Want to know if your accountant is costing you money? Watch our video to find out more.
Every business needs a good accountant. The problem is that most business owners don’t realise what a good accountant looks like – that’s because they’ve never had one.
“You don’t know what you don’t know.”
If you have got a good accountant, you’re in a very small minority.
If you’ve got a bad accountant, you’re also in a minority.
The problem is that the majority of business owners have a mediocre accountant. And that’s why they’re costing you money. They don’t mean to. But, by being mediocre, they’re making you miss out on extra profits and extra tax savings.
Some are even taking money from your pocket through their mediocrity.
Too many accountants are still just doing the minimum legal requirements – a set of accounts and a tax return. There is a value in that – everyone needs to be compliant. But are they making your business better? Or making your life better?
Working with a really good accountant is like having a Non-Executive Director for your business. Having a sounding board for you and your ideas. Having a source of wisdom, guidance and experience – all designed to improve your business and your profits.
Someone to work alongside you throughout the year. Someone to understand your goals and help you achieve them. Someone to provide regular input and information to help you get to where you want to be.
My next door neighbour recently bought a new car. He replaced an 11-year old car with a nice new Audi. He couldn’t believe the difference – power steering, cruise control, and full air con.
And then there’s the sat nav, the iPod doc, and the hands-free phone. And he’s getting used to having a nice, big storage unit where the handbrake used to be – it’s now just a small button.
He was quite happy with the old car. But now he can’t believe what he’s been missing out on.
And that’s what it’s like switching to a good accountant. And a progressive 21st Century Accountant.
A standard accountant does a perfectly decent job…..until you see what you can get by upgrading.
So, how can you spot if your accountant is costing you money? Here are six indicators.
I hope you find them useful.
You don’t understand your numbers
If you don’t understand the numbers in your accounts or you don’t understand the numbers in your tax return, your accountant is letting you down.
It’s one of the most common things we get told when clients come to us – “My old accountant never explained the numbers to me. Therefore, I just signed off a bit of paper on their say-so.”
Ultimately, it’s your business, and they’re your numbers. That means you need to understand them fully.
Your accountant is there to help prepare the numbers and help make the numbers better. But they should then explain them to you in plain English so that you, the business owner, fully understand them. So that you own them and know exactly what they mean to you.
If you don’t understand balance sheets or profit and loss accounts, your accountant is letting you down.
If you don’t understand the numbers in your business, how can you know whether your business is doing well? How can you make it better?
One of the great business quotes is from Warren Buffett, the multi-billionaire investor. He said “If you can’t read the scoreboard, you don’t know the score. If you don’t know the score, you can’t tell the winners from the losers.”
If you don’t understand your accounts, you can’t read the scoreboard. So, how do you know if you’re winning or losing?!?
You haven’t seen them recently
If you haven’t spoken to your accountant lately, you’re not getting the service you deserve.
The exact frequency you speak to your accountant does come down to you and your needs. For some small businesses, once a year might be enough. For others, it’s quarterly, monthly, or even weekly.
The point is there should be a regular discussion. It doesn’t have to be face-to-face. It could be by Skype or even by phone, but email isn’t enough.
It needs to be a genuine discussion because, otherwise, how can your accountant fully understand your business? How can they understand your goals?
If they don’t understand your business and your goals, how can they help you reach those goals? How can they help you plan to make your business better?
If they don’t understand your business entirely, and also your personal circumstances, how can they help you plan to reduce your tax bill?
Many ways of reducing tax do come down to your personal circumstances. Whether you’re married, whether you have children, whether you have other investments, whether you have other sources of income. And these circumstances change, so your accountant needs to know.
And tax savings depend on a current knowledge of your business and your plans. Are you thinking of buying any new capital items? Taking on new staff? Moving premises? Undertaking research? All of these have an impact on your tax savings.
If your accountant is not speaking to you regularly, how will they know if anything’s changed? Therefore, how can they save you money?
And, if they’re not saving you money, they’re costing you money.
You don’t know the time and amount of your next invoice
If you’ve had any fee or invoice you weren’t expecting, your accountant is letting you down. If you don’t know when your next invoice is, and how much it will be, your accountant is letting you down.
In the olden days, accountants billed by the hour after the work was done. If work overran, the bill went up. If you rang for some advice, it was added to the bill.
But that was in the olden days. Or was it?!?
If your accountant is still billing at an hourly rate, it’s just rewarding them for inefficiency and being slow. The more hours they spend, the more they charge, and the more it costs you!
A good accountant, and a 21st-century accountant, will bill a fixed fee for each bit of work. And that fixed fee will be agreed in advance.
Most good accountants will bill a fixed fee for the year, usually in monthly instalments, so you know how much it’s going to cost. So that you can budget.
If there is any variance to the work involved, it’s discussed…..and agreed….. before it’s done. But that would only be for work that’s genuinely beyond the normal work involved during the year.
The fixed fee should include ad hoc queries and advice.
You shouldn’t be worried about picking up the phone in case you get billed for it! A good accountant wants you to pick up the phone – it helps them understand you better and give you a better service.
You’re not using cloud accounting software. Or don’t know what it is
Cloud accounting software is one of the best things to ever come along for business owners.
If your accountant isn’t using it, if you’re still on paper, or if you’re in Excel or a desktop software, something’s wrong and you’re stuck in the 20th Century.
The advantages of cloud software are many, but they include keeping you on top of your numbers at all times.
You can access your business numbers anytime, any place, as long as you have an internet connection. You can view them on your PC, laptop, tablet or phone. And your accountant can see the same numbers on their screen. No more sending information back and forwards.
Cloud software puts you in control of your business because you have the numbers at your fingertips.
And cloud software means you’re fully ready for HMRC’s new Making Tax Digital regime. If you’re not, you’re going to have to change or you won’t be compliant.
Also, it saves you lots of time. And saving time saves costs. Cloud software saves time because it takes away the task of inputting figures.
Are you or your bookkeeper still typing bank statements? Not any more – cloud software can talk directly to your bank and import your bank statement every night.
Are you or your bookkeeper still typing in receipts and invoices? Cloud software allows you to just take photos of the invoices. It will do the rest – upload them and analyse them in your accounts, including the VAT.
If you or your bookkeeper are typing anything, you’re wasting time. You’re in the wrong software, and your accountant is costing you money.
They haven’t come to you with a suggestion to put more cash in your pocket
Has your accountant given you any advice this year over and above just doing the normal?
Now, there is a value for an accountant keeping you legally compliant by getting your accounts and tax returns in and hitting deadlines. But that’s not enough for an ambitious business owner.
A good accountant will do much, much more than that.
A good accountant will be proactively giving you advice and coming to you with ideas to make your business, and your life, better.
If your accountant hasn’t approached you at least once this year with either some advice to save taxes, or some advice to grow your business, they’re letting you down and costing you money.
They’ve missed a deadline
Has your accountant missed a deadline?
Any deadline. That can be external to Companies House or HMRC, or internal to you.
If they’ve missed an external deadline, it’s pretty obvious that it costs you money because it leads to a fine. If they’re missing legal deadlines, they’re not a mediocre accountant – they’re a bad accountant.
But even if they miss an internal deadline, ie a promise to you, it is probably costing you money because overall it shows that they’re not on it. They’re not thinking of you. They’re not doing the best for you.
So, is your accountant costing you money?
If they are, you should have a chat with them. It may be that they can deliver everything you need, but you need to change the service you’re buying.
Or perhaps you do need to consider moving accountant.