Choosing an accountant is probably one of the most important business decisions you will make if you are starting a business or if circumstances within your existing business change. Everything you do in business has some kind of financial dimension. Having access to a trusted accountant is vital.
Without good financial advice as well as proper systems and processes, you face considerable risks. Unfortunately, many entrepreneurs find that out too late – when they run out of cash or encounter problems with the Revenue Commissioners.
It’s not always easy to identify the accountant that’s right for you and your business. But a good starting point is to decide what your needs are and what you can and can’t do yourself.
The accountant's role
There are three roles that accountants play in a business – operational, strategic and advisory. Operational covers the day to day financial transactions of the business. Irrespective of the type of business, you will need to keep records, manage cash, do the payroll and deal with the bank and the Revenue.
Also, you will need to:
- Prepare annual financial statements (for your bank, the Revenue Commissioners and other parties)
- Create monthly or quarterly management accounts (for use by you within the business)
- Get the annual accounts audited (if your business exceeds the annual audit threshold)
- Help with establishing good internal systems and controls
- File annual returns to the Companies Registration Office
Strategic services involves assisting with long-term planning – developing business plans, devising financial models, raising capital and other activities related to the long-term decisions of the business. Advisory services include advising on tax, acquiring new premises or merger and acquisitions activities.
DIY or outsource
You need to establish how much of the operational accounting activities you can do yourself and how much you need to outsource. Some business owners are good at doing routine tasks, or can call on a relative to help out. Others hate the idea of spreadsheets, form filling and calculations.
If you are in the latter group, you most definitely need to consider outsourcing all of the accounting functions. But if you’re in the first group, it’s often worth asking whether routine bookkeeping tasks are the best use of your time and whether full or partial outsourcing of those activities should be considered.
A freelance bookkeeper who can come to your premises might suit your needs. However, it is unlikely that this bookkeeper will have the experience to meet your strategic or advisory accounting needs. As a result, you need to retain an accountant, most likely an independent practitioner or a firm of accountants.
Selecting an accountant
Before you start your search, it’s best to have a clear idea of the services you need and whether you need someone close by. Here’s how you should conduct your search:
- Create a brief on your business and the services you need. Be prepared for that brief to change throughout the course of your search, as you learn more about other possible services you may need
- Ask other business people you know about the accountants they use. Be specific – ask about the efficiency of the service, the people involved, the expertise within your sector and the fees charged
- Ensure all of the candidates belong to a recognised professional accountancy body
- Try to get recommendations for at least three accountants
- Set up meetings with all of them and circulate the brief in advance
- Ask questions about their experience in your sector, their availability by email or phone and whether they can meet at short notice
- Discuss fee arrangements and ask for a written proposal based on the final brief
Remember that just because someone is the cheapest, they’re not necessarily the best choice. Try to compare like with like, based on the brief. Also, consider how you got on with the accountants you met and whether you’re likely to have a better rapport with one compared with another. The better the relationship the more you will benefit.
Once you’ve made your decision, and the formalities have been finalised, meet the successful accountant to share more details about the business and to plan the work.
Working with your accountant
You should aim to build a trusted working relationship with your accountant. Involve him or her in the early stages of any business planning discussions or whenever you may have a significant setback. An accountant with sectoral expertise is particularly valuable in identifying risks and making recommendations on where your business might improve its margins or secure funding.
In the case of a start-up, a good accountant will spot gaps or incorrect assumptions in your business plan and help you to create different financial scenarios. He or she can often become a good sounding board when you are considering changes or new developments.
A good accountant should free up your time, by taking over administrative and accounting duties. But you still need to be involved. You need to take the time to review the accounts or documents your accountant provides. Don’t be shy about asking questions and don’t be put off by accounting jargon.
Your accountant can help you to establish good internal record keeping, enable you to budget, manage your cashflow and meet tax and filing obligations. But you and your employees need to play your part, by ensuring that the records are up to date and that important tax and other deadlines are met.