As a business owner you’re wondering how much it will cost to work with an accountant. The answer is not as straightforward as you might think because there are many factors involved. So we want to help you make sense of it all so that you understand the cost and value you receive.
There are 3 common mistakes to avoid when choosing an accountant
We’re going to go through these with you as we want you to avoid making these same mistakes that actually end up costing you more in the long run.
#1 Choosing your friend’s accountant.
They might be right for your friend and their business, but you and your business are different. By all means speak to their accountant, but also put the time aside to speak to different accountants. This is important for you to see who you feel you can work with & who is going to provide the right support for your business. The cost is too high if you don’t invest the time upfront and just choose an accountant because someone else does.
#2 Only shopping on price.
Price is definitely one aspect of your decision, but it shouldn’t be the sole basis of your decision. You can shop purely on price to find the cheapest accountant. This is ideal if you don’t want any service or advice. In this area you are at risk of the accountants who aren’t really accountants. The accountants who offer the world, but can’t deliver for the price and let you down, the unexpected bill and no more clarity & understanding than you’ve got right now.
You’ve probably heard the saying “you get what you pay for” now this doesn’t mean the more you pay the better, it means you need to look at what you’re paying for not just how much it’s costing. Instead, judge the price alongside the value. Consider how quickly you want to reach your goals, you may need more support to get there quicker.
#3 Assuming the fancy office means they must be good
You could just look for the accountant with the biggest fanciest office in your area. This must mean they’re good, right? Not necessarily. Now this isn’t to say that all accountants with fancy offices aren’t good. It just doesn’t guarantee they’ll be the right accountant for you and your business. Instead, consider how important your accountants location or office are to your decision, then include that as one of the factors to base your decision.
5 things to consider when deciding how much you will spend on an accountant
#1 Consider the level of support your business needs
You might not know exactly what accountancy services you need, but you probably have an idea of what areas of business you’re struggling with. Compliance services are essentially the ones that get everything filed for HMRC and Companies House. Compliance services don’t include tax planning advice and support. Like any industry you can still get accountants who mess things up and the accountants who aren’t accountants and haven’t got a clue what they’re doing. But other than that the format of the tax return & layout of accounts is prescribed – yes we can play around with fonts on the accounts but that’s about it.
You’ve then got bookkeeping support, software support & implementation, business planning and advice, tax consultancy, cashflow forecasting and advice. Plus a whole host of other support services. Which is why it can get confusing for you to identify what you need. This is where putting the time aside to talk to an accountant about your business and asking them what support they would recommend to help you achieve your goals is key.
#2 Find out what level of customer service is included in your price
Now this is the game changer. This is what you need to focus on as this is a key area of what differentiates each accountant. What level of service are you going to get? Are you going to have to explain who you are every time you speak to your accountant? Will the figures be explained in a way you can understand? Are they going to spot when you might need extra support & offer you that support? Will they challenge you when needed?
Can you ring with any questions you have as part of the service or will they be clocking the time and adding that to your bill.
Are they interested in your business or is it just a compliance transaction to get the job done.
Do you get a key point of contact – someone you can build a relationship with so they fully understand your business? And will they create a guide to your business so the rest of the team understands how it works and can seamlessly pick things up if needed.
You should get a feel for their customer service as soon as you contact them and book a call or meeting.
The main reason I started Fresh Clarity was because I saw such poor service given to small businesses. There’s no excuse for it. We place huge value on customer service, it’s what we value as a business when using other services. We do this by keeping in touch with you regularly throughout the year, making sure we help you fully understand information we give you about your business. Our 10 minute quick query service is included at no extra cost so you know you can pick up the phone and ask us those burning questions without worrying that we’re clocking the time to bill you.
#3 Consider what level of expertise they have in your sector or industry
Do you want an accountant who understands your sector? Someone who understands how things work in your industry. An accountant who understands the software you use, or specific accounting requirements of the sector? Having an accountant who specialises in your sector can be a huge help as they understand the challenges and they understand what you’re talking about. You may pay a little more for an expert in your sector and it could be worth it for your business.
#4 Ask yourself, is their pricing clear & transparent
Can they give you a clear & transparent price? By this we mean do they go through the price in the meeting with you or shortly after with a recorded video explaining the proposal and exactly what is included? Is the price fixed for the work described or is it just an estimate then they hit you with the balance at the year end?
Can you pay monthly to avoid any large bills at the end of the year?
At Fresh Clarity we use the same methodology for pricing all of our clients to ensure that it is fair. We even hold an award for clear and transparent pricing because we calculate the price in front of you and clearly explain what we’re offering you and why. With us, your price will depend on turnover, transaction volumes and number of employees for most services.
#5 Decide if you like them
You’ve got to work closely with your accountant so you need to like them. You don’t need to be best friends, I wouldn’t recommend using your best friend as your accountant, but you do need to be able to work well together. Do their values align with yours? This might seem “fluffy” but without realising it you make decisions based on your values all the time, so making sure your values align with your accountant is key to a successful relationship.
We make this same consideration when we choose to work with clients because we need to be able to build a relationship with you. We look for clients who are passionate about their business, who involve us in decisions by asking for advice, they value what we do and understand that we’re using our expertise to implement processes that we know work.
It all boils down to what you value.
As an established business you will find that spending between 1.5%-4% of your turnover on your full finance support will be about right. Now this doesn’t mean you have to spend all of that with an accountant, but that’s how much your whole finance function from bookkeeping to payroll to tax should cost to run well.
Of course you don’t have to have an accountant, you could just do it yourself. But, there is a hidden cost of your time and the risk of costly mistakes – whether that’s missing out on tax reliefs or HMRC finding you’ve claimed for things you shouldn’t. There’s a reason it takes so long & costs so much to train to be an accountant.
You might think you’re saving money by doing your own bookkeeping, payroll and vat, but more likely than not you aren’t. Sure you’re not paying out for an accountant each month, but how much is your time worth? How forgiving are your employees when you mess up their pay or taxes? What if you make decisions based on your bookkeeping only to find you’ve made loads of errors which then means you haven’t made enough profit to cover the money you’d drawn out of the business, which also then means you’ve got to pay an additional 33.75% tax charge on that.
How quick you want to achieve your goals will make a difference
How serious are you about your business and being able to achieve the lifestyle you’ve dreamed of for you & your family you need all the support you can get. Choosing the right accountant for your business is a crucial investment. I recently invested in a Business Coach as I wasn’t reaching one of my goals on my own. We set a 12 month plan (which I thought was ambitious at the time) but in the end I achieved what I wanted in 6 months. My point is that investing in the right support is critical for your business.
If you’re looking for an accountant, book a quick discovery call to go through some of these indicators we’ve gone through to see if we’re the accountant for you, and we’ll be doing the same. We recognise your time is important so the discovery call lasts just 15 minutes. We ask for a few details about you and your business – such as turnover, number of employees and software you use. If it doesn’t sound like we’d be a good fit for you we’ll point you in the direction of other accountants in our network who may be better for you. If it sounds like we could work together we’ll offer you a 60 minute meeting where we’ll go through your business needs in more detail. And provide a clear quote for the services you need.