Startups Guide
1. I have no idea of what an accountant does so how am I to chose one when there are so many in the Yellow Pages?
Ideally you would like two or three people to recommend the same accountant on the basis of outstanding performance. However the chances are that any business acquaintances you have are all using different accountants so you need to have an objective method to help you choose.
You need to consider their qualifications, do they have professional indemnity insurance, what is their reputation with your bank manager, the Taxman and the VAT man:
- Do they act for similar businesses so have the necessary expertise?
- Can they show you any testimonial letters from happy clients?
- Can they offer a wide variety of services, which will be useful for a growing business?
- Do they offer help with technology?
- Are they accessible?
- Do they have parking so you can visit them easily?
2. Will I miss some important deadline if I only see an accountant once a year?
Not necessarily. Many accountants use technology to keep in touch with their clients on a monthly basis, providing tips and hints to keep you on track. You may find that in the early months of a new business you will be phoning your accountant regularly so you may well decide you need a firm who have several senior staff who can answer your questions whenever you call. A sole trader will inevitably be unavailable for long periods of time.
3. Will my accountant really be on my side if the Revenue or VAT men investigate me or is he actually working for them?
This all depends upon the reputation of the accountant you choose. Some accountants may be keen to keep on the right side of the Taxman or VAT man because they are working with them all of the time. Others may have an antagonistic reputation arguing the smallest points on principle, which may cost the client more in fees than the tax being saved.
It's a question of balance. You need an accountant who will argue strongly on the big issues but be prepared to compromise on the smaller issues if it saves you fees. Ask your accountant if he offers fee protection insurance as this is a good indicator that he is happy to challenge the Taxman and VAT man in the right circumstances.
4. Accountants are intellectuals and they will make me feel stupid when I don't understand what they are talking about.
The simple answer is to meet with a number of accountants and talk to them. Ask them lots of questions and shortlist those who avoid jargon and speak in plain clear language that you understand. It is the accountant's problem if you don't understand him not yours.
The real expert is the one who can make a difficult subject sound simple. It is possible that the accountant who talks gobble de gook is actually not as qualified or experienced as he pretends and is trying to sound like he knows what he is talking about when he doesn't.
5. How do I know if they have the right qualifications and experience to really help me?
Qualified Chartered or Chartered Certified accountants have spent probably at least four years working under a training contract whilst at the same time undertaking formal study for their professional exams. This will be followed by a minimum of two years working in a professional practice to obtain a practising certificate. Only then can they start their own business. Ask about your accountant's qualifications and practical experience.
6. What do I do if my accountant gives me bad advice, which costs me a lot of money?
Qualified accountants are required to have a minimum level of professional indemnity insurance otherwise their professional bodies do not allow them to practice. Unqualified accountants have no such requirement. So ask. Professional Indemnity insurance is very expensive and good accountants work very hard to ensure that they do not have claims.
7. Accountants are very expensive at a time when I am not earning much but should I take the risk of not employing one?
The early days of a business are its riskiest. More businesses go bust in their first year than any other. Even the Taxman and VAT man will fine you if you don't register with them at the right time making life even harder for the start-up business. You cannot hope to learn what an accountant has spent at least six years learning so don't try. Your job is to make the business a success. Delegate everything else.
8. I keep reading about so many business people and companies going bust so can a good accountant prevent me risking my home if I go into business?
A great accountant will tell you the truth. If your idea is flawed he will tell you. If your prices are too low he will tell you. However the best idea or the most fantastic new product can still fail and going in to business is a risk. If you are not prepared to take a risk you should not consider going into business. Your accountant will be able to explain the options to limit the risk but limiting the risk may well limit your potential particularly when it comes to obtaining bank finance because they will always want you to secure all of their lending.
