Are you getting the best deal from your accountant?

Transcription

1 Are you getting the best deal from your accountant?

2 Introduction It s human nature to want the best deal. Whether you are going out for a meal, booking a holiday or paying an accountant, it s good to know you re getting the best return on your money. But, there is a big difference between buying a meal or holiday and paying your accountant. With a meal or holiday it's simple; the cost is the price you have to pay. With an accounting support it is more complicated. The true price of an accountant can only be worked out after taking into account the value of their advice. For example, two accountants may charge the same but one may provide some tax advice which saves 10,000 more than the other. This may not be 10,000 a year, it could be 1,000 a year but in today's economy every penny counts. And, as a business owner, remember that you must take into account opportunities costs, not just the initial cost. So, if your accountant can save you 1,000 a year you could use this to promote your business. This could win a new contract or customer that could lead onto even more business. Appendix I of this report includes a tax planning checklist. Use this to see if your accountant is exploring every opportunity to reduce your tax bill. But, keep in mind that advice can also increase your tax bill, by helping you find ways to increase your profit! Accountants are able to help business owners increase profit by advising on a wide range of topics including strategic planning, pricing, marketing and effective management. The key to getting the best deal from your accountant is making sure that you consider that your payment is an investment, not an expense. The gap between what you pay and what you get is your profit. The best deal is when this gap is as wide as possible. So, we recommend you compare profit gaps, not just fees. As a businessperson, your accountant should be on the top of your list of expenses to review. That is because their advice (more than any other supplier) can have a dramatic impact on your pocket. This report poses a number of questions for you to consider about your accountant and the deal you are getting. If you find it useful please share it with friend and business colleagues. And, if you feel you re not betting the best deal we hope you will contact Crunchers to see if we can offer you a better deal.

3 What is a good deal? As mentioned in the introduction, it s not all about the fee but the profit gap. A good deal is when what you get is worth more than you pay. The best deal is when the gap between what you pay and get is maximised by a combination of service value and a low price. So, you need to be on the lookout for an accountant who will pack value into your service and work with you to make sure your fee for the basic work of accounts and tax returns is as low as possible. Does your accountant help you reduce your year-end accounts fee? It s important to remember that the best deal for one person may not hold the same value for another. There is an infinite set of criteria that dictate whether a deal is good, bad, terrible or amazing, and the criteria can only be established through a level of understanding between you and your accountant. A survey into Accountants and Business owners by Sage of over 2,000 businesses and 480 accountants found that business owners place most importance on an accountants ability to understand them. Does your accountant really understand you? But, that is not all. First, a key driver of sales is the price you charge and accountants can provide help developing pricing strategies. Accountants are trained in pricing and profit margins. Second, although accountants are not specifically trained as business growth advisers, they come into contact with large numbers of profitable businesses. The owners make practical and sometimes innovative business decisions that help grow their top line. We feel that accountants, however unwittingly, have access to a large and vital knowledge pool. By using videos and running events like Webinars and seminars this knowledge can be shared with the clients they work with. Wherever possible, you should be able to tap into your accountant s experience of successful businesses to grow your own top line. Does your account help you increase the top line? Has your accountant offered help developing your pricing strategy? Does your accountant share ideas on how to grow your customer base? Does your accountant run regular seminars and webinars or use videos to pass this knowledge to you? The survey found that 76% of businesses don t believe their accountant helps them to grow the top line! At Crunchers we find this amazing for a couple of reasons.

4 What service options does your accountant offer you? We ve found the best way to understand someone is to take the time to find out what s important to them, and why. We also believe it s a good idea to check regularly because people's attitudes and circumstances change. With regular communication, people can be treated as individuals. Does your accountant take time to offer the style of service that matches you as an individual? The world in changing fast, driven by the Internet. There is an explosion of new systems, tools and resources available to small businesses. These can save you time and help you make money but you need to know about them. Once again, this is where an accountant can help. By researching the market and finding out what's available your accountant can help you. At Crunchers we introduce our clients to the latest and best technology. One example is new bookkeeping and accounting systems. These can automate some of the work and save you time. Does your accountant introduce new software to you? Does your accountant offer help with training and coaching to help you adopt new systems? But, accountants can also help with issues outside traditional accounting. This is because they would have worked with businesses that have gone through these processes. Examples include developing a Brand Strategy, people and time management, even Websites and Internet Marketing. Your accountant may not be a designer, but they probably know the process of branding and seen successes and failures with many other businesses. Accountants can also help with technical work such Search Engine Optimisation and Pay-Per-Click management. They do this themselves and can share their knowledge. Does your accountant look to help with service extensions outside the basic accounting work? For example, these new systems can connect to your bank and automatically enter the information for you.

5 What next? Here's a suggestion. Why not review the questions outlined in this document (Appendix II) and assess your current deal? There are some questions below that you can score in order to rank your current accountant. Please feel free to call us and ask us the same questions so that you can make a comparison. If your accountant is not giving you the best deal ask yourself why? Have they taken you for granted? Do they really care about your business? Many owners of small business are with large firms of accountants who are best set up for dealing with larger clients. Perhaps you need a specialist company. Perhaps it might be us! Crunchers Carrick Business Centre Commercial Road Penryn Cornwall TR10 8AR

6 Appendix I Tax Planning Checklist Use this checklist to see if you are getting the best tax advice. No Tax planning strategy No Yes Maybe New products and services Launching a new product is an opportunity to create and sell a new business to your own company and enjoy tax free profits for up to five years. Profit extraction Are you taking money out of the business in the best way? Use a combination of salary, dividends and loans Spouse and children Are you making full use of your families tax free allowances? You may even be able to claim a proportion of dog food and Vet bills if it can be said to be a guard dog! Pension planning Can your company save tax by investing in a pension for you? Do you know you can set up your own pension and use the pension fund to help fund your business? Timing of expenditure Is it worthwhile bringing forward any expenditure so that you get a deduction in this year s accounts. Expenditure Have you made sure you have claimed for everything you can? This includes Christmas lunch and home as office. Loan interest Have you reviewed to see if you can claim tax relief for any Credit Card, loan or overdraft interest you have paid personally? Business vehicles Have you reviewed the best way for you to finance your car? You should consider Hire Purchase and Contract Hire. Employees Have you considered ways to pay employees without suffering National Insurance on all or some of their money? This can include salary sacrifice and share options, which can help drive the business forward.

7 No Tax planning strategy No Yes Maybe Benefits Are you making use of tax free benefits like parking, lunch vouchers, 150 per head annual parties, health checks, payments for employee suggestions, bikes, personal phones and computers? Contractors If you use contractors, are you sure that taxman cannot ask for more tax and national Insurance by challenging their self-employed status? Trading style Have you reviewed if it is better for tax to be a limited company, partnership or sole-trader? Research and Development If you invest in R&D you may be able to claim a tax credit. Investment If you need cash to grow have you explored share schemes that offer investors tax breaks by investing in your business? Gifts If you make gifts to customers have you explored how to make these tax allowable? VAT Have you explored using one of the VAT schemes like Cash or Flat Rate Accounting? Future expenses Do you know that if you need to pay some money for something but have not been sent an invoice you may still be able to claim the cost and reduce profits and tax now? Pensions Are you using pension planning to reduce your tax bill. As well as advice on how much to pay, have you been introduced to setting up your own pension fund?. Tax Investigations The taxman is looking for more tax are you fully protected with the assurance of good financial processes, paperwork and insurance to pay professional fees if you are investigated? Do you keep minutes and produce vouchers for your dividends? If not, the taxman could challenge your tax planning and reclassify your dividends as earnings. And, come after you personally for PAYE because you didn t operate payroll correctly.

8 Appendix II Compare Your Deal Use this checklist to help choose the best deal for you. Give each firm a score in the right column score 1 as the lowest and 5 as the highest. The best deal will be the one with the highest total. To score Crunchers please feel free to give us a call and ask us the questions. Question about the firm Current Detail Score Accountant Crunchers 1. Does your accountant help you keep your year-end accounts fee to a minimum? For example, do they offer bookkeeping software? 2. Do you feel your accountant understands you? Do they ask enough questions? Do they know your personal goals? 3. How do you rate their service standards? 4. Do you feel they are working hard to keep your tax bill to a minimum? 5. Does your accountant make suggestions to increase your top line? For example, do they actively seek your feedback on the service they provide? Do they constantly strive to improve their service? The cost of an accountant is not just the size of the bill. Lost opportunities can be more expensive. Do they come up with ideas on pricing or marketing. 6. Does your accountant run events? 7. Does your accountant fully understand your needs? This could be free Webinars or seminar presentations? Has your accountant dug into your business and offered you a full range of services? Total score