Finding and choosing the right accountant or bookkeeper for you and your small business, is one of the most critical decisions you can make when starting a company and for a number of different reasons.

The decision needs to be made on a number of different levels; from considering the personality of the individual (or firm) to their professional experience and expertise.

In this article we focus on the key considerations for any small business start-up when selecting an accountant or bookkeeper.

We look at:

Referrals

A very useful way to find the right accountant to help your business is to speak with friends, acquaintances, former colleagues or anyone you know who also runs – or ran – a small business and ask who it was they used for their accountancy services.

There is a good reason for this: an accountant or bookkeeper experienced in dealing with smaller businesses or start-ups is often better placed to understand and help similarly sized companies. Some even suggest smaller sized accountancy firms provide a more relevant service to smaller sized clients than perhaps a larger firm, simply because they understand the needs of businesses of a comparable size.

Word-of-mouth, or a referral, can also help satisfy you of the reputation of the individual or firm, being (hopefully) an unbiased opinion.

Experience, business advice and other services

If you can, speak to those who run a similar business in a similar industry and establish who they use – or perhaps they can offer advice on what you need from your accountant. Again, accountants don’t necessarily offer simple accountancy services; they can also provide business advice. An accountant with experience of your business sector will be able to understand the issues and challenges a firm like yours may face and give helpful counsel accordingly.

With this point in mind, if you can, choose an accountant before your business begins operating. They can provide support and advice of a general nature from the beginning – but if they have experience of your business sector too, they may also be able to offer specific guidance invaluable to a fledgling company.

If they can offer accountancy and business advice, what else might they offer? Should you need it, you may also want your accountant or bookkeeper to complete your self-assessment returns forms. A ‘one stop shop’ will be more convenient than using multiple service providers.

Although you shouldn’t need to see your accountant every day – or even every month – a local bookkeeper or local accountant will make it more straightforward if you need to meet or liaise. It also makes it easier – and not an excuse – for the accountant to maintain closer contact with your business going forward.

Your accountant could offer you important advice – and not just a ‘service’ – about the business; they might be your only source of advice and so you should try and have them as close to hand as possible.

Principal point of contact

Once you have an idea of the available accountants, bookkeepers or accountancy firms able to offer you the service(s) you need, you should speak to at least two or three to obtain their charges, discuss what they offer, how they might offer it and – not a point to be dismissed – you will be able to see if you get on well together.

This is important, since you have to trust your accountant and for the relationship to be fruitful, as well as just functional, you have to be able to communicate easily with them. As such, you should check the individual you meet will be your principal point of contact and/or advisor. You don’t want to find you ‘click’ with the senior partner – who you never see again – and instead you are fobbed off in the future with the trainee accountant.

The fees they charge should be established right from the start. Will they be charging hourly, monthly or annual fees for example? Do they have a fixed charge for specific projects or services? Understanding cost structures will help avoid any surprises further down the line.

You may want to speak with a client or two of theirs. Asking to do so shouldn’t present a problem and most firms will be more than happy to put you in touch.

Corporate, Family, Employee Benefit Trusts [EBTs] and Key Man Insurance

When you start a business it is important to plan for the future.

  • How will you and your family benefit from your business ?
  • Do you know how to reward yourself in a tax efficient way ?
  • What will happen when you retire or die ?
  • Can the business continue without you ?
  • Are your dependants and employees protected in case you suffer from a critical illness or early death ?

There are many trust structures available that allow companies to make provision in a tax efficient manner. Companies can even receive tax relief on their contributions to trusts.

Employee Benefit Trusts are often used for inheritance tax planning, deferring tax , making interest free loans to shareholders and also a range of death benefits. Professional advice is important so always seek advice from a suitably qualified accountant.

If you die early due to an illness or accident your business may collapse without your input and support. Most businesses plan for this by using Key Man Insurance.

Key Man Insurance pays out a lump sum on the death or long term illness of one of the lives covered and money paid out can then be used to enable the business to continue by hiring interim managers or recruiting and paying new staff to cover the gap in the business. When selecting the lives to be covered do not just think about the directors of the business, they will be important employees who it is difficult to replace in the short term.

Cover the key people and you will be preparing your business to survive one of the most damaging events that can happen to a small business.

Professional bodies

Finally, an important point is to ensure the accountant(s) is a qualified member of one of the three main professional accountancy bodies. These are: The Institute of Chartered Accountants; The Association of Chartered Certified Accountants and; The Chartered Institute of Management Accountants.

If the firm is listed in a local newspaper or in an internet directory, their profile should state quite clearly what body they belong to. You can also check this if they have a website.

The three organisations maintain membership lists and may also be able to help you with your selection by providing details of local members.

Do Your Own Accounts

If you have the time and the interest it is quite simple to do your own company accounts though this should not reduce your time on your income generating activities. It is important that you accurately record all the information about your business and it is vital that you correctly calculate, deduct and remit the monthly PAYE & NI contributions from any staff payments made. The tax man does not take prisoners !

If you are VAT registered then VAT must be charged on all your sales invoices. You can deduct the amount of VAT you have paid [this often called “input VAT”] from the amount you have collected [“output VAT”] and the difference must be paid to HMRC when you submit your VAT return [usually every 3 months]. VAT is a complex area so a VAT Training Course is recommended to ensure that you are up to date with the HMRC VAT returns requirements.