If you’re a small business or sole trader and you’ve spent hours adding up your end of year accounts, filled out boring tax returns or have had the monthly grapple with payroll, you’ll know that tax can be taxing.
As a small business owner or individual freelancer/contractor, the chances are that you’re not highly skilled in accounting. And yet you seem to spend countless hours in front of a calculator adding up figures when you should be out there doing what you do best.
If all of this sounds familiar, then it could be time to get yourself or your business an accountant. Now, of course, this will cost you money and you might think that it’s money you can afford to spend. But there comes a point when saving on an accountant becomes counter-productive.
Not only could a professional doing your books save you money on tax, but they are also far less likely to make costly mistakes. And above all, with the time they save you, they will more than pay for themselves in the long run.
However, once you’ve made the decision that it’s time to get some professional help, the next step is choosing the right accountant for you or your business. With that in mind, here are five things to think about before handing over your books.
Given what we are discussing, it makes sense that one of the primary considerations when hiring an accountant is how much they cost. Unless you’re a thriving business or large corporation, you’re unlikely to be able to take on staffed accountants, which means you are more likely to be looking at hiring a firm or individual on a contractual basis.
And how much you pay for these skills is important. Your accountant’s fees need to fit nicely with the size and scale of your business and budget. Most people calculate fees in one of two ways. One is to pay per hour for the work carried out. This is beneficial as it means if you have a quiet period you only pay for the small amount of services required.
The other is to pay a fixed rate. This means that you get the accountancy services you need, and the rate remains fixed. So even if there’s more work than expected, you don’t end up paying more. It’s worth thinking about which one will be most suitable for your needs.
Each firm or accountant is different and will have different rates, so it’s worth comparing a few before making your decision. And, as always, the cheapest option is not necessarily the best. You usually get what you pay for. Which brings us on to the next point.
Any accountant you employ should be qualified. And if they’re not, then look elsewhere. Accountancy is a highly skilled profession that involves years of study and training. It’s well worth checking the credentials of any firm or individual you employ.
In the UK, there are different levels of accountancy qualifications. While it is possible to study accountancy at university at degree level, a vocational qualification is still required. This may be incorporated into the degree course, but it is worth checking to make sure they have the right credentials.
In the UK, accountants should have one of several official qualifications. These are the Associations of Accounting Technicians (AAT), which is the minimum needed for a career in accountancy; Association of Chartered Certified Accountants (ACCA), which are recognised around the world by financial organisations; and Certified Institute of Management Accountants (CIMA), which is a qualification from the largest professional body of management accountants in the world.
In addition, to become a chartered accountant, they will require qualifications with one of the following bodies: The Institute of Chartered Accountants England and Wales (ICAEW) or Chartered Institute of Public Finance and Accountancy (CIPFA).
As a general rule, the more of these letters your accountant has beside their name, the better. But your accountant should also ideally be familiar with your line of business.
It’s worth asking about the accountant’s current clients or past experience. While professional accountants with any of the above qualifications should be able to handle your needs, if they are familiar with your services or business model then this will certainly help. Different industries have their own set of standards regarding taxation. If an accountant is experienced in this field, they may be able to maximise your return to your advantage.
Finding an accountant who is a good fit, and who can relate to your business, is an important thing to consider when making your choice.
You need to establish exactly who will be working on your accounts. If employing a firm, will it be the senior partner with all the reassuring letters after their name or will it be the new junior team member, fresh out of university with no real-world experience. It tends to be that for the smaller accounts, the less experienced team member works on them. And that might not be what you’re paying for.
You also need to know that your accountant is available as and when you need them. Are they available to chat on the phone if you have specific questions or do you always have to make an appointment? Ideally, you need an accountant you can get hold of when you have a pressing matter. Ask for references or speak to other businesses to find out their experience before making your choice.
As a business person, you probably already know that a lot of success comes from intuition. You work with and do deals with people you trust, like or feel comfortable with. While any transactions should be professional, if you can relate at a personal level and have a good understanding then this will help your relationship.
It’s worth taking the time to meet any prospective accountants before agreeing to work with them. And if you feel intimidated or uncomfortable, try another option.
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Source: Home Business Money