How to Choose an Accountant

In the first instance, one of the most important questions to ask yourself when choosing an accountant is ‘Do I really need one?’ If you’re a sole trader with a very small turnover, low ambition and lots of time to do your own paperwork, the chances are that employing an accountant full-time (on a monthly basis for example) would be a waste of your money. If you need some help at the end of the year, you can always pay-as-you-go for services like tax returns and annual accounts. Many accountants will even offer you basic business advice free under this arrangement.

Pretty much any medium or larger-sized business owner, on the other hand, will tell you that an accountant is invaluable, not just in terms of the time you can save in getting them to do the awkward paperwork – bookkeeping, annual returns and the like – but in terms of the money they can save you on your income, corporation and value added tax (VAT). And if you’ve any ambition to grow, an experienced accountant who knows your business is your best source of timely, relevant high-quality advice and information you’ll need to succeed.

Relationship

Unless you run a tiny business, chances are your accountant will be the only person in the world who knows more about your money than you do. For this reason, the relationship you have with your accountant is important. If you’re paying an accountant for an ongoing relationship, you need to be able to cultivate a good working environment together, and you should expect your accountant to feel the same way. Look at their website and promotional material; reputable accountants understand that relationships are critical, so if they’re not leading heavily with information about their approach to your business, they’re probably not going to make it a priority once you’ve paid them. A dedicated accountant, or at least a single point of contact, should come as standard for SMEs.

A good relationship goes far beyond the way that someone greets you, or the way they pass on information. For an accountant, a relationship should be about the way they approach your business; will they come in, take a look around and immediately want to start with generic changes that make the books easier to manage? Or will they take the time to

discover how you already do things, listen to you and work out how they can best help you achieve your objectives? You’ll want someone in the end who knows your business inside out. Will they still be looking after you in five years’ time? What about ten?

Expertise

Beyond the way they approach you and your business, it’s probably quite obvious that when you entrust your beloved company’s lifeblood – its finances – to a relative stranger, you need to know that they know what they’re doing. One of the first things to check is that the accountant you’re engaging is either chartered or certified (see our recent blog article about types of qualification for further information on this). In short, individuals with very limited qualifications are able to call themselves accountants, so make sure you’re not deceived by one of those!

Next, check to see how many partners there are, and the collective number of years they have had in the profession. A small firm may offer you a more personal service, and a firm of young accountants may be more upbeat and progressive. A larger firm with experienced senior partners will have a large reservoir of knowledge to draw from and a long list of useful contacts. It’s important to approach the kind of firm that suits your business, your style of directorship, and your objectives.

Finally, if you’re in a niche market, like agriculture, medicine or sport, for example, you’ll find that many larger firms offer specialist departments or specially qualified individuals with particular skills or experience in your area. These accounting specialties are springing up all over the place as firms compete to stay one step ahead, so it’s worth checking to see whether or not a specialist is what you need.

Value Added

The traditional view of accountants as ‘scorekeepers’ and ‘number-crunchers’ is long out-of-date. Any accountants worth their salt in the modern world will be trying their hardest to diversify away from what are known as compliance related services (the financial functions that must be completed by law) to offer business advice, specialist reports, forecasting, even strategy. Many firms are now offering part-time financial directorship, having the skills and experience to recruit and manage an in-house team on your behalf. These so-called Value Added services, far from being, as they once were, the icing on the cake, are now the cake itself. If the firm you’re approaching isn’t falling over themselves to show you how they can do more for your business, they’re living in the dark ages.

That said, it’s important that you don’t get carried away. Most modern day accountancy firms make money by upselling; that is, getting business from you initially, perhaps on a pay-as-you-go or compliance-related basis, and then working hard to sell you additional services. The unscrupulous amongst them won’t hesitate to sell you a raft of services you don’t really need; the good ones will take the time to assess your business model and operation, and discuss with you the rationale for a particular course of action. The mark of a great relationship with your accountant is the moment when they say, ‘You know, I don’t think that’s a good idea for you.’

When approaching a prospective accountancy firm, look at their promotional material, see what they say about offering you the right kind of service and giving you honest advice about the services that you need. Talk to them on the phone, try asking about a service that you would never consider paying for in a million years, and see what they say.

Fee negotiation 

If you’ve decided to employ an accountant and think you’ve found the right one, the next step is to negotiate the level of service and a fee that suits both parties. Bear in mind the advice above about selecting only the services that work for you and start with a minimum. Gauge the quality of the firm’s work first before you commit to a large annual outlay, but be open to suggestions that make sense to you. For many small businesses, a limited, pay-as-you-go, compliance-only service can be a good way to start, avoiding the burden of a monthly fee, but if you’re interested in growth, it would be worth your while to get a regular relationship going early doors.

Like the level of service, monthly prices are usually negotiable, particularly if you’re intending to engage the firm for a number of years. Make sure, however, that you don’t drive too hard a bargain. You might save money now, but from the accountant’s perspective, with the best will in the world, you’re not going to be as high a priority as someone paying a much higher price for the same service. What you lose in a few pounds worth of fees you can easily get back through an accountant going the extra mile for you in the first few years.

When considering fees, don’t forget that above all else, an accountant’s job is to reduce your costs, protect your investments and help you increase your revenue. In short, their job is to help you make money. If all’s going well, they can easily pay for themselves within the first couple of years.

What if I don’t like my accountant?

In short, change them! In this situation, you’re the customer and so if you’re not happy with the service you’re receiving, you have every right to take your business elsewhere, providing you’re not under contract. If you are, it will be clearly set out in the letter of engagement that you receive from the firm at the outset.

That said, accountancy is mostly about a working relationship, and all relationships take time to develop. The benefit you’ll achieve from investing time in building and sustaining a long working relationship with a particular firm, or a particular individual within that firm, will almost certainly outweigh the time and effort invested. Long relationships work better for accountants too, so if you’re having problems with their approach, or you’re not seeing eye to eye, you should feel able to sit down with them and talk about it. If that doesn’t work, however, there are, as they say, a lot more fish in the sea!

Pointers

  • If you’re a sole trader running a small business, opting for ‘pay-as-you-go’ services makes sense
  • For most medium and larger sized businesses, an accountant is invaluable and can save time, by taking paperwork off your hands, and money by scrutinising your taxes
  • Good accountants understand that relationships are critical, and will take the time to get to know your business inside and out
  • It’s important to approach the kind of firm that suits your business, your style of directorship, and your objectives
  • Check that an accountant is chartered or certified, how many partners there are and how many years of experience they hold
  • If you’re in a niche market many larger firms offer specialist departments or specially qualified individuals
  • Accountants have diversified to offer business advice, specialist reports, forecasting, even strategy. However, don’t let them sell you services you don’t need
  • Start small – gauge the quality of the firm’s work before you commit to a large annual outlay, but be open to suggestions that sound reasonable
  • Monthly prices are usually negotiable, but don’t drive too hard a bargain. What you lose in a few pounds you can easily get back through an accountant going the extra mile for you in the first few years
  • If you don’t like your accountant, change them! But remember, a solid long-term relationship will pay dividends, and is worth investing time and effort in

Apr 14, 2015