Many small business owners start out doing their accounts by themselves, and some continue to do this successfully. But few people set out in business because they want to do accounts, or because they are good at them (unless they are starting an accountancy firm).
Hiring an accountant is an important step if you want access to valuable financial advice, and to free up time to actually run your business.
Choosing an accountant can be a difficult process. Your accountant plays a vital role in the success of your business, and will be entrusted with a number of important tasks. As such, it is important that you find an accountant you trust, and with whom you can work easily.
First, though, you must decide what it is that you want your accountant to do.
What will the accountant do?
Depending on the size of your business and the complexity of your financial affairs, you may wish to hire an accountant to perform any number of different tasks. Some business owners want to engage an accountant to look after virtually all of the bookkeeping and reporting tasks faced by the company, while others simply wish to have an accountant draw up annual reports and self assessments. Still others wish to have a trained financial professional on hand to offer advice as and when it is needed.
Much of your decision will be governed by cost. To begin with, it should be noted that hiring an accountant to look after your bookkeeping and your financial reporting is expensive and potentially inefficient. Accountancy and bookkeeping are two very different disciplines, and employing an accountant to keep records of your income and expenditure is not necessarily a good use of their time or your money.
As such, while many accountants will agree to do bookkeeping work, you may well find that it is more cost effective to employ a separate accountant and bookkeeper. Alternatively, you may wish to keep the books yourself. This obviously keeps costs down, but will also help you develop an accurate picture of the day-to-day financial health of your business.
Accountants tend to specialise in certain industries and business types, and it is therefore best to seek out an individual or firm that has experience in your sector. Where possible, seek recommendations from others in similar businesses. If you are a member of a trade association they will be able to advise on reputable accountants in your area. Indeed, many trade associations offer deals and discounts for their members. Similarly, if you have a lawyer they may well have contacts at accountancy firms - but do not feel obliged to act on their recommendations.
Having decided on a few accountants that you wish to approach, you should draw up a list of questions to ask at an initial meeting. Some of these questions can be asked over the phone - for example, what do you charge? Can you provide references? Are you a Chartered Accountant? However, the bulk of your questioning needs to happen in person. You should make sure that you book a meeting at least one hour long with each of the prospective accountants.
In your initial meeting the accountant will probably ask you to outline the nature of your business. You should describe what you do in as much detail as possible, explaining where you envisage the accountant fitting in. Make sure that each accountant can actually perform the tasks that you require of them; some will not be able to deal with certain particularly esoteric aspects of tax reporting, for example - and it is vital that you are aware of this from the outset.
Another important consideration is the way in which you will transmit records to your accountant. If you will be keeping the books yourself, you need to ascertain in which formats the accountant will accept your data. For example, will you send paper ledgers? Or will the accountant only accept electronic data? If the latter is the case, will you need to buy specific software?
Of course, price will also be a significant concern. Indeed, if your affairs are relatively simple your choice of accountants will be broad - and price will probably be the deal breaker. It is therefore important that you see a range of potential accountants before coming to any decision.
It may well be possible to garner a price reduction from your preferred accountant if you are able to provide evidence of a better offer elsewhere. Wherever possible, however, you should always choose the accountant with whom you feel most comfortable over the accountant charging the least amount of money.
Finally, it is important to remember that your chosen accountant will have access to a huge amount of potentially sensitive information. As such, trust is paramount. You can help to prevent that trust being abused by making sure that you only hire a Chartered Accountant, certified by the Institute of Chartered Accountants in England and Wales.