Using Professional Services

Accountants can be used for a wide range of functions that expand much further than the bookkeeping that most people initially think of. The following will detail those areas that accountants can offer their expertise but you have to appreciate that an accountant doesn’t usually specialize in all fields. You should, therefore, choose an accountant that is more suited to your needs.

Book Keeping

Accountants can keep your business accounts up to date by recording all transactions and operations in the business. This will include constructing balance sheets, profit and loss accounts, cash flows, and any other financial statements that you require. Many accountants now use computer software and therefore may help integrate this into your business if needed.

Advice on Starting a New Business

If you are starting a business of your own, they are extremely useful for advising what form of business you should take (partnership, limited, etc). If you need help with the business plan, then they can provide you with their assistance and advice. Any legal and tax issues involved when starting a new business can also be dealt with by an accountant.

Advice on Management

Through bookkeeping and producing forecasts of the business, an accountant can advise you on the way to manage your business. Such forecasts will include budgeting and cash flow and will help you plan a future strategy for your business. They will also be able to monitor your current cash flow, budget, sales volume, costs and profit margins, and will advise you accordingly. The responsibility of stock and credit control can also be put into the hands of the accountant.

Advice on Finance

Accountants can help generate finance for your business by advising you on the best way including bank loans, overdrafts, grants and venture capital. They can further help by presenting your case to them which will look more professional when using an accountant. They will also advise you on leasing and hire-purchase conditions that may also be beneficial in certain situations.

Advice on Buying and Selling a Business

Should you decide to Buying a Business: Contents (including a franchise) or even Selling a Business, arguably the most useful assistance will come from an accountant. They can be used to cover the accounts of the business that you intend to buy and also value any assets that may be included. Working on both the behalf of buying or selling a business, they are useful for helping with negotiations which could be one of your weak points.

Tax Services

Issues with tax returns, corporation tax, income tax, National Insurance, PAYE, and VAT can all be dealt with by an accountant. This, therefore, highlights that the management of your employees can also be reduced by using an accountant to take on some of these tasks, and not just your business.

Do You Need a Qualified Accountant?

When looking for an accountant you have to realize that many of them are in business for themselves. Small businesses don’t necessarily need the large national firms and should, therefore, seek these smaller independent services. In most cases, you should also keep in mind that you shouldn’t settle for an accountant that isn’t highly competent and experienced: being a bookkeeper doesn’t automatically make them qualified. To recognize that an accountant is qualified, check that there are letters at the end of the accountant’s name. Those that are Chartered Accountants will have either FCA or ACA if registered in England/Wales and CA if they are registered in Scotland. These will be the accountants that you should be more interested in if you are a small – medium-sized business. Others available are Chartered Certified Accountants, displaying the initials FCCA or ACCA, and Management Accountants, displaying FCMA or ACMA with their name. These people are usually associated with the larger National Accountancy firms. (Just to make it clear, the first initial ‘F’ stands for Fellow and the first initial ‘A’ stands for Associate with ‘Fellow’ being the more experienced.) The importance of using someone who is qualified will become clear when those who aren’t, are restricted by law concerning what they can do. Further, if your accounts are to be audited, the law states that they have to be completed by a member of one of these institutions. It may be that you don’t need a qualified accountant and that someone with the skills and capability of performing the task to a satisfactory standard is acceptable to you. This may be occasional bookkeeping which you need simply for guidance purposes and the accuracy of the task won’t determine a business failure or major problem. If this is the case, then it would be a better option as it will involve less cost, but determine the importance of the job before you make a decision. A bookkeeper who ‘does your books’ is not conducting a bona fide audit and it is you (the business owner) who is responsible for the annual accounts produced.

Looking For An Accountant

When you look for an accountant, the best source for referrals will come from business contacts as they will be able to recommend firms from previous experience or word-of-mouth. By looking in telephone directories such as the Yellow Pages, you will find a list of accountancy firms although you will have limited knowledge of their reputation. You may also decide to contact the accountancy Institutions to find out if any firms that are registered to them are in your area:

• Institute of Chartered Accountants England and Wales (FCA and ACA)
• Institute of Chartered Accountants-Scotland (CA)
• Association of Chartered Certified Accountants (FCCA and ACCA)
• Chartered Institute of Management Accountants (FCMA and ACMA)

It is a good idea to narrow down your search to firms that are similar in size to your own business. By doing so, such firms will usually deal with small businesses themselves and therefore will be more relevant for the job.

Choosing an Accountant

There are many factors that you need to consider when choosing an accountant that is right for you. Have about three or four shortlisted so that you can compare between them and therefore not have to rely on one accountant claiming that they offer the best service. Before you proceed to find out more about the accountants, be sure that they are interested in your business by briefly stating its size and the work involved. If they aren’t, at least they have done you a favour by not wasting your time. To find out more about the accountant, you should arrange to meet them (at least twice) so that you can ask them questions and state the conditions and finer details of the work involved. The accountant will want to ask you questions which will further determine their capability in doing the job. If there is more than one person in the firm, then find out about them all and which areas they specialize in. Clarify how many businesses they have dealt with that are similar to your business in both size and industry. This will determine their experience and give a situation where you can consult those businesses for a reference. Find out the availability of all the people that will have some input in your business to be sure that you will have the assistance and support when it is required. You should also determine their efficiency at getting things done: will they produce immediate results or will they require a period of time? If you are just employing them for say, bookkeeping, can they offer you further assistance that will give you value-for-money such as follow up advice? Be cautious of those accountants that claim they are experts in all fields: this is very uncommon today, particularly at the rate that business is changing. Those accountants that will be more useful will insist on including other professional assistance if required. You may not feel you can ask the above points, but do ask some specific ones that concern your industry: this will help with specific allowances and result in less time being billed to you. The most important thing to remember does not go with the first accountant you come across: look around and if you’re not completely happy – keep looking!

The Costs of an Accountant

Accountancy fees will vary depending on the work involved and the size of your business but are usually paid in either of two ways and sometimes even both. Firstly, accountants can be paid hourly and the firm may well use a higher rate at what they normally pay them to make a profit and cover any costs involved. Secondly, accountants may issue a fixed fee for a period (say, a year) and is arguably seen as the better method of the two. This is even more beneficial if the accountants offer free advice during this time.

When considering costs, take note of the office environment and operations of the accountancy firm as expensive offices can lead to expensive fees. To keep fees minimal, especially if you are paying hourly, try to get the basic work out of the way yourself. Alternatively, employ a cheaper, maybe less qualified accountant to complete the simpler tasks. Costs are something that should be discussed when you visit the accountants before making a final decision on which one to use. Get them to provide an estimate of the fees and put it down in writing. Identify if any additional costs will be added to this fee such as travel costs, telephone bills, etc. To give a figure, a smaller small business with a turnover of £50,000 could pay up to £500, and a business with 3 employees and a turnover of £250,000 could pay up to £1,500.