By Emily Coltman, Chief Accountant at online accounting provider FreeAgent
You may think picking an accountant for your business might not be as important as choosing a romantic partner, but it certainly comes close.
In many aspects of life finding that perfect partner can make a huge difference to how you fare and accounting (of course!) is no different.
When you’re in business a really good accountant can be your perfect partner.
But there are thousands of accountants out there.
So how do you find your perfect partner?
What do you want?
In any relationship it’s important to know what you want from that relationship.
What do you want from your accountant?
Are you already comfortable putting your books together, or would you like an accountant to teach you how to do that? Some accountants will provide a software package that you can use to keep your books, either one they have built themselves, or a third party package such as FreeAgent.
Do you want to pay your accountant as little as possible, or would you like a more comprehensive service that includes additional advice, such as helping you pay less tax?
Would you like your accountant to actively engage with HM Revenue on your behalf? If you are selected for the dubious honour of an inspection by the VAT man, would you like your accountant to be there to help you answer the inevitable questions?
How IT-savvy are you, and how important is it to you that your accountant is also IT-savvy? In a relationship it’s important that you share interests and ideals. If you want to keep your books online, and you like using Twitter and LinkedIn to promote your business, how happy would you be with an accountant who isn’t au fait with online bookkeeping software, and doesn’t tweet or use LinkedIn?
How important is it to you that your accountant is local to you? If your accountant is happy online, this might well not be an issue.
How much would you like your accountant to be involved in your business? Are you looking for a committed relationship where your accountant becomes a trusted adviser and mentor, who knows your business inside out? Or are you looking for more of an annual one-night stand, where your accountant simply rubber stamps your figures and that’s it?
Make sure you know what you want from your accountant before you start looking.
How should you find your perfect accountant?
Anyone who’s ever been single and looking for a partner knows that finding Mr or Ms Right is often difficult!
So how do you find the right accountant for you?
Try asking friends, colleagues or contacts who are in the same business sector as you are. This is particularly important if your business’s accounting is not straightforward, for example, you run a pub.
Why are pub accounts not straightforward? Because there’s lots of cash involved and lots of stock such as food and drink. Both of those create accounting issues. Make sure your potential accountant has experience in your business area.
You could also try asking other business advisers, such as your bank manager.
And if you’re keen to have an IT-savvy accountant, search sites such as Twitter and LinkedIn to see if they’re regularly active there.
You can also look at the various accounting bodies’ websites to find accountants who have qualified through these bodies. Absolutely anyone can call themselves an accountant, so finding a qualified accountant is a good idea, though do beware, the accountant being qualified is not a guarantee that they are a good accountant — I’ve known very good unqualified accountants and very poor qualified ones!
The main UK accounting bodies are:
The Institute of Chartered Accountants in England and Wales, in Scotland, and in Ireland — accountants who have qualified through one of these institutes, i.e. qualified members of these institutes, will have “ACA” or “FCA” after their names — the “FCA” is for members who have been qualified for more than 10 years.
The Association of Chartered Certified Accountants (ACCA) — qualified members are “ACCA” or “FCCA”.
The Chartered Institute of Management Accountants (CIMA) — qualified members are “ACMA” or “FCMA”.
The Association of Accounting Technicians (AAT) — qualified members are “MAAT” or “FMAAT” — this qualification covers the lower end of the other three, so is in some ways the “little brother”, but again I have known excellent accountants who went no further than this qualification!
What should you avoid?
Because every business and every accountant is different, this can be harder to pin down.
But there are some classic danger signals that accountants emit, which show that your business could be in for a rough ride if it partners with them.
Many accountants are moving to charging fixed fees for their services, rather than charging by the hour. Personally I would avoid accountants who charge by the hour, because you never know how much you’ll end up paying them, and arguments about money can sour the best of relationships.
Make sure, too, that your accountant speaks your language and doesn’t blind you with jargon. Remember, these are your books, this is your business that you’ve worked so hard on and lavished so much love and care on. Don’t trust it to an accountant of whose conversation you can only understand one word in ten.
This is especially important given that, even if you do use an accountant, you are still legally responsible to HM Revenue for your business’s record-keeping and tax.
If you’re not on the same wavelength as your partner, the relationship is doomed.
Finding your perfect partner, in business as in life, is not easy to do, but once you do find them, the rewards can be very great. Pick your accountant wisely and you can find a trusted adviser, a champion when the taxman calls, and save tax into the bargain.
FreeAgent has pioneered online accounting since the launch of its service in 2007, rapidly growing a loyal community of thousands of freelancers and small business users.
As well as making accounting easy for business owners to understand, FreeAgent offers real-time projections of tax liabilities including VAT, Self Assessment Income Tax and Corporation Tax. Users can also analyse bank statements, see live profit and loss reports, send and track invoices, track time and expenses, and manage projects.
The company is run by founders Ed Molyneux, Olly Headey and Roan Lavery who — originally freelancers themselves - needed a finance tool that would give them a clear picture of their business accounts and so FreeAgent was born.
When surveyed, a remarkable 99.5% of users said they would recommend FreeAgent to their friends, and it was voted Best SME Accounting Software in the 2010 Software Satisfaction Awards. FreeAgent is listed in the Tech Media Invest 100 list, published by the Guardian in 2010 and was selected by PC Pro Magazine in 2011 to join their A-List of best-in-class products.
Try it for free at www.freeagentcentral.com