Who needs an Accountant?
Whether you have just started operating as a sole trader, already co-manage a partnership business or are considering setting up your own limited liability company, it is likely you will have already considered which are the best ways to efficiently manage your company’s finances.
After all, ensuring your finances are in order is key to the management and survival of any business.
Hiring the services of an accountant is not only best practice, it is also the easiest and most reliable way for all business owners to ensure their business is legally compliant.
Indeed, unless you are an experienced accountant yourself, failure to understand and comply with the latest legal requirements and UK tax legislation could potentially result in fines to the company, to yourself, or even worse, leave you facing further legal consequences
Why is hiring an accountant important?
After all, company finance is not just about balancing the books. In fact, there are a number of reasons why hiring an accountant could be one of the most important decisions business owners will take.
Firstly, for new business owners and entrepreneurs, most accountants can also provide support with company formation, meaning you can rest assured that your business will be registered and set up legally and correctly.
Most importantly, however, when it comes to meeting your business’ regulatory and legal requirements, the knowledge of an experienced accountant can be priceless.
For example, in addition to preparing and submitting your annual company accounts, accountants have direct and practical experience in filing annual confirmation statements with Companies House and understand the ins and outs of corporation tax law, which is significantly important to ensuring you are not overpaying on your tax liability.
Furthermore, when considering your business’ financial plans for the years ahead, accountants can also provide insightful guidance into tax planning which could be crucial for accurate forecasting and managing future cash flow.
For instance, for smaller businesses, accountants can support in initial VAT registration upon exceeding the VAT threshold as well as with subsequent monthly and quarterly VAT return submissions.
For those unfamiliar with UK VAT legislation, having this support on hand can be vital as severe penalties are in place for getting it wrong.
Due the nature of their work, most accountants also have good relationships with numerous banks across the country and can help start-ups and business owners to open a UK business bank account.
Indeed, this topic has become increasingly important in recent years as more and more new businesses continue to be turned away from opening new accounts as part of banks’ Anti Money Laundering and Know Your Customer (KYC) requirements and checks.
For companies owned and administered by overseas businesses or directors, this could be a particular problem as UK residency is often a prerequisite to meeting these requirements.
Fortunately, however, a number of accountancy firms are now able to support in these areas.
For example, in addition to their full accountancy services package, Icon Offices offer support in UK company formation, opening local business bank accounts as well as providing legal and virtual office addresses for company registration.
Furthermore, by providing all these services remotely, it means overseas directors are not required to visit the UK and can have confidence knowing their business affairs are in capable hands.
How to choose the right accountant?
Indeed, having an accountant you can trust will not only relieve you of unnecessary stress, it will also allow you to focus on doing what you do best, running your business and generating profit.
But given the importance of accountants to your business’ financial affairs, how exactly do we know which accountant is the right one to choose?
First of all, when making your initial searches or enquiries, it is always recommended to review any accountant’s background, reputation and credentials.
In most cases, a quick Google search can often reveal client feedback about their services and pricing. Furthermore, a quick search can often reveal whether an accountant has any specific experience or expertise working with similar clients or in the same area as your businesses.
Whilst specialist knowledge in same industry doesn’t necessarily have to be an essential requirement, it could potentially be advantageous as accountants experienced in your area of work may have insights into industry specific legislation which governs and may subsequently impact on your business operations.
Secondly, it is important to remember that by working with an accountant, they will have access to all of your company’s confidential financial information.
For example, accountants will know exactly how much money you are earning, who your suppliers are, who you are selling to as well as your costs.
Indeed, there have been numerous past examples of accountants who have copied or replicated their clients’ business models, especially in industries with few costs and barriers to entry.
Furthermore, with no formal regulation in place to prevent this, trust and reliability in any working agreement is of the utmost importance and so choosing a reputable accountant or accountancy services provider who can guarantee your confidentiality is key to protecting your business interests.
On this point, it is also very important to ensure that any fee structures are formally agreed before entering into an agreement with an accountant or accountancy services provider.
With access to all your financial information, there have also been cases where accountants have increased their fees as soon as they see business profits increase, even if it doesn't involve them having to conduct any extra duties.
For example, if number of financial transactions and invoices you issue per year stay the same, but the value and profitability of each increases, some accountants may see this as a perfect excuse to increase their fees.
Technically, however this should make no difference to the amount of work that your accountant has to do as the number of transactions that you engage in remains the same.
Furthermore, there have also been instances where accountants increase their fees based on the amount of tax that they claim to have saved the business.
Though, there are, of course, legitimate reasons why an accountant may charge you extra, for example, where time and research has been spent on investigating specialised taxation rules and regulation surrounding your area of trade, it is important to make clear to your accountant that you do not wish to be charged extra at a later date based on the amount of tax that they have saved you unless they can prove that extra man hours have been invested and extra costs have been incurred along the way.
It is therefore recommended to choose an accountant or accountancy services provider who is professional, discreet and confidential with your information as well as transparent with regards to their fee structures and pricing.
Icon Offices, for example, offer discreet and confidential accountancy services with upfront costings and fee structures. Furthermore, if looking to change accountants, they can also liaise with your existing accountant to make the switch process quick and easy.