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Choosing an accountant |
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Introduction
This article is based on common sense and experience. Of course there is no specific statue or common law governing your choosing of an accountant, but it is an important decision which needs careful consideration. |
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| Businesses need accounts for two reasons: |
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- To satisfy the tax authorities that they have paid the correct amount of tax;
- To enable the owners and managers of the business to assess past (and future) trading, i.e. to see whether they have made a profit or loss for the day, week, month, or year in question.
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Tax is calculated in a different way for each different business structure, e.g. self-employed person or limited company. The law requires that the accounts be prepared in a particular way. That makes for precision and easy comparison, but also some complication. This is why you need to find the right accountant.
There are many simple accounts and software packages, which enable a small business to keep accounts which will be adequate for both management and tax purposes. The amount of help your new business needs from a professional accountant at the commencement may be none. Even after a year or two it may still be very little. However, it is good business practice to find an accountant to check your accounts and your tax return, even if it is comparatively simple. If you submit a return showing too little tax to pay, then you may be committing an offence. Conversely, your accountant will prevent you from paying too much tax. It is a long established precept of English law that each of us is entitled to arrange our affairs in the way that minimises the amount of tax we pay.
Once your business affairs become more complicated, you may need advice from an accountant from time to time. If your business is a partnership, or limited company with shareholders other than you, then you or they may need to find an accountant to prepare the business accounts each year, simply to provide proper third party proof of the financial circumstances of the business to you and to them. |
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| Who to choose |
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| Accountants come in all professional shapes and sizes. Anyone can call himself an accountant. Accountants usually embark on a series of examinations set by one of several professional bodies. Upon completion of all of these they are accredited to that body. However, there is a vast army of people who are effectively part qualified accountants. You need to find the right accountant. They provide a range of competence and a range of services to cover all requirements. The point we make is that you may find perfectly adequate accountancy help from someone working from home charging £20 an hour, as from a firm of accountants charging £80 an hour. It is a classic case of “horses for courses”. |
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| Start by making a short list of the services you need. In my experience, book keeping is fine, but the work is very basic. Your accountant ought to be able to “press a button” to produce meaningful monthly management accounts. From those, you or they can extrapolate a budget for the next 12 months, then a cash flow forecast. Then you are really in control of the money. |
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| If by chance you find any error in this information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes: |
 Do not provide a complete or authoritative statement of the law; |
| Do not constitute legal advice by Net Lawman; |
| Do not create a contractual relationship; |
| Do not form part of any other advice, whether paid or free. |
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