Choosing and Using an Accountant

Introduction Accountants provide small business owners with a range of professional advice and taxation services, including bookkeeping, preparing financial statements, calculating tax and providing advice about minimising tax and other costs.
Here we explain the services offered by accountants, what to look for when choosing an accountant and how to find and appoint one.
Services provided by accountants There are several business issues that an accountant can help with, including:
Start-up advice. An accountant can provide advice about the best legal status for a business (such as sole trader, partnership, limited company, limited liability partnership, community interest company) and can help with other legal and taxation issues.
Bookkeeping. An accountant can offer a bookkeeping service. Even if a business owner takes care of day-to-day bookkeeping themselves, an accountant can help by advising about which records should be kept for accounting and tax purposes.
VAT (Value Added Tax). If a business is VAT-registered, it will be necessary to prepare VAT returns. An accountant can provide advice about the best VAT accounting scheme for the business and outline the VAT rules that apply.
Preparing annual accounts. Many small business owners use an accountant to produce key annual financial statements, such as the profit and loss account and balance sheet. Limited companies and limited liability partnerships must file accounts annually with Companies House and accountants can help with this too.
Preparing tax returns. Accountants are typically able to provide advice about tax rules, regulations, exemptions and case law that apply to a particular business sector. Accountants can also provide advice about achieving tax savings and presenting a case to HM Revenue & Customs (HMRC) in the event of an investigation or dispute.
Business advice/management accounting. Once a business is up and running, an accountant can set up systems to monitor performance and budgets, and improve efficiency. They can also provide specialist advice about financial planning and potential investments.
Finding an accountant It is worthwhile seeking advice from an accountant before starting up in business and a good place to start is with existing business contacts who may be able to make recommendations. Local enterprise agencies or a business relationship manager at a bank may also be able to offer advice about finding an accountant.
Choosing an accountant There a number of issues to consider before choosing an accountant:
Check the accountant is suitably qualified and belongs to a professional body approved by the Financial Reporting Council. These qualifications mean the accountant has passed numerous examinations in order to qualify and has several years' practical experience.
An accountant who is not a member of an approved professional body may offer cheaper rates, but they could cost a business more in the long run if the quality of their work or advice is poor. Members of leading accountancy bodies must also ensure that their technical knowledge is kept up to date by attending regular courses and seminars, as well as following a programme of continuing professional development throughout their careers.
It is crucial that the accountant understands the business and the sector it operates in. It is also worth making sure the accountant has experience of working with smaller businesses.
It is advisable to contact more than one accountancy firm and have face-to-face meetings before making a decision about which firm to choose. It is important to find an accountant who not only has the appropriate qualifications and experience but is also empathetic.
Some accountancy firms waive the fee for an initial meeting unless specific advice is given at that meeting. Check in advance whether the first consultation will be free.
The letter of engagement When appointing a new accountant, they will issue a letter of engagement. This is the contract between the business and the accountant and should set out:
The accountant's responsibilities.
The business's responsibilities.
The fees and payment details.
It is important to meet regularly with an accountant and have additional meetings when critical business issues arise, such as cash flow problems. Adequate records should be kept of any correspondence, and information must be supplied to the accountant well in advance of any deadlines for filing accounts, payroll information or VAT returns.
Hints and tips
An accountant should be engaged before starting a new business.
Always look into a prospective accountant's reputation prior to engaging their services.
If help is needed with more specialised areas such as audit, investment business or insolvency work, make sure the accountant is authorised to carry out this type of work.
The accountant should be informed as soon as possible of any developments that may affect the financial circumstances of the business, including cash flow problems or changes to key personnel.
The accountant's charges should be reviewed and agreed annually.
Contact Ashored for help and support with your accountancy needs