10 Questions to ask your accountant

Most small business owners do everything related to their organisation. They don every hat and try to do what is best for their business. Do you know one other thing that is best for business? It is hiring an accountant.

Bookkeeping and accounting play a significant role in conducting business, and not everyone can do it. Escalating these tasks to a professional is always a good idea. It is not easy to hire an accountant who would align with you and your business requirements. The accountant hunt can be challenging, and the vetting process will take time.

However, this article is here to make your hiring process more straightforward. We have curated the ten most important questions that you should ask your accountant without fail. Make sure to read all the questions and also reason to ask them.

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Questions to ask the accountant

Before we get into the specifics, here is a small tip for you. Always look out for an accountant who has experience working with a small business. Usually, small business accounting is not an easy nut to crack. They are complex and needs hands-on expertise in different aspects. So, find an accountant who has this experience.

It is going to come in handy for you in the future. Let us see what all questions you can ask an accountant.

1. What should be the structure of my business?

This should be the first question if you are just starting out with your business. There are different business structures in the UK, and you have to choose the right one. Each of these businesses has pros and cons. A reliable accountant will be able to point you in the right direction in this aspect.

Different structures of business in the UK are:

  • Sole proprietorship: One person wholly owns and operates a business in this structure.
  • Partnership: When two or more people fund and operate a business.
  • Limited liability partnership: The partner’s liability is limited to their invested amount. Each partner pays income tax on the profits earned through their partnership.
  • Limited company: It has a separate legal entity from the owners. The profits are distributed among partners after paying corporation tax.

Every business structure has a different tax structure and legal liability. An accountant is a right person to discuss these.

Check our blog post about : Business structure types: limited company vs sole trader vs partnership.

2. Your tax obligations

Ask the potential candidate what your tax obligations and related timelines are.

Once you choose the type of business structure you want, you have to determine your tax obligations. These are the different types of taxes that are present in the UK.

  • Income tax
  • Corporate tax
  • Payroll taxes
  • VAT
  • Import duties

Your accountant will help make you understand all the tax obligations you have. Apart from this, you must know how to file, when to file them, and what data you will need.

3. What are your financial options?

If your business is just in the starting stage, you must know the different financing options you have right now. You can do this even after some time, too, but this is quite important for entrepreneurs starting their new business journey.

There can be the need for additional financial assistance to grow your business now or in the future. Knowing where to look when you need money is essential.

Some of the funding options that you have

  • Crowdfunding
  • Investors
  • Business loans or credit cards

Apart from this, different options vary from one business to another. Your accountant will help you understand these and guide you through the entire process. Knowing whether your accountant knows about these or not in advance is essential.

4. What records you should maintain?

As said above, you need records to file the taxes correctly. These financial records are the ones that will help you secure funding whenever you need it. So, it is always important to keep these records handy. An accountant can help you in figuring out what records your business needs.

Some of the most typical records that every business needs are

  • Financial statements (income statement, cash flow statement, balance sheet, forecasts and budgets)
  • Business tax returns
  • Bank statements
  • Contracts
  • Insurance documents
  • Business license and permits
  • Payroll records

Remember to have digital copies of these documents. With HMRC’s Making Tax Digital, saving the documents in digital format is essential. All of these records are needed to be stored for a specific time. Your accountant will help you in determining the same.

Business owners know the difference between a bookkeeper and an accountant

5. When is the tax season, and how to prepare for it?

Filing taxes is not an easy task. It requires time and effort. There will be many accounting forms to fill, reports to check, etc. Once the tax season is here, organising things may not be as easy as you wanted it to be.

So, get all the details from your accountant first. Know what all documents they need and by when.

Arrange these documents properly so that your accountant can complete the work efficiently. Remember that filing the taxes on time is mandatory for accountants.

Stay away from accountants who leave things to the eleventh hour.

6. What is the break-even point?

The Break-even point is when your total expenses are covered with the sales that you have done.

This means that you haven’t spent anything out of your pocket. You are making enough to cover the expenses. Knowing your break-even point will help you price the product, cut down on some unnecessary expenses, and have a pricing strategy in hand.

An accountant will go through all of your business records and get an idea of the break-even point. This amount will help you in knowing whether your business is in profit or loss.

7. How to manage the cash flow?

Cash flow should always be positive for any business. So, what is cash flow? The incoming and outgoing amount in your business. It is important for any business to be successful to have more sales than expenses.

An accountant can draw up a cash flow projection and ensure that the business has positive cash flow all the time.

8. What is the role of an accountant in the growth of your business?

Hiring an accountant can become a costly affair for businesses that are just starting or small businesses. You should know what an accountant will bring into the business first. At the end of the day, you want your business to grow right!

So, it is essential to know the role of your accountant in this entire situation. Accountants are experts in managing finances and taxes too. If you hire the right accountant, they can help you in every arena of your business. Starting from cash flow projection to the pricing, accountants’ suggestions play an essential role in the growth of the business.

9. Does my business have any industry-based tax regulations?

Some tax regulations are limited to only specific industries. For example, the shipping industry has freight tax, and the automotive industry has trade-in value tax. You have to know whether your industry has any of these taxes other than the usual ones.

Some industries get subsidies and tax credits, too, such as R&D. So, knowing about any such tax credits and specific taxes levied on your business can save you from spending more or penalties on taxes. It is something that every business owner has to know about.

Know about : outsourced accounting and how could it help businesses

10. Can you assess the entire value of my business?

Every business has a fair market value. Ask your accountant whether they can estimate this value and give you a clear idea about your business or not. Your accountant will start by understanding the financial plan, tangible assets and work on a Discounted Cash Flow analysis.

Once your accountant evaluates the business, they will know where your business is growing and what it is lacking. The accountant will start comparing your business with other ones in the industry and provide you with essential insights that will help in the growth of your business.

Every small business owner should know how to choose an accountant

Hire an Accountant

Work with UK-based Experts for tax, audit, accounting, payroll, & EIS/ SEIS needs.

Have a question? Call us on
0203 983 8100
Monday to Friday 9am – 4:30pm

Wrapping up

So, once you ask all of these questions to the accountant you are interviewing, you will get an idea of their knowledge. Every question here is intended for the growth of the business, and if the accountant can answer all of them with extreme clarity and confidence, they might be the one.

Either way choosing the right accountant is not going to be an easy process, and either you put in a lot of effort to get the right one or use Experlu.