Ittr Money

When setting up a small business choosing an accountant should be high on the list of priorities, although it is often something that is overlooked until the accounts need preparing or the business owner runs in to a problem. 

The role of the accountant has changed from a person who offers tax advice and deals with compliance work, to that of an all round business adviser. An accountant will be able to assist in many different areas of your business including the initial set up, obtaining funding to get the business up and running, advice on day to day management, advice on human resources, advice on setting up control systems (sales ledger, purchase ledger, stock control) and advice on cash management amongst much more. 

There are many accountants to choose from and as with everything in life some are much better than others. There are many “cowboys” out there and it is important to ensure that you don’t engage one of these to deal with your business affairs. After all, you want your business to succeed right? An accountant can ‘make or break; a business therefore it is not advisable to choose some incompetent accountant just because he is a few dollars less than a competent alternative. So how do you ensure you find the right accountant for you? 

In the first instance speak to other small business owners in your area. These small business owners were in the same position as you when they first started, therefore they are likely to have seen a few accountants, both good and bad, during their time in business. Speaking to other business owners will give you a feel for which accountants should be avoided at all costs and which ones it may be worth exploring further. 

Based on the discussions with the business community in your area do some research on accountants you consider worth exploring further. Many accountants rely on word of mouth recommendations to win clients but they will still market themselves to other potential clients. Have a look at the accountants’ website. Is it professional looking? Does it give biographies of the main people – are they qualified? Does the firm offer all the services you currently need and are likely to need in the future? 

It is possible for almost anyone, whether qualified or not, to set up an accountancy practice therefore it is advisable to check out the credentials of the accountants. Whilst there are many good accountants who are unqualified there are many poor ones. Qualified accountants are regulated by their institute and bound by their ethical guidelines, therefore adhering to certain conditions to practice, which unqualified accountants do not. The fact that an accountant is governed by an institute should give comfort that there is an external body to go to if you run in to problems with the accountant. There are many different institutes and the ones to look for include ACCA, ACA, AAA, AICPA etc. In reality no one institute is better than the others, although the members may think otherwise. 

Don’t discount smaller practices. Bigger is not always better and you should explore small practices as well. Many small practices are set up by accountants that trained and qualified with the multinational firms (such as PWC, Deloitte & Touche, KPMG etc) with vast knowledge and experience. Since small practices have few staff it is likely your affairs will be dealt with by the partner who will carry out all the leg work.

In slightly bigger practices the partners often start as junior members of staff and work their way up the career ladder, having never had the same experience as those that have worked for the multinational firms. In these practices junior members of staff will do the leg work and the partner will just review the work and interact with the client.  Who would you prefer doing the donkey work for your affairs – a junior member of staff or the partner? 

Once a shortlist of potential accountants has been selected arrange a meeting. All accountants should offer an initial meeting on a no cost no obligation basis, so if a particular firm is going to charge you a nominal fee for meeting discount this firm immediately. Before you have a meeting you must prepare for it. Know exactly where you want your business to be, an idea of how it is going to go there and what you expect the accountant to do to help you. 

During the meeting ask questions about the type of services that are available, ask about who will be looking after your affairs (i.e. the staff structure) and anything else you consider relevant. During the meeting you must decide whether you like the accountant or not. What is your gut feel? Can you work with the accountant? Do you think the accountant actually cares about your business or are you just another ‘client’ to generate some fees from? You should remember that you are looking for a long term working relationship (it is not advisable to change accountants year on year because your accountant will have to learn about your business to be of any use and this takes time) therefore you have to actually like the accountant you will be dealing with. 

In order to get a like for like comparison between different accountants you should ask the same questions at each meeting, and note down the response. Don’t be afraid to take notes during a meeting if they are needed to decide which accountant to go for in the future. 

Don’t select your accountant solely on price. During the meetings the accountant will give some indication of fees for the services. Most accountants charge by the hour and will give an estimation of the time it is likely to take to deal with your affairs, therefore giving an expected fee that is subject to change. Many clients want a fixed fee, which is actually unfair on the accountant. Would you give a fixed price for repairing the roof of a house you have never seen? You can’t charge the same for totally re-roofing a large property and fixing a tiny hole in the felt near a gutter right?

It is reasonable to ask the accountant to provide regular cost updates and detailed time summaries as they deal with your affairs so you can monitor costs along the way. The meetings should serve to provide a ‘ball park’ level of fees, therefore if a specific accountant goes in far too high it can be discounted and if an accountant goes in far too low you have to question why since it is likely the level of service won’t be the same. Whilst you don’t want to pay too much for accountancy services cheapest is not always best and you will get what you pay for. 

In choosing an accountant cost does play a large factor, however the most important things should be the credentials and qualifications of the accountant and the ability for you to work with the accountant. Your relationship with your accountant should be long term and if you don’t like them it is not going to work. 

If you do make the wrong decision and choose an inappropriate accountant it is not a too problematic as it is very easy to change, however it will mean going through the process of researching suitable accountants, devising a shortlist, meetings and then making a final decision all which takes valuable time that could be better spent in building up your business, therefore it is good to get it right first time.