A man who runs two sandwich shops in Coventry hands over a carrier bag every January. Bank statements, a wedge of till rolls, invoices from a wholesaler, and a note apologising for the state of it. His accountant charges him £900, files the accounts and the return, and neither of them speaks again until the following December.
He is not badly served. He is barely served at all. The £900 buys a legal obligation being met, which is worth having, and nothing else. He has never been told that his second shop loses money, because nobody has ever looked at the two separately.
Anyone can call themselves an accountant
There is no protected title. A person with no qualification and no insurance can print cards saying accountant and take your work on Monday. What is restricted is narrower: statutory audit and insolvency work are reserved to people authorised to do them, and that is largely it.
What fills the gap is membership of a professional body. ICAEW, ACCA, ICAS, the AAT and CIOT all set entry standards, require continuing professional development, require professional indemnity insurance, and will hear a complaint against a member. If your accountant belongs to none of them, you have no route of complaint other than the courts.
There is one check that applies to everybody. Under the Money Laundering Regulations 2017, anyone providing accountancy or tax services in business must be supervised, either by a professional body or directly by HMRC. Ask who supervises them. A firm that cannot answer that question in one sentence is a firm to walk away from.
Ask also whether they hold professional indemnity insurance and for how much. You are handing someone the numbers your business is assessed on. If they get it wrong, the insurance is the only thing standing between their mistake and your money.
Compliance is the floor, and most people buy only the floor
Compliance work is the set of things that must happen or you are in trouble: annual accounts filed at Companies House, a Corporation Tax return to HMRC, a self assessment return, VAT returns, payroll run on time under Real Time Information. It is deadline-driven, it is largely the same work every year, and it is the cheapest thing an accountant sells because it can be systematised.
Advice is different work. It is someone looking at your management figures in August and telling you that your labour cost as a percentage of sales has moved four points since spring. It is being told before you sign a lease what the lease does to your cash. It is a conversation about whether to take on a fourth employee.
Most small firms buy compliance and then feel let down that they did not get advice. They were never charged for it. If you want the second thing, you have to ask for it, specify it and pay for it, and you have to give the accountant something to look at more often than once a year.
The practical test is simple. Ask how many times a year you will speak. If the answer is once, you have bought filing.
Fixed fees change what you are willing to ask
Hourly billing has one effect on a small business owner that nobody admits to: it stops you ringing. You have a question that would take eleven minutes to answer, you picture the invoice, and you guess instead. Over a year that is a lot of guessing.
A fixed monthly fee, agreed in advance and covering a defined list of work, removes that. You ring. The accountant has priced for a certain amount of contact and has an interest in your records being tidy, because tidy records cost them less to work with.
The risk with fixed fees is scope. Get the list in writing. Year-end accounts, Corporation Tax return, one director's self assessment, quarterly VAT, monthly payroll for up to six people, and a defined number of meetings is a scope. A monthly figure with no list attached is a hope. Ask specifically what triggers an extra bill: a company car, an HMRC enquiry, a second trade, an extra payslip run.
Where hourly still makes sense is genuine project work with an unknowable shape, such as defending a VAT enquiry or structuring a share sale. Nobody can quote that fairly in advance, and a fixed quote for it usually contains a large margin for the worst case.
Hand over the work, keep the numbers
The dividing line that works is this. Hand over the things where being wrong is expensive and the rules are technical: the Corporation Tax computation, the payroll calculation, capital allowances, the VAT treatment of anything unusual, the filings themselves. Those are skilled work with a penalty attached.
Keep, in your own hands, the things you need to feel. Your bank balance. Your rolling twelve-month turnover, because the VAT registration threshold is tested on a rolling basis and nobody else is watching it monthly for you. Your debtor list and how old each line is. Your gross margin by product or by site. An owner who outsources the feel of the business loses the ability to notice when something changes.
You will also need to authorise them formally with HMRC before they can act for you, through an agent authorisation. That is normal. What is not normal is an accountant who wants your Government Gateway credentials rather than proper agent access.
Ten minutes is enough to tell
Ask these, and listen to how fast the answer comes.
- Who supervises you for anti-money-laundering purposes, and which professional body are you a member of?
- What is included in the fee, in a list, and what causes an extra invoice?
- Who actually does my work, and will I speak to them or to a partner who then passes it on?
- How many clients in my trade do you have, and what is the one thing they all get wrong?
- If I ring you in June with a question about a lease, is that chargeable?
The fourth question is the one that separates them. An accountant with ten pubs on their books will have an immediate answer about stock control or wet-to-dry margin. An accountant who says every business is different is telling you they see you once a year, in January, in a carrier bag.
Where this shows up in the game
Business Baron gives you a named accountant rather than an advice button, and the relationship behaves like a relationship. Keep decent records and they spot the VAT threshold coming before you cross it. Keep poor ones and the first you hear about a problem is the letter from HMRC. The fee is a real monthly cost you can cut, and cutting it has consequences you will not see for two quarters. You can find out what a cheap accountant costs you in the free game, before you find out in life.