How to: choose the right accountant
If you’ve taken the leap towards an entrepreneurial lifestyle and established your own company, you may have thought about hiring an accountant. Whether you employ someone full-time, or use the services of an existing accountancy practice, choosing your accountant is an important decision for your business.
The right accountant should ensure that you are compliant with Companies House and HMRC, and help you to avoid unwanted fines, penalties, and tax bills in order to help your business grow. However, some businesses grow just fine without an accountant to support, advise and file accounts, so it’s up to you to decide on the best course of action for your business.
So, if you do decide to get an accountant, how do you choose one that will add the most value to your practice, and where do you begin your search? Here are a few steps to help make things easier.
Identify what your business needs
Ask yourself exactly what you need your accountant for, question whether you require them simply to produce your annual accounts, or if you’d prefer that they did everything from payroll to bookkeeping and VAT returns. This is specific to your business circumstances and how much time, energy and money you deem necessary to commit.
Obtain an Engagement Letter
You’ll want to do everything you can to keep your business safe. This doesn’t just mean protecting your business from fraudsters, scammers and cyber threats – you should also be sure to cover yourself in case of disputes with your accountant.
In order to safeguard your business, make sure you’ve got an engagement letter issued by the accountant, and take your time to read through it: it’ll be your reference point for any potential disagreements with your accountant over the level of service required from them, and should ensure you always remain on the same page.
Choose the right accountant for your financial goals
When you’re choosing the right accountant, be clear on your business goals. If you treat these goals as your starting point it’ll be much easier to find the right firm or freelancer to help you. Get used to the idea of equating your cash flow with these goals and make sure you’re able to convey them clearly to the financial professionals you’re speaking with.
This will also help you to understand which services are essential, nice to have and additional. An accountant that offers bespoke packages can often be useful when running your own business. But be open to services you might not have considered, they may help to streamline your overall business plan.
When considering what kind of support to go for, it’s important to think about how often you’ll need to check in with an accountant. What are the touch points you expect throughout the month or year? Be sure to ask about your chosen firm’s availability and any extra costs. If you’re starting a business from scratch, think about what your needs will be a year from now.
Where are they located?
Location used to be more important that it is today thanks to the cloud-based technology that helps manage your accounts in real-time anywhere, anytime. But does this mean location is less of an issue for you and your business?
The decision about this comes down to what suits your company the best. Think, how do you like your finances handled? Would you rather collaborate over email, phone call and online accountancy platforms or would you like to be having a face to face conversation with your accountant to chat everything through? If it is the later, then location is an essential factor for you.
Are they certificated?
Accountants which are certified or chartered have a greater breath of experience and knowledge which will add value to your business. If you are a business which expects to grow, it is a good idea to hire a professional accountant from the beginning rather than later down the line.
It is possible to hire an accountant who is not certified or chartered however, that could be an unwise move. Tasks such as bookkeeping, tax preparation and general accounts work do not need a certified accountant to be produced however when it comes to growing your company, requesting a loan or auditing your large business a certified accountant is what you need!
What is their expertise?
When hiring an accountant, you need to choose someone with experience in preparing tax returns and financial documentation of companies that are a similar size and revenue to yours. If you can also find one which has worked with businesses in the same sector as you before then that is a massive bonus as they will have a good understanding of your unique needs.
How will you divide the work?
When looking for an accountant it is easy to choose them based on the price they are charging however it is also important to consider how they work and which aspects of your bookkeeping you will give them.
Accountants can easily handle every aspect of your bookkeeping and accounting but is this the best approach? I’m not going to lie, accountants charge by the hour so making them do simple data-entry tasks isn’t the best use of their time or your money. So why not take that bit away…looking at it from a positive, it will be of benefit to you to get a better grasp on all your expenses and revenue income and give you a heads-up on any potential problems.
Sound like a lot? This is where cloud-accountancy software can come in as it is easy to use, simplifies key tasks such as invoicing but also allows the accountant to have access to it all the time from a secure server and do why they need to do.
So now, how do you go about selecting one?
Full time, In-house or outsource
As a small/medium business owner, cost is the key consideration. You may not need a full time accountant. There are many accounting firms out there that provide accounting services and this could be just the right solution for you. However, you need to choose the accounting firm that you can trust with your financial information and someone whom you could work with in the long run.
Relevant experience, certified or chartered accountant
Ensure that your accountant is certified by a professional body, i.e. CPA (Certified Public Accountants) or CA (Chartered Accountants). It is preferable that the account should also has the relevant experience working in a similar business to yours or at least has experience in in the same sector as yours. This is to help ensure that your accountants understand your business unique need sand, can set up your company right from the start and able to serve well as the company grows over time.
Be clear on his/her role and responsibilities
As mentioned above, the Accountant has a wide range of responsibilities. Ensure your accountant has the necessary skill and experience to help you with current and future needs. Any simple accounting task that can be done in house will reduce accountant costs and will also give the business a better grasp of the company’s financial situation in real time and a heads-up on potential issues. These include book keeping, payments and collection.
Accounting software, offline or online?
If you decide to engage a third party accountant, your accountant’s software may play part of your selection process.
Would you like your accounts to be accessible online, 24/7?
If yes, then ensure your accountant use cloud accounting platform so that you have access to your accounts anytime you need to.
Can your accounting software be able to export data and information easily to for your accounts to import to their software?
If the 2 systems cannot match or share information it will create a lot of heavy operational and administrative work.
Working with your accountant
You should aim to build a trusted working relationship with your accountant. Involve him or her in the early stages of any business planning discussions or whenever you may have a significant setback. An accountant with sectoral expertise is particularly valuable in identifying risks and making recommendations on where your business might improve its margins or secure funding.
In the case of a start-up, a good accountant will spot gaps or incorrect assumptions in your business plan and help you to create different financial scenarios. He or she can often become a good sounding board when you are considering changes or new developments.
A good accountant should free up your time, by taking over administrative and accounting duties. But you still need to be involved. You need to take the time to review the accounts or documents your accountant provides. Don’t be shy about asking questions and don’t be put off by accounting jargon.
Your accountant can help you to establish good internal record keeping, enable you to budget, manage your cashflow and meet tax and filing obligations. But you and your employees need to play your part, by ensuring that the records are up to date and that important tax and other deadlines are met.