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Tax, Accountancy and VAT


Choosing an Accountant

The first point to make about choosing an accountant is to do it in good time. It's often something which is left until trading is well under way, and often the first tax return is almost due before an accountant is approached. At this point the trader expects an accountant to minimise the tax bill, but it's often too late to do anything significant.

Saving tax is 90% good planning, and there are several examples above: timing of capital expenditure; vat registration and use of a special scheme; best choice of trading format (company or sole trader).
Tax Planning Point
See an accountant for tax planning and record-keeping advice sooner rather than later.
Having resolved to get this sorted at an early stage, what to look for? Obviously you want someone you can get along with and feel comfortable with; someone you can ask questions of and who explains the answers in an understandable way; someone accessible who treats you and your business with respect and importance. You are after all (hopefully) embarking on a long-term relationship which will help your business to grow and prosper.

Regarding qualifications - this is a difficult area. One response might be to automatically advise a qualified accountant; however - and speaking as an ACCA qualified accountant myself - it is true that there are many good accountants who are "qualified by experience" rather than by examination.

There are also many expensive qualified firms who would be inappropriate for a small business, which may be a very small fish to them. Often the work is assigned to a junior member of staff who is inadequately supervised. I have seen many regrettable examples of bad advice and negligent service from large and medium-size firms, who should know much better.

Qualified or not, you are looking for: You should expect to be asked to produce proof of identity (or to agree to an online check). Since December 2007 the Money Laundering Regulations have been extended, and identity checks on all clients are now mandatory for any person operating in the regulated sector, which includes accountancy, and now, bookkeeping as well. Typically, you will be asked to produce photo id, such as a passport, and recent evidence of your address, such as a bank statement.

Can I do this myself - or just get a bookkeeper?

The short answer is "yes" - you can (or at least "may") do it yourself. There is no legal requirement to use an accountant, even for a company. So if you are happy to navigate the various pitfalls yourself, and the time and effort won't detract from your business, that is fine.

A good bookkeeper can be a great asset, keeping you organised and up to date, and preparing your affairs for the accountant - or even for yourself! An accountant will certainly appreciate a well-prepared file, and this should be reflected in their fee.
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