So, you need to get a new accountant? Or you need to change your existing accountant?
Choosing an accountant is not an easy decision, but it needs to be done. Period.
The problem is that there’s a lot of choice available. Different firms, different offerings, different prices. It is also really hard to compare like-for-like. Sometimes it is also hard to figure out what you need from your accountant. How do you rate different accountants for your specific needs? What makes a good accountant? What makes a bad accountant? Should you go for the cheapest option? Or spend a small fortune?
Hopefully I can help you. In this article, I want to share some advice and my deep experience in dealing with accountants over many years.
I want to share how I tell a good accountant from a poor one, which firms are best, how you figure out what you need from your accountant and how to get the best value (not price).
Let’s start with the most important information…
The first question you have to ask yourself is where you are in your business development cycle. Are you just cruising or are you planning to aggressively grow your practice over the next few years? Your answer will dictate what type of accountant you should choose.
If you are a sole trader of a small, one- or two surgery practice, a local non-dental specialist accountant would probably suffice. But, on the other hand, if you are a practice owner with plans to grow your practice, and therefore personal income, you should be looking at a proactive accountant who are also qualified to give business and tax advice as part of their offering.
I hear you ask, “How much is this going to cost me?”. When choosing accountants, it is less about the direct fee you pay but more about the value you receive, and this is by far the single biggest metric by which you have to judge your accountant. Accountancy fees can vary from anything between £100 per month to £1000 per month depending on the services you require. This fee can become irrelevant very quickly if you consider the value a good accountant can offer. By this I mean advice like how to structure your capital purchases in your practice, this can alone save you £500 p/m. Good tax advice can save you up to twice this amount, so it is really a case of looking after the pounds rather than the pennies.
So, what are the top 5 questions to ask before appointing your next accountant?
1. Does your accountant embrace technology and use could-based accounting software?
Would you use a bank today that does not offer online banking? That means no online transfers, and you can only use cheques as a method of payment. Just as the world of banking has moved on, technology in accountancy has also moved on to offer you a better service. They key criteria here being that your accountant should offer you an online accounting system, such as Xero, which enables you to check your bank balances, who you owe money to and who owes you money at an instant, from your mobile.
2. Is your accountant a specialist in dental accounts?
Critically you would want your accountant to understand dentistry in its entirety. This includes NHS dentistry, NHS pension schemes and private dentistry. The critical questions here to ask your accountant are how many other dental clients does he or she have and ask for one or two references. Other questions you could ask to gauge their understanding of the dental industry are: What is the state of the dental market? What areas are doing well and who is struggling? What is the trend of UDA rates? How does my lab and material bills compare to other similar practices? What profit margins should I be aiming for?
3. How does your accountants’ fee structure work?
As mentioned above, it is notoriously difficult to compare accountancy services on a like-for-like basis. It is almost as difficult as choosing a dentist for dental implants from a patient perspective. The main reason for this is because there can be so many variations. Ideally you would want to choose an accountant that offers you a fixed-fee solution with no surprise bills at the end of the year. Obviously make sure you understand what is included in the fixed-fee and what is not.
4. Can your accountant offer you sound business advice from experience?
This goes back to my earlier point about making sure that your accountant understands the dental industry. You would want to be sure that if you are to embark on a big decision like buying an expensive piece of equipment or taking on new staff that you are comfortable in asking for financial advice from your accountant and that he or she is in a position to give you good sound advice based on his or hers experience in the sector. I always found the best advice came from accountants who have had exposure to a number of dental practices.
5. Can your accountant provide you with relevant monthly management accounts (i.e. monthly profitability)?
Further to my earlier point about using cloud technology, your accountant should be able to offer you monthly profit reports as well as your monthly tax bill estimates. After all, this is what it is all about – how much profit you make monthly and how much tax you have to pay. Having this information monthly will not only reduce your stress levels but will also put you in a position to manage your practice and your money much more proactively.
If you want to discuss any of these points or seek some free impartial advice do get in touch with me at The Peloton.