Most business owners don't expect their accountant to be involved in every slight decision they make, but your accountant should certainly do more than just a set of accounts and a tax bill once a year.
The accountant you chose when you first started out might have been a great choice at the time, your finances were simple, there were less transactions and your business was simply smaller. However, as your business grows, the support you need changes.
Now, that doesn't necessarily mean your accountant has done anything wrong. Sometimes the business just outgrows the services they provide, and if that’s the case, something's got to give.
So, how do you know when you've outgrown your accountant?
1. You Only Hear From Them When There is a Deadline.
If the only time your accountant contacts you is when your accounts or tax return are due, all they're doing is helping you report what has already happened.
By the time your year-end accounts are prepared, the information in them can already be a few months old. You might discover that profits have fallen, costs have increased or your tax bill is much higher than you expected, but the opportunity to actually do anything about it has probably already passed.
We’re not saying your accountant should phone you weekly, but there should be enough contact with you that they can spot problems and opportunities while there is still time.
2. You’re Regularly Surprised by your Tax Bill.
Nobody enjoys paying tax, but the amount you owe shouldn't come as a complete surprise every year.
A growing business needs a rough idea of how much it is going to owe and when they will need to pay it. Without an idea of this, how can you plan your spending to accommodate this? It’s easy to mistake money sitting in the bank as money that is available to spend, when really you need it to cover your tax bill and paying that becomes a lot trickier if you haven't accounted for it before spending.
Good tax planning isn't about avoiding tax or trying to find a smart trick at the last minute. It’s about keeping you informed, giving you enough warning to plan properly and making use of the options legitimately available to you.
Trust us, your tax bill is an easier pill to swallow when you’ve been expecting it.
3. You Have Numbers, but No Real Understanding of Them.
Receiving a set of accounts is one thing. Understanding what these accounts are telling you, and being able to use that information, is another.
You should know whether the business is genuinely profitable, where the cash is going and what needs to happen for you to reach your personal business goals. If you’re sent reports once a year full of accounting terms with little to no explanation, what use is that to you or your business besides being compliant?
Your accountant should be able to explain the important numbers to you in black and white and help you turn these insights into better decisions. You shouldn't leave every meeting with your accountant feeling like you need to go home and google everything you were just told.
There’s more to accounting than just keeping HMRC happy.
4. You’re Making Important Decisions without Financial Input.
Hiring someone, buying equipment, changing prices, expanding into new markets or taking on premises can all have a major effect on your businesses cash flow and profits.
If you never think to involve your accountant in those conversations, you’ve got to ask yourself why. Is it because they don’t know enough about your business to truly understand? Because it's more hassle than it’s worth trying to reach them? Or because you simply don't believe their advice will help?
None of those are particularly good signs. Your accountant should be someone you feel comfortable speaking with before making an important decision, not someone who only finds out about it months later when they're preparing your accounts. If your accountant only ever sees the decision after it has been made, they can report on the impact it has had, but they can't help you plan for it.
Your accountant shouldn't make every decision for you, and the final call should always be yours. But they should give you financial information and commercial challenge needed to make decisions with more confidence.
5 You Feel Like a Number Rather than a Client.
As your business grows, it becomes more complicated, and having an accountant who truly understands it becomes increasingly important.
You shouldn't need to give a quick rundown of your business every time you get in touch, your accountant should understand what you do, the challenges you face and what you’re working towards. You should know who is responsible for your accounts, how to contact them and what support you can receive with the service you pay for.
If your emails regularly go unanswered, questions are passed back and forth between different people and all you ever receive is generic advice, the “relationship” may no longer be giving what your business needs. A good accountant-client relationship should feel personal, not like you’re simply another name on a list.
Outgrowing your Accountant Doesn’t Mean you’ve Outgrown Accounting
Many business owners stick with the same accountant because switching sounds difficult. They worry about the awkward conversations, getting records transferred over or changing half way through a financial year.
In reality, changing accountants is far more straightforward than most business owners expect. Your new accountant can contact the previous firm, request professional clearance and arrange for the relevant records and information to be securely passed over. You don't need to wait until the end of year either, although choosing the right time can make the process a lot smoother.
The important thing is not to change simply for the sake of it. Start by asking whether your current accountant can provide the support you now need. If they can, a proper conversation may be enough to improve the relationship.
But if you’re still making decisions without useful financial information, being surprised by tax bills and only hearing from your accountant once a year, it may be time to find one that fits the business you have now, not the business you had when you started.
If you’re considering switching accountants and want to understand what the process involves, get in touch with Acumenica. We’ll explain it clearly, handle the transfer and let you decide whether we’re the right fit for your business.
Not ready to make the switch just yet? Sign up for Three Things Thursday instead. Every week, we’ll send you three practical ideas about tax, finance and running a better business, the kind of useful advice you might not be getting from your current accountant. Sign up here: https://www.acumenica.co.uk/three-things-thursday#form
