now financial matters. As the name describes, they aim to keep your financial books in order.

Bookkeepers might visit your business premises periodically to ensure the accounting is up to date. As such, they may use your computer and your accounting software.

As part of their job they might chase unpaid debts, or at least inform you they need chasing. They’ll enter receipts on to the system for your purchases, and generally take care of the burden of ensuring your accounting is correct.

This can include tax preparations, or even managing payroll runs.

Having a bookkeeper has been described as having your own freelance finance person, and many businesses use both a bookkeeper and an accountant.

The accountant will step in at certain times of the year to assist with compliance needs, or adopt more of an advisory role across the year – watching your profit and loss, for example, and warning of problems or pointing out opportunities.

An accountant will probably be required to create reports if you need to apply for financing, or if you need to audit.

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What an accountant can do for your business

Luke Streeter is founder, accountant and chief delivery officer at flinder, a multiple award-winning accounting, consulting and data analytics business that fast-growth SMEs outsource their finance function to.

Here, Streeter shares his advice on selecting a good accountant – and what to expect.

He says: “Expect a good service from them. Don’t settle for them not being proactive.

“Your accountant should be a business partner. They shouldn’t be somebody you see once a year and you get a set of accounts from.

“Let’s say you’re a small business or sole trader. You want to grow. You want to expand and do well. How do you run your business if the first time you know how much money you’ve actually made is after you’ve done 12 months of activity?

“It’s too late by then.

“A good, modern accountant will want to meet you in person, or jump on a Skype/Zoom call, and not just at the first introduction.

“That flexibility and availability of an accountant is important.

“They should get to actually understand you and the business, otherwise they can’t advise you what is best when considering the whole picture.

“An accountant will want to understand the full process, which often starts from an operational point, and so having conversations wider than just finance are signs of a good accountant.

“The other key focus is the use of technology.

“They should be embracing the use of technology. We take an approach of using best in class technology. We don’t say, ‘You have to use this piece of technology because that’s what we use.’ We say, ‘Actually, what is the best technology for what you need to do?’ And then we work with that.

“And I’d say contacts and networks are important too.

“We introduce our clients to each other. We cross refer within our client base. So it’s about having an accountant that’s well-connected.

“We won’t necessarily lead a fund raise for our clients, but we’ll ready them to be attractive for investment and work with certain partners that can.”

Checklist: 6 things to consider when finding and choosing an accountant

1. Get references and check accreditation

It’s always wise to do a background check of potential accountants you’re looking to use and check their accreditation, which you can usually do online.

You could ask the prospective accountant to provide three client references.

It would also be useful to get a recommendation from someone who also works in your industry so you can be sure the accountant has a real understanding of what your business is about.

2. Create a shortlist of candidates

Have a quick introductory chat with a few different accountants, get quotes and make a shortlist. It’s also important to establish how they prefer to communicate with their clients and if this fits with your communication needs.

Traditionally, many accountants only used to meet their clients once a year, but these days, younger and more forward-thinking accountants are embracing the online world and using platforms such as Skype and Teams to keep their clients updated on a more regular basis.

3. Check accountant fees

Check how the accountant works out their charges or fees, as this can potentially save you thousands of pounds.

Always ask for a quote based on workload rather than what your company is making. Some accountants have stopped working on fee basis and instead ask their clients to pay a monthly retainer.

This can represent excellent value for money because it means the accountant is always there, ready to answer a query or undertake work.

4. Stay in contact with your accountant

This is something you also need to keep up on your end, otherwise your accountant won’t be able to provide you with the best advice.

Keep in touch regularly.

Companies often go into liquidation simply because they haven’t kept their accountant in the loop, and it’s been too late to salvage things after the accountant has stepped in.

By telling them what you want, you’ll ensure they can adapt and evolve to newer ways of working to help you grow your business.

5. Could you be getting added value?

There are many accountants out there who go over and above for their clients. Some are happy to recommend accounting software based on your individual needs.

Others like to hold regular networking events and business workshops.

Some will even give you regular reviews of your finances free of charge and make recommendations to ensure you get the best profitability.

Try and pick one that has a real understanding of customer loyalty and retention.

6. Keep your records up to date

You’re legally obliged to keep all your tax up to date, so keep a file of all your bank statements and relevant financial documents for six years.

Conclusion on choosing an accountant

Choosing an accountant is one of the most important decisions you’ll make in the life of your business, and a good accountant really can make all the difference between success and failure.

The days of accountants sitting in dusty offices working out tax bills are long gone.

Nowadays, accountants anticipate being your business partner, and are as focused on your business growth and success as you are.

Editor’s note: This article was first published in July 2017 and has been updated for relevance.

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