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You are at:Home»Finance»Why hire a professional accountant?
Why hire a professional accountant?

Why hire a professional accountant?

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Posted By sme-admin on October 31, 2022 Finance

Most likely, an SME’s decision to use an accountant is based on a recommendation or price, but few will have asked about qualifications and membership of a professional body. If you’re an SME owner looking to strengthen your finance team or hire an accountant, look for the designatory letters that indicate planning and compliance expertise and professional body membership, eliciting benefits that equate to real value for your business.

  1. Future-proof your business

Now more than ever, companies of all shapes and sizes around the globe need the right support and assurance as they look to recover from the pandemic and thrive as recession looms. When choosing which accountant to use, qualifications are often assumed, but not validated. Many business owners are surprised to find out that accountancy qualifications are not mandatory, and are instead required by professional bodies, but only if an accountant chooses to join. This potentially leaves businesses vulnerable to unqualified of underqualified advisers. Having a professional accountant on the other hand means that they’re forward thinking and armed with best practice needed to excel in their role and help you drive your business forward.

Although it varies slightly from professional body to professional body, Institute of Financial Accountant (IFA) members, for example, must be qualified, have experience, have the correct insurance, be up to date with regulatory requirements, commit to continuing professional development, and subscribe to a code of ethics which guides their behaviour. IFA practising members are issued with annual practising certificates, which clients can ask to see.

  1. Avoid serious consequences

SMEs could be making ill-informed choices by using incorrect or fraudulent advice, without even realising. Many professional bodies including the IFA have long argued that many SMEs may be unwittingly using unregulated accountants, putting their business at risk and potentially even committing fraud. This leaves the sector and its clients wide open to potential misdemeanour, as any business or individual can call themselves an accountant. At best this could mean poor decision making or potentially fines from HMRC; the worst-case scenario is irreparable damage to their reputation and loss of their business.

Although employing an unregulated accountant may appear to be a money-saver, potentially business owners could be exposing themselves to significant risk. One business ended up with a VAT and tax bill of over £40,000 when their previous accountant, who was unregulated, failed to tell them they needed to be registered for VAT. HMRC eventually found out and the unregulated accountant just buried their head in the sand. Another case saw an unqualified accountant lose control of the finance function in a business. As a result, the business ended up with a £2 million deficit that was covered up.

  1. Gain trusted advice

As a business owner, you have every right to ask for credentials. Don’t just take it for granted. Don’t be afraid to ask accountants whether they are a qualified member of a professional body – this means you can be confident in the quality of advice you are receiving and assured of the accountant’s credibility.

Anyone can set up an accountancy practice, regardless of whether they have specialist experience, technical skills, qualifications or professional indemnity insurance. While providers of some services must be authorised, this is not the case with many other accountancy and taxation services. You wouldn’t go to an unqualified or unregulated doctor for medical advice, so why should this be any different when it comes to the health of your own business?

Using a regulated accountant will help ensure that SMEs can trust that their accountant’s knowledge is up-to-date and gives them access to a means of redress should they have concerns.

  1. Find the right solution for MTD ITSA

A regulated accountant will be well versed in recent and pending regulations. This is vital as the sector goes through some of the biggest changes to the tax system over the next three years, affecting every type of business, as well as sole traders and landlords.

For example, Making Tax Digital for Income Tax (MTD ITSA) is part of a ten-year plan to modernise the tax administration system and support the digitalisation of the UK. Coming into force on 6 April 2024, MTD ITSA will affect any individual earning over £10,000 gross income each year from self-employment or property. For businesses and individuals, this means keeping digital records, then filing quarterly updates, end-of-year adjustments and the final confirmation using compatible software.

Keeping up to date with the legislation to understand how MTD ITSA will impact SME owners is an essential requirement of an accountant. As a qualified member of a professional accountancy membership body, they will have the latest know-how and highest levels of technical competency required to assist businesses through this challenging period of change.

  1. Drive your sustainability strategy

Integrating sustainability within organisational strategy and an enhanced awareness of risks, such as climate change, can lead SMEs to make better-informed decisions. A regulated accountant has access to professional learning resources where sustainability and technology are key parts. SMEs can benefit from the latest insights their accountant provides to drive business efficiencies and support businesses in their digital transformation. Using an educated, holistic approach to operations, they can improve the flow of information throughout an organisation, minimising duplication and other inefficiencies.

Regulated accountants are best positioned to manage sustainability and deliver high-quality integrated reporting assurance, given their assurance skillset, experience in financial audit, and professional scepticism and judgement. Their professional training and experience provide both an understanding of organisations of all types and sizes, and an ability to apply judgement and problem solving in complex situations.

In summary

As one of the key roles of an accountant is to mitigate risk rather than increase it, hiring one with professional body membership might be the wisest business move an SME owner will make.

Search for an accountant: https://www.ifa.org.uk/find-an-accountant

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