How to choose an accountant

[DanMartin]

How to go about selecting the right accountant for your business is a common question asked on UK Business Forums. The answers are contained in Bagging a bean-counter: Getting the right accountant every time, an article on BusinessZone.co.uk, UKBF's sister website. I have made this post a sticky on the suggestion of Kent Accountant.

 

[Alexa42]

I also found this website to be useful to give an overview of various options in the UK
http://uk.moneto.eu/financing/
or this thread has good options if you are unhappy with your accountant/were overcharged
http://www.ukbusinessforums.co.uk/forums/showthread.php?t=65955
To my experience I have been struggling to find someone who sticks to my original understanding of the fees so it is always a good idea to get an agreement in print or to make sure all the charges are accounted for before you get hit with an unexpected fee!
Also for businesses that are looking for accountants, this is a good thread to look at as well.
http://www.ukbusinessforums.co.uk/forums/showthread.php?t=68800
Hope this was helpful

 

[michal5210]

Hi, friends.
Thanks for the information that you have provided. I liked it. The links that you have provided is seems to be helpful to me. Thanks for sharing it with us.

 

[in-business]

In my opinion one of the top questions on your list for chossing an accountant is whethr they used fixed fees as against charging by the hour! When I ran my accounting practice (I have sold this now) I introduced fixed fees for all my clients and services, which transformed my business!

I have a fixed charge for CT600's, for Tax returns, for a set of Statutory Accounts etc and I converted most of my clients to pay a fixed annual charge on a standing order.

 

[Intel Clarke]

Fixed fees are a must in our opinion but what is not mentioned enough is what else someone you trust and respect can help you with.

A good accountant understands the drivers in any business and if they are your accountant will understand yours very well. They will be able to advise on a range of commercial issues that could benefit any business. This however depends on the individual and if they are personable and you are happy taking advice from them. The only way to find out is sitting down and having a chat.

Cheers

 

[MikeH]

Points to consider when choosing an accountant-

Recommendations - offers some reassurance, but not always a good gauge
Qualifications - Not legally required but sensible to use a qualified accountant
Location - Do you need to meet them, if so how often, can they visit you?
Size of the accounting business - Small may save money, but do they have the right skills. If there is only one accountant, what do you do when they take a holiday?
Fees - Cheap is not always good - Fixed fees or variable – Will a fixed fee cover all of your needs.
Meet the accountant - A face to face meeting can help. Accountants do have personalities
Ask questions - Be prepared to test their knowledge. Do they know your industry?


This list is not exhaustive, but an overview from the following information-
Choosing the right accountant

 

[agentyumi]

We seek services of an accountant last year; I did my research first before letting my father look for an accountant. I already forgot the website but here are the basic tips when you are planning to get an accountant.

1) Investigate and, if possible, choose an accountant before you start your business.

2) Make sure your accountant is fully qualified, for example as a certified or chartered accountant.

3) It is essential that your accountant works with small business clients. If your business generates a large number of transactions (for example, an online shopping service), make sure the accountant has experience with dealing with companies in your sector if possible.

4) How much does the accountant charge?

5) When you first meet a prospective accountant, you will know soon enough if you see eye-to-eye. It is important to develop a good relationship and know that your finances are being handled by someone you trust. You should contact at least 3 accountants and find out which one best meets your requirements.

6) What other services does the accountant provide - can they complete your self assessment returns?, do they provide business advice or further information to help grown your business?

7) As a small business, we find that the best accountants are also likely to be smaller in size.

8) Ask to speak to existing clients before signing up.

9) Make sure your accountant keeps in touch with your business.

10) If at some stage you decide to sell your business, you will need a good accountant more than ever to minimise any tax liabilities payable on the sale.

Hope this helps.

 

[DFL]

Good advice.

We seek services of an accountant last year; I did my research first before letting my father look for an accountant. I already forgot the website but here are the basic tips when you are planning to get an accountant.

1) Investigate and, if possible, choose an accountant before you start your business.

2) Make sure your accountant is fully qualified, for example as a certified or chartered accountant.

3) It is essential that your accountant works with small business clients. If your business generates a large number of transactions (for example, an online shopping service), make sure the accountant has experience with dealing with companies in your sector if possible.

4) How much does the accountant charge?

5) When you first meet a prospective accountant, you will know soon enough if you see eye-to-eye. It is important to develop a good relationship and know that your finances are being handled by someone you trust. You should contact at least 3 accountants and find out which one best meets your requirements.

6) What other services does the accountant provide - can they complete your self assessment returns?, do they provide business advice or further information to help grown your business?

7) As a small business, we find that the best accountants are also likely to be smaller in size.

8) Ask to speak to existing clients before signing up.

9) Make sure your accountant keeps in touch with your business.

10) If at some stage you decide to sell your business, you will need a good accountant more than ever to minimise any tax liabilities payable on the sale.

Hope this helps.

 

[Me@Limefox]

8) Ask to speak to existing clients before signing up.

Hope this helps.

Is this not a breanch of confidentiality ? I've asked a couple of times and they have both responded with an 'As you would expect, we cannot provide you with details of current clients."

Nick

 

[samsutton]

It's very simple, just ask any prospective accountant the following:

"What is 1+1?"

If they answer "2", run for the door.

If they answer "what do you want it to be?" you have found the right person.

 

[MyAccountantOnline]

Is this not a breanch of confidentiality ? I've asked a couple of times and they have both responded with an 'As you would expect, we cannot provide you with details of current clients."

Nick

It is actually very, very rare that a potential client asks me for references, often as they have been refered to us anyway, but if they do I ask a clients permission first and then give them contact details.

I wouldnt dream of giving a potential client any of my other clients details without permission first.

 

[David Griffiths]

It's very simple, just ask any prospective accountant the following:

"What is 1+1?"

If they answer "2", run for the door.

If they answer "what do you want it to be?" you have found the right person.

Yes, that's very amusing, until you get the letter from the Revenue saying that they want to investigate your affairs. Which kind of accountant would you prefer then?

 

[DickM]

Yes, that's very amusing, until you get the letter from the Revenue saying that they want to investigate your affairs. Which kind of accountant would you prefer then?

On the lead up to Christmas, or perhaps approaching April 5, 2009 may be better, if UKBF ran a poll on David's

, and perhaps add a few other scenarios.
Don't get me wrong, as I agree totally with his stance, as the alternative @ the other end of the scale is anarchy. A poll may give an interesting cross-section of accountants, bookkeepers and last but certainly not least ........... clients responses.

 

[Philip Hoyle]

On the lead up to Christmas, or perhaps approaching April 5, 2009 may be better, if UKBF ran a poll on David's

, and perhaps add a few other scenarios.
Don't get me wrong, as I agree totally with his stance, as the alternative @ the other end of the scale is anarchy. A poll may give an interesting cross-section of accountants, bookkeepers and last but certainly not least ........... clients responses.

It is a very fine line between keeping a client legal and keeping their tax bills as low as possible. A good accountant will use his knowledge and, more importantly, his experience of dealing with tax investigations, to make sure that the client pays as little tax as possible whilst not exposing him to the draconian penalty regime. I know that some of my clients get confused when I resolutely refuse to let them claim for some expenses, yet positively encourage them to claim for other things they hadn't thought of - I will often put a "spin" on something to try to get it allowed as a valid expense, but only where I know it to be a grey area and where it is a matter of judgement on the particular circumstances as to its allowability - I never try to claim anything that is specifically disallowed or lie to make a claim. I tire of hearing that "my mate down the pub" claims his restaurant bills or has a porsche and pays no tax - that maybe so, but he is probably lying or making false declarations in his tax return and so risks heavy fines if caught. An accountant who is privvy and helps such claims is not doing their clients any favours - it's not clever accounting - any fool can put figures in the boxes to claim reliefs - what is clever is having the confidence to be able to argue that the figures in the boxes are legitimate when challenged. Sadly, in recent years, there seems to have been fewer tax enquiries, so dodgy practices have not been caught and stopped - I am already seeing an upsurge in enquiries being launched so it seems the tax inspectors are cranking up the pressure and investigating more people again.

 

[polarbear]

Is this not a breanch of confidentiality ? I've asked a couple of times and they have both responded with an 'As you would expect, we cannot provide you with details of current clients."

As a practising accountant myself, if I trotted out that line, I suspect my prospective client would get a bit suspicious, and more importantly feel turned off and disconnected.

Better to have good references, "happy clients", who are only too willing to give you a recommendation. Talking about clients and their affairs without their prior permission isn't ethical, of course, but an introduction that both are happy with won't hurt.

 

[rock-lee]

It's very simple, just ask any prospective accountant the following:

"What is 1+1?"

If they answer "2", run for the door.

If they answer "what do you want it to be?" you have found the right person.

i think so

 

[ITCOntractor100]

Let's face it: accountancy for UK limited contractors is way too expensive in the UK.

"meet your needs"? - 90% of UK contractors have pretty much the same needs.

Normally there is no balance sheet, no accruals very little that is difficult - most contractor accountants just apply HMRC rules, fill in the forms and returns for you and charge you £100 per month + VAT, all of which you are allowed to do yourself if you want - I checked with HMRC!

Their margins are huge, is seems to me, yet the competition seems to have fixed the price at around that mark.

If you want to break the mould, search for the little guys like this: piscesreturns.co.uk - £35 p.m. + VAT - full personal service, contractor expert - not sure how you can go wrong, unless you are one of the 10%...

All just my humble opinion, of course...

 

[DFL]

Do you value your time over that of an accountant / tax adviser?

I would say that on average we spend 2 days per annum per contractor and at £1200 per year that would equate to 2 days of the average contractor charge out rate.

Secondly, there are balance sheet items, accruals, also increased risk, IR35 considerations, and the opportunity to add huge value by pro active tax planning with contractors.

You could do it yourself, as many try to do, but you would suffer from less time, generally pay more tax and leave yourself exposed to compliance errors.

We work for many IT contractors and they are all hugely grateful and see our fee as an investment rather than a cost, our service works very well for this type of contractor. We steer well clear of the cost cutting I can do it myself brigade.

Let's face it: accountancy for UK limited contractors is way too expensive in the UK.

"meet your needs"? - 90% of UK contractors have pretty much the same needs.

Normally there is no balance sheet, no accruals very little that is difficult - most contractor accountants just apply HMRC rules, fill in the forms and returns for you and charge you £100 per month + VAT, all of which you are allowed to do yourself if you want - I checked with HMRC!

Their margins are huge, is seems to me, yet the competition seems to have fixed the price at around that mark.

If you want to break the mould, search for the little guys like this: piscesreturns.co.uk - £35 p.m. + VAT - full personal service, contractor expert - not sure how you can go wrong, unless you are one of the 10%...

All just my humble opinion, of course...

 

[ellbristow]

Normally there is no balance sheet, no accruals very little that is difficult - most contractor accountants just apply HMRC rules, fill in the forms and returns for you and charge you £100 per month + VAT, all of which you are allowed to do yourself if you want - I checked with HMRC!

Before relying on this HMRC comment I would also ask them for their definition of 'due care'.

As far as HMRC are concerned you will not be penalised for errors on your return as long as 'due care' has been taken to ensure that the accounts are correct. Recently their definition of 'due care' has been adjusted so that you are only deemed to have taken 'due care' if an individual 'qualified in the specific area of taxation' has prepared or reviewed the return. This means that if you are returning property income, capital gains tax, or even self-employment, the average individual is not specifically qualified.. infact neither are some accountants (QBE's who call themselves an accountant without formal qualification).

Many of the £35+VAT accountants do not offer the sanction of 'due care' and you could be left in hot water in the event of an enquiry.

 

[ITCOntractor100]

Do you value your time over that of an accountant / tax adviser?

I would say that on average we spend 2 days per annum per contractor and at £1200 per year that would equate to 2 days of the average contractor charge out rate.

Secondly, there are balance sheet items, accruals, also increased risk, IR35 considerations, and the opportunity to add huge value by pro active tax planning with contractors.

You could do it yourself, as many try to do, but you would suffer from less time, generally pay more tax and leave yourself exposed to compliance errors.

We work for many IT contractors and they are all hugely grateful and see our fee as an investment rather than a cost, our service works very well for this type of contractor. We steer well clear of the cost cutting I can do it myself brigade.

With an average charge out rate of 600p.d. you are obviously looking at the tiny top-end of the market.

When you are charging 300p.d. (much closer to the national average - see jobserve), your accountant's fee levels come into play and excessive fees make a difference.

Readers who don't earn like your clients do might consider whether £1200 is excessive for the full, but no-frills accountancy service they actually need.

Don't get upset about people undercutting you - this is a diverse market with 14,000 accountants in the uk. Your niche is small but probably safe.

 

[DFL]

Don't get me wrong - I am not upset!

I'm all for a free market - you pay your money and you take your chances.

My point being that the more financial savvy contractors do not begrudge paying this price as they know full well the value they receive will hugely exceed it.

You can pay less for any goods or services, but from extensive research most people rate cost as only the fifth number of importance when choosing their accountant.

We pick up considerable clients willing to pay us double what they have been paying previous accountants who charge low fees, with the flip side being a poor quality service in this important aspect of their business.

 

[taxattack]

Before relying on this HMRC comment I would also ask them for their definition of 'due care'.

As far as HMRC are concerned you will not be penalised for errors on your return as long as 'due care' has been taken to ensure that the accounts are correct. Recently their definition of 'due care' has been adjusted so that you are only deemed to have taken 'due care' if an individual 'qualified in the specific area of taxation' has prepared or reviewed the return. This means that if you are returning property income, capital gains tax, or even self-employment, the average individual is not specifically qualified.. infact neither are some accountants (QBE's who call themselves an accountant without formal qualification).

Many of the £35+VAT accountants do not offer the sanction of 'due care' and you could be left in hot water in the event of an enquiry.

Could you pls clarify the source of your quote 'qualified in the specific area of taxation' .

Thanks

Chris

 

[StefanJ]

Our site, cmypitch, provides a 'find-an-advisor' service which can get you free no-obligation quotes from local service providers. We have some excellent accounting and book-keeping firms from across the UK signed up - rather than trawling through a list of names and numbers in a directory, you fill out a short form and get three accountants calling you and pitching for your business!

 

[Philip Hoyle]

I can't find "qualified in the area of taxation", but there is:-

"The person has an obligation to choose an adviser who is trained and competent for the task in hand. "

as per http://www.hmrc.gov.uk/manuals/chmanual/CH84540.htm

Only time will tell what level of training and competence is expected by HMRC. It will be very interesting to see how this progresses.

 

[taxattack]

I can't find "qualified in the area of taxation", but there is:-

"The person has an obligation to choose an adviser who is trained and competent for the task in hand. "

as per http://www.hmrc.gov.uk/manuals/chmanual/CH84540.htm

Only time will tell what level of training and competence is expected by HMRC. It will be very interesting to see how this progresses.

Thanks Philip

"qualified in the specific area of taxation" would have appeared to require appointment of a CTA/ATT!

Chris

 

[ellbristow]

Could you pls clarify the source of your quote 'qualified in the specific area of taxation' .

I got that from a bulletin we receive bi-monthly, granted it is obviously not a direct quote from HMRC.

CTA and ATT are not the only relevent qualifications. ICAEW, ACCA, AFA, CIMA and a few others all include tax modules in their training and CPD structures, therefore all would be acceptable as "trained and competent for the task in hand"... at least I sure hope so otherwise my training means squat (AFA)!

 

[bfung]

How helpful are big international accounting firms, such as PwC, to small businesses? How much would they typically charge for planning a tax-saving business structure (if the business will eventually operate internationally), and for taking care of the accounts of the business during the year?

 

[Asset Finance]

I also agree with fixed fees

 

[Spongebob]

After dealing somewhat unsuccessfully with several high street type firms of accountants I found my current one through a recommendation from my bank's mortgage advisor!

He works alone from home and so has zero overheads. If he needs office facilities he uses a desk at one of his bigger clients. Its very much a case of 'Wherever I lay my laptop, that's my home'.

He is by far the best accountant I have ever met or heard of. His first job for me was to deal with a very difficult tax investigation which could have ended up with me in jail. He tied the tax office up in such knots that they couldn't drop the case fast enough. He has since performed similar magic for a friend of mine.

I am very lucky to have found him - all his clients come from personal recommendation and he doesn't advertise. He makes a very good living but his fees are relatively tiny as he has no costs. Particularly if you pay cash!

I am sure that there are plenty of accountants out there like mine but they are very difficult to find. I guess you just need to ask around.

Bob

 

[mullins]

i always ask friends who they use....word of mouth is always best......if they are saving my friends moeny on their tax bill then thats good enough for me

 

[globalcvsolutions]

I am having issues with this - been doing my accounts on a small business software and its been ok but I am struggling to determine when I should get a 'book keeper' and am not sure what a reasonable cost/arrangement is

 

[elaine@cheapaccounting]

Like everything else in life - you get someone to do something for which you neither have the time nor the capability to do yourself.

 

[frauke]

I keep seeing post about people paying to much for their accountancy fees. We currently pay £249 per year for a full set of statutory accounts using a company called 'The Accounts Production Bureau'

x

I was curious and its certainly is a really good deal.

But from personal experience of getting trial balances, not all book-keepers (and certainly not many business owners) could do "a final trial balance which incorporates all year end adjustments". I know this, as many book-keepers are the first to admit - that's what an Accountant is for!

It is also for "non-complex, Service based companies".... Its getting harder to say yes to all the questions :|

Oh and its £249 + VAT - so for an small business not VAT registered its £286.35 at the moment.

 

[Marie Stein]

I think this is an interesting subject - I'm an independent VAT consultant by profession and am busy building up my contacts with accountants who could be very helpful for me in finding work. I've worked for half a dozen accountancy firms since 1986, from most of the big 4 to a single office firm and was married to an accountant for the best part of 10 years.

I've seen people spend more time choosing their interior decorator than their accountants, but I can understand why. Most non-accountants really don't understand what accountants do and are just as likely to choose on the basis of a recommendation by a friend down the pub or on price. It doesn't actually cost a lot of money to prepare a simple set of accounts but I suppose that the main issues are first what you want your accountant to do for you and what sort of relationship you want to have with them.

As a VAT consultant, I'm used to having to explain to clients what I do and how I can "justify" my fees. The same is true for accountants and I suspect that many businesses don't understand what their accountant actually does. They choose someone who they get on with and then stick with them for years.

I've chosen as my own accountant someone I worked with for a couple of years, who is one of the most direct people I have ever met and whose clients constantly refer her to their contacts. She regularly turns away work because she doesn't want to dilute the amount of time she spends with her clients. She has a wealth of practical knowledge on all areas of accounting and has loads of common sense on business issues. So for me, it's been a case of choosing someone I know and trust. Her fees are good as well, but I'd have chosen her even if her fees were higher. It's an important investment. But I appreciate that for anyone who has limited experience in dealing with accountants, it is a daunting decision.

 

[DFL]

You get what you pay for in life - as a business owner do you want a pro active accountant who understands your business or do you really want production line accounts produced? Note that they require trial balance WITH all year end adjustments so will simply enter the figures into their accounts production software and bang out a tax return. For that service I wouldn't consider the fee low at all - the work has all been done for them, I would assume that non accountants would be processing and it should take no more than 30 mins per business. Not a recommended option in my opinion.

I was curious and its certainly is a really good deal.

But from personal experience of getting trial balances, not all book-keepers (and certainly not many business owners) could do "a final trial balance which incorporates all year end adjustments". I know this, as many book-keepers are the first to admit - that's what an Accountant is for!

It is also for "non-complex, Service based companies".... Its getting harder to say yes to all the questions :|

Oh and its £249 + VAT - so for an small business not VAT registered its £286.35 at the moment.

 

[DickM]

I may be naive, but I saw no advantage in registering my Ltd Co for VAT, other than cash flow. I also know an accountant who charges around £250 for an "in-depth set of accounts" (including assistance with the electronic submission to Co House), and £50 for completing a CT600(Short) Form, attaching the detailed accounts, and assisting with the "paper" or electronic submission to HMRC. He also is not VAT registered.

 

[Fastbooks]

Everyone knows someone who has their own business.

If you are confident that they speak honestly to you and don't try and portray themselves as some big 'player' who knows it all, ask them about their accountant or better still their bookkeeper if they have one.

A good bookkeeper knows their clients business much more intimately than a firm because they record every transaction and they also know the way accountants operate so they can ensure your interests are looked after and that you are properly informed, assuming you want to be.

As in every other walk of life, don't assume so called professionals will help move your business forward. If you are going to trust someone, make it someone who, at least, has a day to day knowledge of your business.

 

[Deleted member 55443]

I have been carefully reading your posts, thanks to OP and all the contributions, I was wondering if any of the mod's or experts here could create a simple 5 point check list for a small business seeking to appoint a new accountant.

 

[hendyphilhendy]

After dealing somewhat unsuccessfully with several high street type firms of accountants I found my current one through a recommendation from my bank's mortgage advisor!

He works alone from home and so has zero overheads. If he needs office facilities he uses a desk at one of his bigger clients. Its very much a case of 'Wherever I lay my laptop, that's my home'.

He is by far the best accountant I have ever met or heard of. His first job for me was to deal with a very difficult tax investigation which could have ended up with me in jail. He tied the tax office up in such knots that they couldn't drop the case fast enough. He has since performed similar magic for a friend of mine.

I am very lucky to have found him - all his clients come from personal recommendation and he doesn't advertise. He makes a very good living but his fees are relatively tiny as he has no costs. Particularly if you pay cash!

I am sure that there are plenty of accountants out there like mine but they are very difficult to find. I guess you just need to ask around.

Bob

And that doesn't worry you? An accountant willing to take a 'cash' payment. I don't think you have been lucky, I suspect he has!

 

[MyAccountantOnline]

i want to ask is it ok to go for fresh accountants or should we appoint experienced accountants?

When you say Fresh accountants what do you mean? Is this a new firm of qualified accountants?