Choosing an Accountant

Of all the advisers you are likely to encounter when running a business, a good accountant is perhaps the most valuable one to have. Not only will they assist with preparing your accounts, but they can also save you and your business money. If your accounts are in order and you are up-to-date with payments, you are far likely to be more able to concentrate on building the business. It's a good idea to ensure that you have an accountant to advise you before, not after, you start your business, as they will be able to help with your cash flow forecast, business plan, funding and setting up the business structure.

The good news is that there are a few key steps you can take to maximise your chances of finding an accountant who meets your needs.

Look for recommendations.

Ask business associates, colleagues or friends if they would recommend their own accountants. You'll soon discover the ones to avoid and the ones offering good service.

Alternatively, ask your bank manager or local Business Link for advice on accountants in the area or log on to the Institute of Chartered Accountants, the Chartered Institute of Management Accountants or the Association of Chartered Certified Accountants for a list of local accountants.

Check that the accountant is fully qualified.

In the UK, anyone can legally call themselves an accountant, even if they have no professional qualifications. However, if any laws are broken, it will be you, not your accountant, who pays the penalty. It is therefore essential to ensure that your accountant is suitably qualified and is a member of an approved accountancy body. Look for the following letters after their name:

• ACA or FCA if they are a chartered accountant
• ACCA or FCCA if they are a chartered certified accountant
• ACMA or FCMA if they are a chartered management accountant

These qualifications will normally be displayed on any promotional material or the company's website, and mean that the accountant has gone through numerous exams before qualifying as well as spent several years gaining practical experience.

Do they have expertise in dealing with your sort of business?

Choose someone who already deals with companies of a similar size to yours so they will have experience of the problems you are likely to face and will be accustomed to claiming any tax breaks that may be available.

Ask how many businesses of a similar size your accountant handles and whether they have specialist knowledge of your particular industry. Although most qualified accountants would be able to provide a service to you, there are now several specialist firms of accountants across various market sectors; these firms generally offer a far superior level of service than you would obtain from a generalist (high street) accountant, who would typically serve all trades. A specialist accountant will have a far greater degree of knowledge to the areas which will specifically concern you, and with 'hot topics' relevant to your industry.

What sort of business services do they provide?

Can they help with tax returns, vat and payroll? Do they provide business advice or further information to help grown your business?

Set up an initial meeting.

When you have whittled your initial list of prospective accountants down to about 3-4, arrange to meet them in person to discuss your needs and to find one you trust and can work with. Check in advance whether the first meeting to discuss their appointment is free of charge; specific advice may be charged for.

Take along a copy of your business plan and details of areas in which you would like the accountant to be involved; for example, financial reporting, business advice, tax and auditing work. Tell them what you are planning to do and check whether they offer the services you will need to build your business. Ask for their comments on your business plan. Tell them the accounting records you keep. Can they suggest

Find out how they charge.

Ask for a quote for the first year's fees. Is there a fixed annual or monthly fee to complete all business tax requirements, or do hourly fees apply? If there's an hourly fee, does this vary depending on the seniority of the person doing the work? Compare the charges of all accountants on your short-list. However, you will often get what you pay for and the cheapest is not necessarily going to be the best.

It is very important to consider exactly what is included when comparing costs, since the more expensive packages may be "fully inclusive", compared with those which are marketed as cheaper but you will be subjected to extra charges, such as completion of your personal tax return.

Who will be handling your work?

Establish who at the firm will be dealing with your work - it may not only be the person you are meeting with. Ensure you are happy to work with this person and that they can give you and your business the attention it needs as and when you need it.

Ask for references.

Always ask to speak to existing clients before signing up; any decent accountancy firm should be happy to arrange this.

After the appointment:

• After appointing your chartered accountant, you should receive a letter setting out their terms and conditions.
• After your accounts have been prepared, you should receive a letter setting out future tax liabilities.
• You must tell your chartered accountant as soon as possible of changes in your business, problems, circumstances etc.
• Don't be afraid to tap into your chartered accountant's knowledge for help with running your business.
• Review your chartered accountant's charges every 3-5 years.
• From time to time, assess whether your accountant's services still match your business needs. If you are not getting what you want - ask.
• Make sure your accountant keeps in touch with your business - not just at year end. If you feel your current accountant no longer meets your requirements for whatever reason, get a new one.
• If you decide to sell your business, tell your chartered accountant - they could plan to minimise tax liabilities and even help with the sale.