Pin-the-tail-on-the-donkey games are popular with young children and parents alike. Just put on a blindfold, spin around a few times and enjoy as the person struggles to stick a pin into the picture of a donkey that’s missing its tail.
Traditional games like this are fine but what worries me is when we take this approach to choosing the professionals who handle our personal and business matters, such as your Accountant, who may not be have any qualifications at all.
Make sure your accountant is qualified
It is very important to make sure that your accountant has been ratified by one of the main accountancy bodies such as, the Chartered Institute of Management Accountants (CIMA), the Institute of Chartered Accountants (either ICAEW or ICAS) or the Association of Chartered Certified Accountants (ACCA). These bodies hold their members to account in the event of bad practice, and so you'll be afforded some protection should any problems arise, unlikely though this may be.
Choosing your Accountant
First things first, try to choose an accountant before you start your business who will then be able to help you get the structure of your business right from the start, with your initial business plan as well with tax planning.
If you need an accountant just for your personal accounts, don’t start looking for one two days before the tax return deadline. Give yourself a fighting chance to find a good one before January 31st.
Now, some people will go on personal recommendations. But who's to say that just because your mate down the pub says his accountant is "OK,” that they really are any good or suit your needs?
Accountants differ widely in qualifications, skills, experience, friendliness, and it is crucial that when entering into a business relationship that will, if successful, last the life of your business, you choose carefully.
Look at what your business actually needs from the relationship; if you are a small business and you require a degree of handholding, don't opt for a practice that specialises in multi-nationals. It is wise to have a list of your 'must haves' and look for the accountant that ticks most of your boxes.
Costs - Fixed or hourly rate?
The next area to look at is fees. How much does the accountant charge? Do they offer fixed fees? If they're the old fashioned type then an hourly rate will be the norm and I would suggest you avoid them. Go for fixed fees so that you know what you're getting and at what price - that way you won't get a surprise when the bill arrives at the end of the year.
Needs
It is important that you actually like your accountancy team; they'll be advising you on some pretty vital stuff and so you have to be able to a: trust them enough to take their advice and b: feel comfortable enough with them to be completely candid about your finances.
So, choose people you click with and it is not unprofessional to be somewhat instinctive about your decision.
A good accountant will want to speak to you regularly and will be happy to see you at your premises at time that are convenient to you, even if that means when you finish work at midnight.
Ask the accountant what happens when they take time off. Some smaller firms are part of a national network of accountants which helps them plug their knowledge gaps as well as ensure they have high quality cover should they fall ill or be away on holiday.
If you're leaning towards a small accountancy practice, ask yourself what back-up they have if a tricky tax issue crops up. After all, when you go to your GP, you expect them to know a little about most medical ailments and to send you to a specialist if needed.
Choosing an accountant doesn't have to be pot-luck. Make sure you have a strategy and don't just pick the first person you come across, after all, not all accountants are created equal!
Summary
1. Confirm that they are qualified and sufficiently experienced to look after your affairs
2. Make sure that the accountant has sufficient cover and has access to specialist advisors
3. Look for an accountant who provides a proactive service – working with you throughout the year and not just at year end. This is the only way in which you can be sure that you take advantage of all the tax saving possibilities available to you and your business.
4. Always insist on a fixed fee arrangement with your accountant so that you are in control of fees and not open to any nasty surprises when the invoice lands on your desk.
5. Finally make sure you choose an accountant you like. This may seem a strange statement but to get the most out of your accountant's expertise you need to work closely with them and to do this successful you need someone you trust and are comfortable with.
Shahbaz Husain at Abacus Gold Ltd (shahbaz@abacusgold.com [1]).