Around 20% of UK companies fail within their first year. According to figures from the Office for National Statistics, only 42.4% of businesses are still trading five years after being set up – and those stats pre-date COVID. Typically, one of the main causes is poor financial management. Despite these poor odds, many business owners still choose to go it alone when it comes to managing their money. A recent report found that 53% of small businesses don’t use an accountant at all.
Obviously as accountants we find that pretty horrifying. But did you know that accountants do more than just file your accounts and tax each year? Partnering with a good accountant will actually help you to achieve your goals and set your business up for long term success.
Having an accountant can provide a world of knowledge and experience to help you to best run your business. The really tough question is undoubtedly how to choose the right one? Finding a good accountant could make all the difference.
Choosing based on the lowest price
Money can be tight when first starting up a company so it may be tempting to make a decision based on price and go for the cheapest option. You may be tempted to go for the accountant who quotes you the lowest figure for their services. After all, all accountants are the same. Right?
You may be surprised to hear that there is no legal requirement for an accountant to be qualified when starting up a practice. There are numerous pitfalls from choosing to go with an unqualified accountant, such as:
- Unqualified accountants are less likely to have good experience (there are of course exceptions). They will not have done their training with a larger firm of accountants as is the norm for qualified accountants;
- They are likely to have a far higher volume of clients, which will impact the service that you will receive. An accountant who is stretched thinly between numerous clients simply can’t provide the same level of service to them all;
- Cheaper accountants may even outsource their work to other parts of the world;
- They may not be able to attract high calibre staff due to having smaller staffing budgets. This will impact the level of accounting and tax advice that the business can provide.
Unfortunately you usually get what you pay for – certain corners will have to be cut with a cheaper company, either regarding the detail into which they delve into your accounts or tax, or from the service that you receive.
Choosing based on the quality of service
An accountant who values her (or his!) time and services will charge more. That is a given in all areas of life. But why is this a good option for you?
- Higher revenues lead to higher staffing budgets, leading to the ability to attract a higher quality of staff. It also means that there will be more resources for staff training in tax and accounting;
- A more expensive accounting service is more likely to be a Chartered Accountancy firm with more experience. The business owners and staff are more likely to be have trained at a reputable firm of Chartered Accountants. This means they will have a richer level of experience to back up their qualifications;
- There could be fewer clients compared to staff levels leading to there being more time available for your accountants to better review your accounts and tax position;
- The extra time available and better level of service could lead to better tax savings. Additional tax savings could more than compensate for higher fees;
- It is more likely that there will be more time for face to face meetings which is where the good stuff really happens.
We appreciate that some business owners will just want to pay the lowest possible fee for a no frills, compliance only service. But paying a basic fee means you will get a basic service. It is a good accountant’s job to identify what services their clients really need to push the business forwards, and to communicate the value to you. And when this happens, you will find that a good working relationship with a good accountant will be massively beneficial to your growing business.
We want you to get it right first time. And if we do our job right, the growth in your business will pay for our services many times over. Book a discovery call to find out how partnering with us could help to guide you through your journey to set you up for lasting success.