General Misconceptions
1. Accountants are just glorified bookkeepers and are worth the same.
An accountant will cost you many times more than a bookkeeper but they are two distinct jobs. You can learn to be a bookkeeper very quickly but a qualified accountant will be studying for a minimum of four years and must then prove himself with practical experience to gain the right to practice. Accountants are analysers of accounts.
They are assessing the figure work for accuracy, for reasonableness and of course for its tax efficiency. Tax is so complicated now that tax planning has become more and more important to even the smallest businesses. Your bookkeeper is simply recording the information you provide. It requires logical thought, efficiency, and tidiness. An accountant works to save you money both in tax terms and in his analysis of what your figures really mean.
2. My computer does it all so I don't need them as much as I used to in the past.
When computers were in their early development an anagram was commonly used. GIGO. Garbage in, garbage out. The output from accounting software is only as good as the information put in.
We have often come across computer generated accounts where expenditure has been miss-analysed, for example hire purchase payments included within fixed asset purchases, fixed asset sales deducted from fixed asset purchases, the "sundries" account full of unknown items because the book keeper did not know where to put them, tools and equipment put into purchases for resale, credit balances on sales ledger and debit balances on the purchase ledger etc etc.
The only thing the computer-generated accounts can efficiently achieve is a balanced trial balance. Everything could be in the wrong place but it will still balance.
3. Accountants are just there to pick up the pieces so I don't need to involve them in my day-to-day decision-making.
But there will be more pieces to pick up, more expensive mistakes to rectify, more time wasted sorting out missing information and therefore more costs. It is essential that you involve the accountant in every major decision you make otherwise you may well regret it.
4. They try to charge a premium price for something anyone can do.
The simple truth is that the qualification period is there for a reason. Just anybody cannot do it as well, as efficiently or with the ability to save you as much money.
5. Since they are all the same the best way to choose is on price.
Low price means the following:
- No money to spend on training courses to maintain the knowledge to make you money or save you money.
- No money to spend on good quality staff and instead you see a constant stream of juniors who know very little and do very little.
- No money to spend on systems to ensure that deadlines are not missed.
- No money to be able to afford Professional Indemnity Insurance.
- No money to keep up to date with technology so that you lose any advantage of cost savings associated with modern IT.
- No money means taking short cuts, which will cost you dearly in the long run.
6. They are terribly boring and I will not understand what they are saying.
Don't employ the first one you meet. See several and try to get to know them before making a decision.
7. All accountants are rich and they will not understand my money worries.
In the past accountants were not paid during their training contracts so obviously had to come from better off families. However this all changed in the 1960s and therefore accountants qualifying after this time came from a very mixed background. Talk to a few and you will gain a better idea of whether you can discuss such concerns with them.
8. All accountants are a safe pair of hands.
By their nature most accountants are risk adverse but trust takes time to build so take your time and make your decision slowly.
9. I have done a course so why do I need to take any further advice?
There are many good courses available to help people start up and then grow their businesses. However the most successful businesses are those who have a team or a board that meet regularly to make important decisions. Small businesses don't have this luxury and the next best thing is to have a mentor. The accountant makes an ideal mentor.
10. Being in business can't be that hard if so many people are doing it.
But why do so many businesses fail? The statistics are frightening with 80% of all businesses failing within five years and a staggering 96% failing within ten years. As an optimistic entrepreneur you are only seeing the successful businesses and not noticing the failures.
11. I don't need advice because I know what I am doing.
One management guru once said that most business people were "technicians having an entrepreneurial seizure". What he meant was that to run a successful business requires a number of separate skills. We have identified 14 independent roles within a business yet most start-ups have just the technical knowledge to product goods or services. Without the other skills your business could be doomed to failure.
