How to choose an accountant to help your small business grow

Most accountants have a wealth of expertise they've acquired over a number of years. A chartered accountant will have three years' postgraduate training and experience.

If they run their own accountancy business, they'll have at least two years of experience since gaining their qualification. That equates to around 10,000 hours of expertise, minimum.

Yet many business owners still try to do their own accounts with little idea of tax law, which changes every year.

Numerous surveys show that accountants are the most trusted adviser for businesses. Yes, there are some bad apples, but in this blog we explain the benefits of working with an accountant and the things to keep in mind when choosing one.

Do I need an accountant for my small business?

Having an accountant is highly recommended, as they provide valuable financial expertise and guidance that can greatly benefit your business.

They can help you with tasks such as:

• managing your cash flow

• creating and maintaining a budget

• preparing financial statements

• filing taxes

• making sure you're keeping to the law

• identifying possible financial risks

They can also offer insight into ways to cut costs and save money, and help you make informed decisions about your business's growth.

Pros of having an accountant as a small business

• They can handle all the admin involved in paying tax. Small businesses are very time-poor and the process of paying tax can distract you from running your business. An accountant can take this work off your hands.

• They can help with keeping records. Maintaining accounting records can be a chore. An accountant can help by recommending a software system that cuts non-productive time and gives information on your business's trading performance at the push of a button.

• They can make sure you pay the right amount of tax at the right time. As they keep accurate and reliable records, the accountant can advise you on the tax you must pay on your profits. They can do so in enough time for you to set aside funds to meet these liabilities when they fall due.

• They can find ways to reduce your tax payments. An accountant can advise on limiting tax liabilities for both the business and you as the individual owner. They can claim tax relief on business expenses, capital allowances on expenditure on equipment, or special relief schemes such as R&D tax credits.

• They can help you seek finance and investment. If they recommend that your business should access finance, they can provide past annual accounts and financial forecasts to demonstrate to a funder that you're able to repay debt finance. With so many finance suppliers in the UK, an accountant can help decide which type of finance is most suitable for your business.

Cons of having an accountant as a small business

• They can be expensive. Hiring an accountant obviously comes with a cost, and for small businesses that operate on limited budgets, it may be out of reach.

• You can become overly dependent on them. Relying on an accountant to manage all your finances may mean you end up lacking a full understanding of your business's financial situation. If you're relying on them to make all your decisions, it could lead to your business running in a manner that doesn't line up with your vision or goals.

At what point is it worth getting an accountant?

As soon as your finances become too overwhelming for you to handle on your own, it's worth getting an accountant for your business.

Of course, the point at which this happens will depend on the size and nature of your business. If you find yourself spending excessive amounts of time trying to understand tax laws, bookkeeping and financial reporting, or if your business starts to experience rapid growth, it may be time to bring in a professional.

Do I need an accountant if I'm self-employed?

It's certainly recommended. While you may be capable of managing your books and finances on your own, an accountant has the years of the knowledge and insight that means they can provide valuable expertise and guidance.

They can help you navigate complex tax laws, make sure you're keeping accurate records and identify potential tax deductions and credits that you may not be aware of. They can also assist with financial statements, forecasting and budgeting.

What to look for in an accountant

Assess their qualifications

Anyone can use the title 'accountant', as it isn't protected in law. Find a chartered or certified accountant who has the letters ACA, FCA, ACCA or FCCA after their name.

This means that they've reached a minimum technical standard. Fellows have 10 years' post-qualification experience (and probably the grey hairs to go with it!).

They may have trained in an accountancy business or as an accountant within a number of businesses. This will give them a slightly different set of skills.

ACMA and FCMA

ACMA and FCMA are chartered management accountants who usually have more expertise in the numbers to help grow your business but less training on the tax side.

Ask about their background and experience to decide if this would be more suitable for you. Or, you might choose separate accountants to work with you on the tax side and the management reporting.

Chartered tax adviser

A chartered tax adviser is the recognised expert in their field. Some work directly with the public but most provide a source of expertise for accountants. Larger accountancy firms will employ their own tax experts for advice and planning on tricky areas.

Chartered accountants:

• are regulated by their professional bodies

• sign up to a code of ethics

• must stay technically up to date

• will have professional indemnity insurance in case something goes wrong

Qualified by experience or ex-HMRC

While some of these accountants can provide an excellent service, it can be more hit and miss than with a qualified accountant who is a member of a professional association.

Find an accountant with relevant expertise

Don't pick an accountant at random. Many accountants have a specialism either in terms of their technical expertise or the types of businesses they advise.

Have a look at their website. What does it tell you about them as individuals and their experience?

Once you find a potential candidate, arrange to meet to discuss their services and whether they have experience in your field or industry. Tell them how long you've been trading and the challenges you face. Is the business performing as you'd expected? What are your ambitions for growth? What advice or suggestions can the accountant offer?

Make sure you can work with them

It's crucial that you find an accountant who isn't just technically competent but someone you can get along with. Having a good personal relationship and open communications will help you get the best out of your money.

Establish whether they understand the benefits of accounting software

Do your accounting records provide all the information you need to run your business? Should you be considering changing to accounting software, perhaps using software through the cloud so your accountant can monitor your records and keep a check on their accuracy?

See if other people recommend their services

Ask for recommendations from business that you aspire to be like. Smaller businesses may be happy to refer you to their friend, but if you're scaling up, you may need a different sort of accountant from those who deal with smaller start-ups.

There will be different tax issues to consider, as well as different business problems for which you may seek advice.

Find out if they can signpost you to other sources of advice

Many accountants advertise themselves as business advisers but there's no clear definition of this term. Often, their skills are in tax advice and access to finance.

Others can offer a broader range of advice to actively help you grow your business. Again, be clear on what you need and what the accountant is offering.

Your accountant should become your most trusted adviser and be able to direct you to other experts when you need help in other areas. Choose wisely and make sure that you're comfortable with the relationship as your business grows.

Questions to ask when choosing the right accountant

If you've arranged an initial consultation with an accountant but aren't exactly sure what to ask them, here a few essentials that you should remember to put across at your meeting.

Fact-finding

It's best to start off with some very simple fact-finding questions. Here's a checklist to help you – just change or delete depending on your circumstances:

• Are you (or is the person I'll be assigned to) a qualified accountant?

• What qualifications do you/they have?

• How many years of experience do you/they have?

• How many of you are there in the firm?

• Do I get assigned to one person or is it call centre-based?

• How many clients like me do you/they deal with?

• What happens if you/they aren't available?

• Can you/they give me some client testimonials or the names of clients I can contact for a reference?

• How do I contact the person?

• How quickly will I get a response?

• What are your fees? What's included in those charges? What isn't included, and how do you charge for those excluded items?

• Are you regulated by a professional body? Who?

• Do you have professional indemnity insurance? (Ask for the name of the provider and the amount of cover.)

Specifics about your business

Once you're satisfied with your initial fact-finding, you can move on to more specific details about your business. The questions you ask will depend on your business structure (whether you're a sole trader or a limited company, for example).

Again, here are a few questions. Choose the ones most suitable to your needs, as not all of them will apply to you:

• What's the best business structure for me?

• How much should I pay myself from the business?

• How will I know how much profit I've made?

• How much tax will I pay? When will I pay it?

• What about National Insurance?

• What costs and expenses can I claim? Can I claim for mileage, phone, using my home as an office and so on?

• Should I register for VAT?

• What about the VAT flat rate scheme?

What's the difference between a bookkeeper and an accountant?

The main difference lies in the scope of their roles and responsibilities.

• A bookkeeper is responsible for recording and maintaining a business's financial transactions. They focus on tasks such as reconciling bank statements, recording sales and expenses, and maintaining accurate financial records.

• An accountant has a broader role and is responsible for analysing financial data, preparing financial statements, and advising on financial strategies and decisions. They often play a more strategic role, providing insights and recommendations to help you make informed financial decisions.

Typically, while bookkeepers make sure any financial data is properly accurate, accountants interpret and analyse that data to provide you with valuable financial insight.

How do I find a bookkeeper?

Some accountants employ bookkeepers, which means that everything is under one roof. And hopefully the accountant and bookkeeper are talking to each other regularly. Even if they don't employ them directly, most accountants know the better bookkeepers around.

Bookkeeping qualifications

There are a number of recognised qualifications for bookkeepers:

• The Association of Accounting Technicians (AAT) train accounting technicians who can do more than just the bookkeeping with some tax and accounts training. There are four levels to achieve the full qualification so do ask.

• Institute of Certified Bookkeeper (ICB) members study purely bookkeeping and have less experience than AAT-trained bookkeepers. Their expertise is in bookkeeping but don't expect any of the extras.

Like the professional accountancy bodies, AAT and ICB members sign up to a code of ethics, have to stay technically up to date and will have professional indemnity insurance in the event that something goes wrong.

Other ways to find a bookkeeper

You could:

• ask for recommendations from other business owners or professionals in your industry who have experience working with bookkeepers

• seek referrals from your accountant or financial adviser

• search online directories or platforms specifically designed for connecting businesses with bookkeepers (like Enterprise Nation). These platforms often provide reviews and ratings from previous clients, giving you an idea of their reliability and expertise.

It's very important to consider factors such as the bookkeeper's qualifications, experience and availability, so you can make sure they're the right fit for your business.

Relevant resources

• How an accountant can help your small business

• Five questions to ask your accountant

• Seven ways to make your small business accounting more accurate