HR · 12 August 2015

When is a good time for a micro business to look into an accountant?

It is imperative to find an accountant who fits the need of your business at a certain time
It is imperative to find an accountant who fits the need of your business at a certain time

Small business owners have often asked me when is the right time to engage the services of an accountant? In my view, I think you need to engage their services right from the start of trading – the more important question is to establish the role that the accountant will perform and also, how they will integrate with your daily business activities.

Although it is possible to create a company using one of the formation organisations around, I found it easier to engage an accountant from the start and leave them to arrange the company formation for me. They are well-versed in the task. It is simply a case of them asking you a series of questions and then going off to arrange it. Once the company is formed, they return the relevant papers back to you and you are up and running. Of course, it is perfectly possible to trade as a sole trader or partnership but I still believe the services of an accountant are integral to the success of any business.

Going back to the question of the role of the accountant, the small business owner has to ask themselves the age-old question of risk and reward. To date, my company has been trading for over eleven years and we are now working with our third accountant. Each accountant works for a separate firm (I would not contemplate hiring an employed accountant until we are a lot larger company) and each one has provided appropriate services to the business as it existed at the time.

The first accountant specialised in sole traders and single person limited companies (typical of the IT contractor set) and provided a total service i.e. I issued my own invoices and recorded my own expenses in an agreed spreadsheet format but then delivered a monthly pack to the accountant, who then prepared the accounts, handled the VAT aspect, processed the payroll (informing me of the net salary to pay myself) and dealt with all end of year accounting and taxation matters. This arrangement suited for a company comprising just myself but later the company expanded to two and then three and the original accountant was charging the same fee for each worker, which then started to get expensive.

At that point we changed to a different accountant (local to Birmingham), who offered a package price for up to ten employees (at no extra cost) and they provided a good service, including all of the services of the first accountant but at a substantially lower price and also business development advice, business planning, the use of their meeting rooms for client meetings etc. This new arrangement worked out well for some years but later on, the new accountant started to get increasingly large and the standard of service became a lot less personal, along with their charges getting very high.

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More recently, we had also grown further and therefore changed to our current accountant, who still offers the same packages but also was able to support us in our ambition to produce our own accounts, operate our own payroll etc. using a dedicated member of my team and this is how we operate now.

I know of some micro business owners who produce their own accounts, but this to me seems like a lot of effort for an organisation so small and taking the owner away from doing what they do best i.e. running their business and making money for themselves. I firmly believe that those running firms should concentrate on their area of expertise and let the professionals concentrate on theirs. To this end, I would thoroughly recommend to all early-stage businesses that they not only engage the services of an accountant from the very beginning, but also use sufficient due diligence to engage the accountant offering the right service for the business at that time. Don’t be afraid to change accountants as well. This can be a necessary process as the business develops. Changing accountants does not have to be traumatic and both (new and old) accountants should be professional enough to ensure that the transition takes place as smoothly as possible.

It is my strong belief that accountants are integral to the operation of any small business, but of greater importance is ensuring the right accountant is offering the right service for the firm at that moment.

Image: Shutterstock

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ABOUT THE EXPERT

Bryan has been in the IT software and services business since 1990, working across HR and Payroll solutions. He worked for PwC and Serco before founding AvalonVale UK in 2004 – a niche supplier of payroll solutions, because he became so disenchanted with the attitude of the larger players in the market.

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