What 10 questions should I ask an accountant?

Summary

• Hiring an accountant is beneficial for understanding your tax obligations, preparing for tax season, and staying compliant.

• An accountant will manage the financial side of the business, focusing on business growth and minimising losses.

• All business owners can benefit from hiring an accountant, allowing them to focus on running their business.

Questions to ask an accountant

If you are a business owner, below are the 10 most important questions to ask an accountant.

1. What financial records should I keep?

Keeping financial records for your accountant is essential for monitoring your business's income and expenses, and it simplifies matters during tax season. 

The financial records you must have available include:

• Bank statements
• Business tax returns
• Financial documents such as balance sheets, income statements, cash flow statements, budgets, and forecasts
• Payroll records
• Insurance documentation
• Contracts
• Permits and licenses

Individuals can also benefit from keeping these financial records as their accountant will use them for tax calculations and financial advice.

2. How should I be preparing for tax deadlines?

The UK tax year starts on 6 April and runs until 5 April the following year.

Your accountant must keep you informed of the tax deadlines applicable to your business.

Keep the following dates in mind if you're using self assessment (as of April 2024):

• Register for self assessment by 5 October.
• Make your first advance payment by 31 January. 
• The second advance payment is due by 31 July.
• Submit paper copies of your self assessment to HMRC by 31 October.
• If HMRC collects taxes due via Pay as You Earn (PAYE), you must file a self assessment return by 30 December.
• Online self assessment is due by 31 January.

Individuals should also prepare by having their documents ready, so their accountant can submit their tax returns on time.

3. What is the breakeven point in a business?

The breakeven point (BEP) is where your business's income equals its expenses, resulting in no profit or loss.

The BEP represents the minimum amount of sales necessary to make a profit.

An accountant can calculate the number of sales needed to reach a business's breakeven point, which provides helpful information regarding production levels, pricing, and other relevant data affecting the bottom line.

From an individual perspective, a breakeven point is when your income matches your expenditures and you have no debt.

Identifying this point is crucial for personal financial planning as it helps you to set goals. 

4. What do I need to know about my tax obligations?

Your accountant will provide you with the relevant information regarding your tax obligations, such as the amount of money you need to save for taxes and their due dates.

Individuals should also discuss their tax obligations with their accountant. Having all the documentation at hand can help avoid late payments and penalties.

5. How do I improve cash flow management and forecasting?

Cash flow management is the management and control of incoming and outgoing funds in a business.

It’s an excellent idea to ask an accountant about cash flow management and forecasting. They can assist in numerous ways to help you maximise your profit potential. 

You can ask your account to assist by:

• Creating cash flow projections showing the effect of continuing the current trends.
• Identifying deductible expenses missed by the business, causing an unnecessary outflow of cash.
• Pinpointing where the business should cut back on unnecessary spending.
• Ensuring that invoices are issued timeously for prompt payment.

They will optimise tax planning by ensuring returns are filed on time, keeping you informed of deadlines, and identifying rebate opportunities.

6. What are my financial options?

This is an important question to ask an accountant if your business is just getting off the ground or needs a cash injection.

A good accountant can advise you on the best way to source funding for your business or situation. These financial options may include business loans, credit cards, crowdfunding, and finding investors. 

7. Should I try different business structures?

When you start a business, you must decide how to structure it.

This is a good question to ask an accountant, who can walk you through the pros and cons and help you decide on the best structure. 

The three most common business structures in the UK are:

• Sole trader
• Partnership
• Limited company

Limited company

Pros: The owner's finances are separate from the business.

Cons: There is far more administration, which may require extra staff.

Sole trader

Pros: Setting up the business is quick and simple. The business owner has total control and keeps all the profits. Many expenses are tax-deductible.

Cons: The business finances are synonymous with the owner's, and company debts could affect their private assets.

Partnership

Pros: It is not expensive to set up, shares the workload and decision-making, and has a flexible structure.

Cons: Partners are responsible for company debts, so finding a trustworthy person is crucial. If the partnership doesn't have a specified period, it can dissolve at any time.

8. Are there any upcoming or new tax laws I should know about?

As a business owner, it's crucial to ask the accountant about new tax laws so your company keeps ahead of any changes and stays compliant.

It's part of the accountant's responsibility to ensure that this happens.

The key points to note in the light of the Spring Budget include the following:

• Corporation tax will stay the same, at 25%.
• The turnover threshold before VAT registration is required has increased from £85,000 to £90,000 as of 1 April 2024.

9. How can I make my business grow?

An accountant can optimise every area of your business, including tax, cash flow management, pricing, shrinkage, and more.

It is essential to ask an accountant for tips on growing your business based on their insight into your business's finances.

10. Where can I find good legal advice?

An accountant must be well-versed in tax and business law to ensure company compliance and take advantage of all tax benefits.

If you ask an accountant about legal advice outside their scope, they should recommend where you can find good legal advice that meets your needs. 

Your accountant should also be able to direct you to where you can find free legal advice. 

Gov.uk provides helpful business tools and information regarding employment, pensions, and tax. More specific advice can be found at the local Citizens Advice Bureau or legal clinics.

Seek expert financial advice

When looking for an accountant, it's essential to ask the right questions to ensure they can provide tax advice, assist with cash flow management, and actively participate in the company's growth and development. 

Whether you’re a business owner or an individual, an accountant can assist with financial planning.

Unbiased can match you with an accountant who can offer expert financial advice tailored to your needs.