It might not be your most thrilling task as a creative freelancer, but asking the following questions of the person you’re eyeing to ‘do your books’ is an innovative way to settle on the tax adviser or accountant who’s right for you, writes Emily Coltman FCA, chief accountant at FreeAgent.
1. Are you experienced at working with freelancers?
Many accountancy practices work only with freelance or contract professionals. Find out though how long they have been in business in this field; how many clients they have, and how many in your specific sector. Increased experience makes it more likely that your accountant will be more adept at identifying potential pitfalls and helping you to avoid them.
2. Do you have knowledge of relevant tax laws issues for freelancers?
There is a significant amount of tax law that relates specifically, or mainly, to freelancers and contractors, such as IR35, which looks at whether the independent worker should be taxed as an employee.
Make sure that your accountant knows how these laws work and can explain them to you in plain-English. Remember, it is you who are responsible to HM Revenue & Customs for your business -- and its tax affairs, even if you engage an accountant. If you don’t understand what your accountant is saying to you, ask them for clarification.
3. Do you use the latest technology and software?
The accounting profession has changed out of all recognition in recent years, with the arrival of tools such as online accounting software. It’s now possible for accountants to work with their clients in real-time, helping you to pay the right amount of tax at every bill, and to avoid bookkeeping errors building up. Does your prospective accountant use these tools? If not, how do they monitor your records and make sure that you are not making errors that will take time to put right later, perhaps at increased cost to you?
4. Am I happy with how they charge fees?
Alright; this is a question to ask yourself, but it’s no less important. Some accountants charge their clients a fixed fee per year or per month, others charge per hour worked. Both approaches have advantages and disadvantages to them. For example, if your accountant charges fixed fees, what do those fees cover -- and, perhaps more importantly, what do they not cover? If your accountant charges per hour, what happens when a member of their staff makes a mistake which has to be corrected -- do they bill you for the time spent correcting the error?
5. Are you qualified?
Probably the most direct of the questions posed, but if you’re not keen to pose this in person or face-to-face, the answer can normally be arrived at by a quick glance of their website. Bear in mind the reason you’re asking though; the term ‘accountant,’ unlike the terms ‘doctor’ and ‘solicitor,’ is not legally protected, in other words anyone can call themselves an ‘accountant.’
Terms such as “Chartered Accountant”, “Chartered Certified Accountant” and “Chartered Management Accountant” are legally protected however, and can only be used by qualified members of accounting institutes, who have taken stringent examinations and have to certify their experience on a yearly basis.
Being qualified does not automatically make an individual a good accountant, but if you choose a qualified accountant then you can be sure that this person has insurance to cover any claims you make against them, and a professional institute to which you can complain if you are not happy with the accountant’s service.
6. Do I trust them?
Another one for you to ask yourself. Remember, you are entrusting your accountant with highly important and confidential financial data, so it’s crucial that they are trustworthy and that you feel comfortable with them. Ideally, you should look at several accountants before deciding which to engage and, if possible, try to arrange a meeting or strike up a thorough email conversation with them. This will help you decide whether they are able to comprehensively answer your questions and show the right level of professionalism and respect to you.
Don’t forget to also ask for recommendations from your own contacts or through social media -- you may find that a fellow freelancer could refer you to a great accountant that may not have even been on your radar. And when you have a shortlist of potential accountants drawn up, make sure you do some research online to check what (if any) reviews their customers have written about them.
Why you’re asking
Sole trader freelancers have a number of tax and statutory obligations to keep on top of (as do their limited company counterparts). So it’s common for many independent workers to use the services of a professional accountant to help them stay on top of this side of their business. But there’s also a lot of business admin to deal with in order to run your business effectively and again, a good accountant can help.
That’s why you’re asking these six questions -- to find and enlist not just any old
accountant, but a good accountant who’s the right person for you to work
with. Remember: if you don’t feel 100% satisfied with their answers to the six,
and don’t entirely gel with the accountant from the outset, you will always be
on the back foot with them and your relationship -- and perhaps even your
business -- will suffer.