Whether you run a small business, own a buy-to-let property, or you need to file a self-assessment tax return, hiring an accountant can save you time, hassle and money.
According to Karen Barrett, chief executive at Unbiased.co.uk, an accountant should save you more than they’ll charge in fees. “Because of their expertise, they’ll be able to spot tax efficiencies that aren’t on your radar,” she explains.
“This could be anything from increasing the amount you pay into your pension to restructuring your business, potentially saving you hundreds, even thousands, of pounds.” And if you’re self-employed, you can claim the cost of hiring an accountant as an allowable business expense.
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Accountants will also ensure your affairs are compliant, shielding you from penalties and tax inspectors. And if you’re running a business, they could even make it easier to raise finance and attract new customers.
Clive Lewis, head of enterprise at the Institute of Chartered Accountants in England and Wales (ICAEW), explains: “Since the recession, banks have become much more selective in the businesses they lend to. An accountant can help you present a convincing picture of your business’s financial condition and future prospects.”
But with the world of accountancy spanning everything from personal taxation through to the tax affairs of a multinational, it’s important to find an accountant that’s right for you. As a starting point, there are a number of search engines you can use to find an accountant in your area.
“We offer an online search to help you find one of our members,” explains Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA). “This allows you to refine your search by specifying the location and services offered.”
Similar searches are available on the ICAEW’s website and through Unbiased.co.uk, enabling you to put together a shortlist of four or five accountants. At this point, Mr Lewis recommends looking at the their websites. “As well as giving you further details about them and the services they offer, you can tell a lot from a firm’s website,” he says.
Once you’re found an accountant you’re happy to work with, do a bit of homework. Unless you found them through one of the professional bodies’ websites, check out their membership and qualifications. Also ask for testimonials and follow up at least one of these.
Meet face to face
To get an idea of whether they’re right for you, it’s sensible to meet them. As it’s a relationship that needs to suit both parties, many accountants will offer a free initial consultation. This is a good opportunity to find out about their business and their experience with similar clients. “Talk to them about what you want,” says Ms Barrett. “A good accountant will be interested in you and can tell you where they can make a difference.”
In this meeting it’s sensible to talk about how the relationship will work. If you meet one of the partners, it can be disheartening to find that a junior will be taking on your accounts.
Fees should also be on the initial agenda. Mr Roy-Chowdhury says that as a rough guide, a tax return should cost around £200, with fees increasing if it’s more complex. “You could be charged a fee for each individual item or, if you have ongoing requirements such as business accounts, they might charge a monthly fee,” he says. “They can give you an estimate at this point.”
Your bill can also be affected by the way you keep your records. For example, if you keep manual records it’s likely to take an accountant longer than if you hold them on a spreadsheet or software programme.
If everything’s in order, let them know. “Your accountant will send you an engagement letter outlining what they’re doing and what it will cost you,” says Mr Roy-Chowdhury. “This needs to be agreed and signed before they’ll start working for you.”
While your relationship with your accountant should be long and profitable, Mr Lewis says it’s wise to review it every five years or so. “Their business might change or your needs could alter,” he says. “Make sure the relationship still works for you.”
To keep costs down, you might consider an online accounting service. These give you access to telephone or online support from an accountant and can be used for everything from completing your self-assessment tax return to running your business accounts.
Firms such as Boox and Crunch offer online accounting to freelancers, contractors, start-ups and small businesses, with charges starting from £25 a month.
You can also get an online accounting service to help you with your tax return. Among the companies operating in this space are TWD Accountants, Boox and FixedFeeTaxReturn, with prices starting from £99.
But although this can be perfect for straightforward tax processes, Mr Lewis cautions against relying solely on these types of services. “We do advocate a face-to-face service as this enables them to gain a better understanding of your position,” he says. “There may be things you hadn’t even thought were relevant.”
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Five questions to ask an accountant
What's your professional standing?
Anyone can call themselves an accountant, so check their qualifications and that they’re a member of the Consultative Committee of Accountancy Bodies (CCAB). The CCAB is an umbrella organisation for professional bodies such as ICAEW, ACCA, the Chartered Institute of Public Finance Accountancy (CIPFA), the Institute of Chartered Accountants Scotland (ICAS), and Chartered Accountants Ireland, giving you the reassurance that the accountant you’re dealing with has been vetted and has professional indemnity insurance in place.
What services do you provide?
Think about your potential future requirements as well as your current ones, especially if you’re planning a big change, such as setting up a business. Also think about the other types of advice you might need, as some firms will be able to provide financial and legal advice too.
What will it cost?
Get an estimate of fees before you engage an accountant. If they sound a bit hefty, Karen Barrett, chief executive at Unbiased.co.uk, recommends challenging them. “A good accountant will be able to explain why they charge more for their services,” she says. “It can be worth paying a higher fee if you get a better service.”
What will you expect from me?
Although an accountant will take away a lot of the hassle associated with your tax bills, you’ll still need to provide them with information. Find out what they might need and the most efficient ways to provide this – it could save you time and money.
What's your business like?
“Look for a firm that has clients like you or, if you’re running a business, is a similar size to you,” says Clive Lewis, head of enterprise at ICAEW. “They will be more understanding of the issues you might face.”
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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