How to choose an accountant for your small business or self-assessment

Whether you need a tax return filed once a year or a full set of accounts, bookkeeping and payroll, the right accountant saves you time, reduces mistakes and often pays for themselves. The wrong one is expensive in ways that only show up later.

Work out what you actually need

Accountants offer very different services, and you should only pay for the ones you need.

• Self-assessment only: a sole trader, landlord or higher earner who needs an annual tax return prepared and filed with HMRC.
• Sole trader or partnership accounts: annual accounts plus tax returns, and possibly VAT returns if you are registered.
• Limited company: statutory accounts and confirmation statements filed at Companies House, a corporation tax return to HMRC, the director's self-assessment, and usually payroll and VAT.
• Ongoing support: bookkeeping, management accounts, cash flow forecasts, and advice on how to structure the business.

Make a list. Then ask each accountant to quote against the same list.

Understand who can call themselves an accountant

In the UK, "accountant" is not a protected title. Anyone can use it. That is why professional body membership matters.

• ICAEW (chartered accountants), ACCA (chartered certified accountants) and ICAS in Scotland are the main chartered bodies. Members have passed professional exams, must keep their knowledge up to date and are subject to a complaints and disciplinary process.
• AAT (Association of Accounting Technicians) licensed members are qualified for bookkeeping, accounts preparation and tax for smaller businesses, and are regulated by AAT.
• Chartered tax advisers (CIOT) and ATT members specialise in tax.

Ask which body the accountant belongs to and check the register on that body's website. A regulated accountant must also hold professional indemnity insurance and be supervised for anti-money-laundering purposes, and will ask you for identification when you become a client. That is a legal requirement, not an inconvenience.

Ask about fees and how they are charged

• Is the fee fixed, monthly or hourly? Fixed fees are common for small businesses and make budgeting easier.
• What exactly is included: accounts, tax return, confirmation statement, payroll, VAT, phone calls, advice?
• What costs extra, and at what rate? Ask specifically about HMRC enquiries, late records and one-off advice.
• Is the fee quoted including VAT?
• What do you need from me, and by when? Sending records late usually costs more.

Ask for the engagement letter in advance. Regulated accountants must issue one, and it sets out the services, the fees and each party's responsibilities.

Ask about how they work

• Which software do you use, and will I need to use it too? HMRC's Making Tax Digital rules require digital records and filing for VAT and are being extended to income tax, so the accountant's software choice affects you.
• Who will actually handle my work: the person I am meeting, or a junior?
• How quickly do you respond to emails and calls?
• Do you have other clients in my type of business? Sector experience matters more for some trades than others, for example the Construction Industry Scheme for building trades.
• Will you remind me about deadlines, or is that my responsibility?

Check them out

• Look up the firm at Companies House if it is a company.
• Check the professional body register.
• Ask for the names of two clients in similar businesses who are willing to be contacted.
• Read the engagement letter carefully, particularly the notice period and what happens to your records if you leave.

You can find accountants near you on Annuvell Local, where each listing shows checked contact details and a Request Quote option so you can send the same list of requirements to several firms.

Switching accountants

If you already have an accountant and want to move, the process is standard. Your new accountant will write to your old one asking for professional clearance and your records, and the old one is expected to respond. HMRC and Companies House need to know who your new agent is, which the new accountant will usually handle. Time the switch for after a year-end has been filed rather than in the middle of one.

Remember your own responsibilities

Even with an accountant, you remain legally responsible for your tax returns and company filings. Keep your records in order, answer questions promptly and read what you are signing. A good accountant will explain the figures; you should understand them.

Next steps

List the services you need, ask three accountants for a fixed quote against that list, check their professional body registration, and read the engagement letter before you sign. Choose the one who explained things most clearly rather than the cheapest.