Do I Need An Accountant?
Business Link produce a very useful handout on choosing an accountant which you can find on the downloads page. Here are some extra thoughts to consider.
Why use an accountant?
You know, it was said that the only thing to survive the Hiroshima nuclear bomb were the cockroaches. I bet the next thing that appeared on the scene were the accountants.
Accountants can be a form of parasite - not actually producing anything but standing on the sidelines, living off your business. They are the kind of people who will stand on the edge of the battlefield counting the bullets and leaning across to you every so often to let you know how much you are bleeding!
Unfortunately, that attitude can get you into trouble as an accountant is not something you should buy on price. Moving from a job to your own business means successfully mastering the mechanics of tax, national insurance, VAT and reporting. Whilst it is possible to manage all of these areas yourself it can soak up your time and energy which would be better focused on serving your customers. In the long run, it is far more effective to pay a subject matter expert to help you structure your tax affairs in the most efficient way and point you to solutions that will save you money. The right accountant will also provide another sounding board and someone, on your side, who you can talk to about your business. A cheap accountant who gives you hopeless service will end up costing you more in the long run.
So, how DO you go about choosing one?
Four top tips for choosing an accountant
Find someone who speaks plain English and who you like
Choose someone who you get on with and who does not talk down to you. A simple test is, can they explain things in a simple way or do they confuse you with jargon? Show them the advice you’ve had from the BYOB workshop and other sources and get their opinion on your options.
Find an accountant who runs their own business
Choose an accountant who runs his own business. Choose someone who is as motivated as you because they are doing it for their own business.
Agree a fixed fee for Year One
In Year One, agree a fixed fee for the work so that you have control over what they are going to charge you. You will have a lot of questions at the beginning and you will need to contact them a lot. Find an accountant who is willing to spend time with you without billing for each call.
Then, go and see at least three
Before you go, understand what you want. Do you want a full service with complete hand-holding or just someone to check your books once a year? How important is advice to you? The basic rule of thumb is that the more you talk to them and the more you ask them to do, the more it is going to cost you.
Most accountants will give you an hour of their time for free. They want your business and remember that you are interviewing them, not the other way round. If an accountant won’t give you a free hour then walk away - there are plenty more.
Get recommendations from other businesses like yours and see at least three of them. Do not skip this step because the wrong decision will cost you time and money later.
and finally…
Please download the Business Link briefing note mentioned above. You'll find it on the downloads page under Workshop Handouts
So, do I really need an accountant?
If your affairs are simple, you don’t have many other forms of investment, you don’t fill in a tax return every year and you are planning to trade as a sole trader / self employed then you could do it yourself. Provided you are reasonably well organised then you can do the accounting for a sole trader using the pages on your self-assessment tax return and your common sense. For a limited company or if your personal tax affairs are complex then not using an accountant is a false economy. Using an expert will be a more efficient use of your time than doing it yourself and is likely to save you money. Here’s a checklist of things that you need to talk to your accountant about for a Limited Company:
- Who is going to do the company secretarial function?
- How will you share ownership of the company? Who are the shareholders?
- Financial Year - do you want to adjust the length of your first financial year so that you align future years with the calendar year or tax year?
- Do they offer bookkeeping or have a preferred package for you to use?
- Who will do the company payroll, including registering with HMRC?
- Where will the registered office be?
- Who is going to do the company VAT returns (if VAT registered)?
- What style or type of cash book records do they like to see?
What other options do I have?
One other option is to use a bookkeeper. As the name implies, this is a person who will keep your books for you. This means…
- You stay up to date with your expenses
- You get a regular health check on how you are doing in the form of reports
- You have peace of mind, particularly if paperwork is not your strong point
- You save money by not paying your accountant to sort paper
Finding a bookkeeper…
Take a look in Yellow Pages and ring a few to see what they offer. You’re looking for a paperwork dragon who is fussy about detail and will help you build good habits.
