Hiring an accountant: a small business guide

By Julie Corkish on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

If you run a small business, hiring an accountant is one of the best investments you can make.

Running a business isn’t easy at the best of times, but the past few years have been truly exceptional. In a climate where companies are faced with challenging economic conditions, it’s important to seek the right professional advice and support.

Hiring an accountant will free up time to focus on other priorities when running your small business, reducing the risk of errors which can prove detrimental if left to chance.

An accountant can provide specialist advisory services and spot potential financial issues early on, reducing the risk of being investigated by HMRC.

>See also: How to do bookkeeping as a small business

What can my accountant do?

Accountants are more than just bookkeepers. The two terms are often used interchangeably, but in practice are very different. While bookkeeping involves record-keeping, an accountant will provide professional analysis on a business’s finances and give comprehensive advice, as well as taking responsibility for complying with HMRC and Companies House filing deadlines and requirements.

Depending on your budget and how much of the record-keeping you can handle in-house, you might choose to hire both a bookkeeper and an accountant. You may also want to hire other specialists such as a credit controller or a chartered tax adviser; your accountant will be able to advise you on building a finance team as your business grows.

Rising inflation, borrowing and energy costs are putting a squeeze on cash reserves. A business with £1m in stock that owes £100 to a creditor could easily become insolvent if it can’t sell its stock. An accountant can help you manage these competing pressures.

Self-employed people in the UK with annual business income of more than £10,000 will need to follow the Government’s Making Tax Digital rules from 6 April 2024. An accountant will be able to help you navigate these new rules and ensure your business is compliant.

Many accountancy firms offer a “one stop shop” for all services including bookkeeping, accountancy, tax and advice, tailoring bespoke packages to suit your business needs.

>See also: Bookkeeping when you’re a sole trader

How to choose the right accountant

Chartered status and qualifications

It’s worth knowing that anyone can call themselves an accountant, so it’s crucial you check that the person and firm you hire has the right qualifications, training and experience. ICAEW chartered accountants, for example, have a minimum of three years’ in-depth training which includes practical experience. They are bound by a code of ethics, must have professional indemnity insurance and are subject to regulation.

Chartered accountants can offer advice on a range of topics, including staffing and payroll, working with suppliers, managing debtors, business growth and regulation. They can also provide a wealth of information on finance issues, such as raising capital, paying yourself, and dealing with HMRC.

We’d recommend that you ensure that your accountant is an expert in the area where you most need advice. If you’re not sure what help you need or where to start, then ICAEW’s Business Advice Service provides a free consultation to all businesses seeking trusted advice, and can point you in the right direction.

Do you need a specialist?

It’s important that your accountant understands the market your business operates in, and whether your sector is at high-risk from a trading perspective. Some practices will specialise in a certain industry or sector, whereas others will have a much wider range of clients. At the largest practices there are specialist teams that focus on specific sectors, like automotive or property.

Chartered accountants are qualified to offer not just financial advice, but business advice too, so make sure they understand your sector well.

Does location matter?

Although technology means that location matters less than it used to, there’s tremendous value in face-to-face meetings.

It’s important to build a trusted adviser relationship with your accountant, and this often means getting to know them in person, so location can be important.

Having a local accountant may also mean they better understand the specific challenges in your region and support that may be available from your council. You can search for a registered chartered accountant in your area by visiting the websites of any of the UK’s registered professional bodies, such as ICAEW.

Reputation

When hiring an accountant for your small business, it’s worth asking colleagues and friends for recommendations.

What to discuss during your initial consultation

The scope of your business needs and service levels

Be clear about your business needs and check that your accountant can meet them. In addition to the basics such as charges and compliance deadlines, consider, for example, frequency of communication and turnaround time. Be honest about any concerns you may have about your finances so your accountant can help you assess what you need.

Fees and charges

Be sure to discuss fees and charges – and their payment dates – upfront. If different rates are charged for different services and your budget is limited, work out in advance which services you want to prioritise. Keep in mind that hiring an accountant is an investment that often pays for itself, in terms of money, reduced risk and time saved.

Information the accountant needs to proceed

Your accountant will require certain pieces of information, which will likely include key documents, HMRC letters and National Insurance numbers. Find out what you will need to provide and get it ready as soon as you can.

Hiring an accountant for your small business

Hiring an accountant can be an important investment for your small business, so don’t be afraid to make approaches to multiple accountants to ensure you find the best fit. A good accountant – and the professional advice they provide – could make all the difference as to whether your business survives in tough economic times.

Julie Corkish is head of practice at ICAEW

Further reading

Best accounting software if you’re a sole trader

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