Choosing an Accountant for your Startup

With so many accountancy firms to choose from, how do you choose a good accountant? Remember, what’s good for one business, may not be quite right for the next. Certainly, with your startups’ finances, you’ll want to choose an accountant you can trust. Not only that, but one that’s qualified and ensures you’re compliant with Companies House and HMRC. Therefore, choosing an accountant for your startup is definitely an important decision. The right accountant will keep on top of your accounts. In addition, mitigate fines and penalties and any other unwanted tax bills. Ultimately, this supports good cash flow & your ability to grow, so choose the right accountant for your startup.

How to Choose a Good Accountant?

It’s a good idea to ask people in your network. For instance, ask them how they went about choosing a good accountant and do they have an accountant they trust. Most importantly, what has been there experience with the accountant(s) they’re using or previously used? Try to drill down as much as you can. Whilst it may seem like a ball ache, avoid choosing an accountant without checking them out for the sake of ticking it off your to do list.

In addition, compare this with a general online search for local accountants. Compare at least 3 accountancy businesses and weigh up the pros and cons for each. As a startup and particularly in the early stages, cost is a driving factor for a lot of the choices we make. On average, you’re looking at around £500-750 for annual accountancy services. For example, for account filing and tax returns, although the more complicated and niche your startup, the higher the price. Your location may also affect price, but as a ballpark figure in and around London, this is what you can work towards and compare quotes with.

Look for an accountant who offers an initial free, no obligation consultation. This allows you to get a feel for the working relationship. In addition, it’s an opportunity for you to ask questions, which are specific to your needs and your startup.

Choosing an Accountant for your Startup

First of all, decide what accountancy services you need and why. It’s important to be clear in your mind about what you need and who can provide this to your expectations. Remember, accounting and financial reporting requirements differ according to your business structure.

Secondly, check that your shortlisted accountant(s) are qualified. For example, the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Chartered Certified Accountant (ACCA). This gives you the chance for recourse in the unfortunate event that mistakes, or other issues crop up.

In addition, there are several accounting certifications to look out for. The most common include Certified Public Accountant (CPA), Certified Financial Analyst (CFA), Certified Management Accountant (CMA) as well as others. This means obtaining proof and/or verifying their licence for reassurance.

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Checklist for Choosing an Accountant

  • Consider the type of accountancy services and whether it’s a good match for your startup. For example, if you’re in Tech, you might find a better choice is an accountant who has extensive experience working with Tech startups and who utilises cloud-based solutions that support your working practices.
  • Weigh up the pros and cons carefully. Price can be used as a deciding factor between those on your shortlist, which meet all your needs and share similar positives. For example, is it important for you to correspond electronically, by phone or face to face? Most importantly, ask your shortlist to confirm how they can add financial value and be sure to choose an accountant who will be a good business partner.
  • Consider local service providers with those that are maybe outside of London, should cost be a challenge. However, please ensure you still weigh up the other pros and cons and try not to solely focus on price.
  • Check what you’re getting for your money (timescales and the deliverables, including expected interactions and what you need to do to support your accountant).
  • Check which accounting software they use, especially if you’re already using an accounting tool to record expenses, issue invoices and manage your startup’s cash flow.
  • Investigate client testimonials, online reviews and star-ratings. Don’t just read what’s on their website either. For example, check if they’re on Trust Pilot, Google My Business, and other review websites.
  • Ask about any additional nice to have benefits for signing up. For example, referral bonus schemes if you refer someone else and/or other promotional incentives.
  • Review terms of business, terms & conditions and/or other contractual agreements thoroughly. Be sure to read the small print before signing anything. Most importantly, check payment terms and cancellation fees and obtain an engagement letter. Most accountants send these as a matter of course, but if not, ask for it.

Accountancy Services

Remember, accountants provide a variety of helpful services, which free you up to focus on what you’re good at. Most importantly, accountants take care of financial legal obligations. For instance, if you have an incorporated limited company or you’re a limited liability partnership (LLP). For example, an accountant will take care of annual account filing, confirmation statements and other tax-related submissions to HMRC. In addition, sole traders and partnerships can also arrange for an accountant to complete self-assessment processes and forms.

Aside from these things, accountants provide general booking keeping services. It’s important to keep on top of your financials. If you have trouble with paperwork and/or just don’t like financials, it’s a good idea to look into booking keeping services. Don’t let receipts and other paperwork mount up. This could easily give rise to mistakes and things being missed. If this happens, you’re more likely to end up with increased accountancy fees.

Some accountants provide other services, including payroll and HR. For example, staff holiday and sick pay, which means you can house all these tasks under one roof.

What do you need to do to help your Accountant?

Most importantly, keep on top of your banking. Ideally, regularly check your account(s) online. Otherwise, at minimum, thoroughly check bank statements. For example, check for any abnormalities and review your direct debits to make sure they’re correct and up-to-date. Remember, things change and things can get missed if you don’t have a process in place.

To facilitate this process, it’s important to:

  • Forecast your cash flow carefully and regularly monitor, update and maintain it. It’s good practice to complete a monthly review, so check your forecast against actual sales and costs. This links with your business plan and budget processes.
  • Store receipts and invoices, whether paper or electronically.
  • Ensure you calendarise key dates, including payroll, VAT and other accounting deadlines to help you avoid any penalties. Not all accountants are proactive and keep on top of these for you.
  • Use a cloud-based service to record your transactions, where possible. For example, QuickBooks, FreeAgent, Xero as well as others, but check that they’re tax digital and meet HMRC requirements. Cloud solutions will also automatically pull your bank transactions, which streamlines your admin processes and provides you with a real time view of your cash flow. Failing that, a good old-fashioned spreadsheet will surface.
  • Avoid cash transactions, since these can be more difficult to keep track of and may also be frowned upon.
  • Chase debtors regularly and make sure you keep track of these to identify any repeat offenders. Equally, make sure you pay your suppliers on time.
  • Go Cardless for collecting payments and consider all your customer payment options so they facilitate your accounting processes with ease.

Further Support

As a startup owner, I appreciate you’re spinning several plates. However, for a little bit of upfront time and effort, it’s more likely to save you time and money. For instance, a bad choice could be the difference between paying additional costs to put things right. For example, time, effort and cost in finding an alternative accountant.

As a general point, try not to be too hard on yourself if things don’t go to plan. We’re all human and make mistakes, whether in our personal and/or professional lives. I hold my hand up for that, but I also appreciate what I’ve learnt from those mistakes and the decisions I’ve made during my startup journey.

If you’re looking for some expert startup business advice or coaching services, contact Maximum Solutions Consulting Ltd. You can also visit the Business Advisory Services London and Business Coaching London pages to find out more.