Choosing an accountant who fits the way your business runs

A small business may need help with anything from checking its books to preparing accounts and submitting tax returns. Those jobs are not automatically included in every accounting package, and the work you need can change with your business structure, staff and reporting obligations. Start by listing the tasks you want to hand over and the information you expect back. Then compare providers on scope, communication, fees and how you will keep oversight of the records and deadlines.

Which accounting tasks do you want to outsource?

Write down the tasks that take time or carry a risk of being missed. These could include transaction recording, bank reconciliations, VAT returns, payroll, year-end accounts, tax returns or management reports. Do not assume that “accounting support” includes all of them: ask the provider to define each service and its frequency.

Consider what you need to see as well as what you want done. Regular figures on income, costs, unpaid invoices and cash flow may be more useful for running the business than receiving accounts only at year end. The government’s business accounting guidance recommends keeping accurate records and setting aside time for bookkeeping; it also notes that outsourcing can cost money and does not remove your responsibility for tax and finances.

If you are comparing outsourced support with other business services, set the same scope, reporting expectations and responsibilities for each provider. The broader business services checklist covers how to choose and manage outsourced work.

What should you check before appointing an accountant?

Start with your business structure and current obligations. A sole trader and a limited company do not have the same reporting requirements, and a company may need annual statutory accounts and a Company Tax Return. Ask the accountant which parts of your situation they have included in their proposal, rather than relying on a generic package description.

Check the working arrangement as carefully as the service list:

• Scope: Which returns, reconciliations, reports and queries are included, and which cost extra?
• Records: What will you send, how often, and in what format?
• Software: Can the proposed system work with your existing records and any applicable Making Tax Digital requirements?
• Communication: Who will be your day-to-day contact, and how will you be told about missing information or approaching deadlines?
• Fees: Is the price fixed, recurring or based on time? Ask how additional work is approved and billed.
• Handover: What access will you retain to records, software and submitted returns if the arrangement ends?

Request a written engagement letter or equivalent terms before work starts. It should make the agreed services and responsibilities clear enough for you to spot gaps, such as payroll being excluded when you employ staff.

Should you use an accountant, a bookkeeper or both?

The choice depends on the work you need and how much you can manage internally. You can keep the books yourself and hire an accountant for periodic checks or year-end filings. A bookkeeper may handle routine records, while an accountant takes on more complex reporting or tax work. Some firms offer both, but compare the actual tasks and handoffs rather than the job titles.

For sole traders and landlords affected by Making Tax Digital for Income Tax, HMRC says a taxpayer can appoint a main agent and supporting agents for different tasks. Its guidance gives the example of a bookkeeper maintaining digital records and sending updates, while an accountant finalises the overall tax position and submits the return. If more than one agent is involved, agree who coordinates the information sent to HMRC.

There is no single arrangement that suits every small business. If your records are already well organised and your affairs are simple, you may need less ongoing help. If you have employees, stock, several income streams or frequent reporting tasks, ask providers how their service covers those specific demands.

How can you put the arrangement into practice?

Before the start date, agree a records calendar: what you send, when you send it and who checks that it is complete. Set up access to relevant bank feeds and accounting software only through the provider’s agreed process, and retain your own access to business records. Decide how urgent queries will be handled and who must approve payments, tax submissions or other decisions.

Make the first review practical. Compare the provider’s opening balances and records with your own, check that the agreed services are set up, and confirm how to find copies of filings and reports. For Making Tax Digital, check that the software and agent authorisations match the tasks being delegated. HMRC’s agent guidance distinguishes the tasks available to main and supporting agents.

How do you check whether the service is working?

Review the arrangement at an agreed interval and after any major change, such as hiring staff, changing business structure or starting a new reporting obligation. Check that the records are current, submissions have been made when expected, and reports answer the questions you need to manage the business. Ask for an explanation of unusual movements rather than treating a completed return as proof that every underlying record is right.

For a limited company, appointing an accountant does not transfer the director’s legal responsibility. GOV.UK states that directors remain responsible for company records, accounts and performance even when they hire someone to manage tasks day to day. Keep oversight by reviewing filings, retaining access to records and raising discrepancies promptly.

If the service no longer fits, compare the agreed scope with the work delivered, discuss any gaps and document changes to responsibilities or fees. A clear handover plan helps you maintain continuity if you change provider or bring tasks back in-house.

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