It’s a common misconception that a person needs to pass exams before they can become an accountant. Unlike many professions, anyone can call themselves an accountant and offer their services to the public. This can make it difficult for businesses who are trying to pick an accountant. So how do you choose an accountant?

Many of the well known names in accounting (such as Deloitte, EY, KPMG and PWC) are out of the price range for small businesses. So most people rely entirely on recommendations for friends with no idea if the accountant they have chosen is doing a good job.

Checking their qualifications

Firstly it is really important to check that your accountant is qualified.

There are lots of different accounting qualifications. The key ones to look out for are ACCA, ACA, CIMA, CTA, ATT, AAT, CIPP, IAB and ICB.

CTA and ATT focus on the tax side of accounts whilst CIMA focuses on management accounting, CIPP is a payroll and pensions qualification and IAB and ICB focus on bookkeeping.

It is completely acceptable to ask an accountant to show you proof of their qualifications. You will be trusting them with lots of personal and financial information so good accountants won’t be offended if you ask for proof that they know what they’re talking about.

In addition to getting ‘exam qualified’ if an accountant wants to offer services to the public they should also have a practising licence from the professional body they have studied with. Professional bodies like AAT make it easy to check if your accountant is licensed by giving you a place to check on their website.

Other professional bodies have similar arrangements and if you’re not sure you can usually get in touch with them through their websites to ask if your accountant is licensed.

Being licensed is different to being qualified as to be licensed they must also have experience, insurance, continuity cover (someone who will take over if something were to happen to your accountant) and they will also check that your accountant is doing enough training each year to stay up to date with all the changes that can happen in the finance world. If you have a complaint to make about your accountant you can make this to their professional body. AAT also require a DBS check of their licensed accountants and ensure they comply with anti-money laundering requirements.

AAT list the services that their licensed accountants can provide and only allow them to provide services where they have enough experience. Choose an accountant that can provide all the services you will need as your business grows. You may not need payroll services yet or limited company accounts, but choose an accountant who can provide these services as you grow (and wants to help you succeed and meet your business aspirations!).

Even if you choose an accountant who is not qualified, you should still ask to see proof that they have the necessary insurances (professional indemnity insurance and public liability insurance). They also legally need to comply with data protection and anti money laundering legisltation so they should be registered with ICO and either HMRC or a professional body for anti money laundering supervision. If they provide accounting or bookkeeping services without this as a minimum they are committing a criminal offence and you should steer clear of them!

How do you choose an accountant?

It’s also ok to ask an accountant if they are regularly training and reading up on the latest tax and accounting rules. The legislation can change so fast that even if they qualified in the last 5 years there will still be lots they don’t know if they’re not making the effort to keep up to date.

No accountant can know everything, so if you have complex questions they may need to do a bit of research and get back to you, but if they have to research everything before giving you an answer they probably don’t have the skills you will need.

Even if you appoint an accountant you are still responsible for keeping accounting records and getting your tax returns correct, so ask questions about anything that doesn’t look right to you and if you are really concerned about anything ask for a second opinion.

So what else do you need to consider aside from qualifications?

The main piece of advice I would give you is to pick an accountancy firm (or individual) that is of a similar size to your business. Large firms can offer services such as audit that are required by the bigger businesses but generally charge more and give a less personalised service. A small firm will normally charge less but care more.

Whilst technology means that you no longer need to be geographically close to your accountant to receive a good service, it may be easier to use someone locally that you can meet face to face. This will help to develop your working relationship so your accountant can become the trusted business advisor you need.

Most accountants offer a free initial consultation so you can get a feel for whether they are the right fit for your business. It is a good idea to meet a couple of accountants to make sure you are happy with your choice.

Be very wary of companies that help you get tax repayments but take a percentage cut of your repayment. These companies which are generally online often provide services that would be very easy for you to complete without an accountant and even if you do want help, your local accountant can give you more reliable advice and it may cost you a lot less.

Whilst it is unusual for accountants to publish their prices on a website, they will normally give you a fixed quote when they meet you. Be cautious if an accountant tells you their fee will be based entirely on hours worked as this doesn’t give them much of an incentive to work efficiently and it can be difficult to prove they haven’t spent as many hours working as they say they have if the bill comes out much higher than you were expecting.

Everybody has a different opinion on tax avoidance. Some business owners want to minimise tax liabilities by any means possible (even if it would be illegal) whilst other business owners want to know that they are doing everything correctly so they don’t have to panic if they get an inspection or enquiry from the tax man. Have a chat with any potential accountant to see if their moral code alligns closely with your own as far as tax avoidance goes. I would recommend picking an accountant who wants to operate on the right side of the law. An accountant who will happily lie to the tax man probably won’t hesitate to lie to you too.

Above all pick someone that you feel you can ask for help. Even if a question seems silly or too simple to bother someone with, your accountant is there to help you not judge you.

What can you expect when you do appoint an accountant?

Your new accountant will ask you a lot of questions which may not seem relevant to you. It might seem like they are being nosy but personal questions such as are you married and how much does your spouse earn? Do you have children? Do you have any disabilities? But this will help them to help you and spot potential tax planning opportunities.

They will also need to see ID for you such as a passport, driving licence and utility bill. Again they are not being nosy, they have to keep copies of these documents to conform with anti money laundering regulations.

It makes life much easier if your accountant is also your registered agent with HMRC. This means that they can liaise directly with HMRC to sort out any issues and check information with them. To get this set up your accountant will ask you to sign a paper form 64-8 or will ask HMRC to send you a code through the post which your accountant will then need you to send to them.

How do you choose an accountant - man with magnifying glass looking at letter of engagement.

Your accountant will also send you a letter of engagement which you should read through carefully (even if it is really long!) as it is an important legal document. They will need you to sign this (at Hassle Free Accounts and Tax I send these digitally so they can be e-signed instead). Even if you do not sign the letter of engagement, many accountants include a clause which means that if you act like you are in agreement (for example by sending over your books and records) then they can take this as acceptance of their terms. So if you have any issues with what you are signing up to, get in touch with them rather than ignore the letter!

Do I need an accountant?

Not everyone will need an accountant when they start a business. Many small businesses manage their bookkeeping and tax returns without help and only choose to appoint an accountant when their affairs get more complex or they don’t have the time to do everything.

It is a good idea to meet with an accountant when you get started though even if you are not sure you definitely need them. They should be able to give you a few tips over a coffee and give you some idea of when you will need them. If you are planning to set up a limited company or have already set one up you should definitely have a chat with an accountant. Don’t wait until after your first year when deadlines start coming up but get an accountant appointed as soon as you can. They can let you know if a limited company is the right choice for you, as well as advise the best way to take money out of your company without creating a large tax liability. They can also help you to budget for your tax liabilities in advance.

If you have any questions please get in touch with us.