So, you have an Accountant or Bookkeeper, hopefully you’re happy with the service they provide, but could you explain your company or self-employed finances to someone?

Ultimately, as a business owner, you are legally responsible for your limited company or your self-employed accounts and tax returns and it’s you that signs those returns.

What accounts are right for my limited company?

There are different levels of accounts that can be prepared for a limited company and the simplest form of accounts (officially called FRS 105 for micro-entities i.e. a small company) might appear or sound like the best one to go for but are they really?

If you need to get a business loan, or you’re a sole director company and need a mortgage, you could need the accounts that are the next level up. This is because they show more information and the loan company or mortgage provider may need this information to assess if they should lend to you.

Your Accountant or Bookkeeper should discuss these different levels of accounts and what they mean for you and your limited company and if they’re the right accounts for your business and your future plans.

One thing to be aware of is that not every Accountant or Bookkeeper is allowed to prepare accounts at every level as it depends on the type of qualification they hold. If you’re not sure what type of qualification they hold or if they have restrictions on what accounts they can prepare for your business, you’re allowed to ask them.

In our next blog called “What is an Accountant?” we share more about the different types of qualifications for Accountants and Bookkeepers and what they all mean.

One piece of advice

Always make sure you have an engagement letter in place with your Accountant or Bookkeeper. This document lays out the legal responsibilities between you and them and keeps you “safe”.

It’s important that you understand the figures in your company accounts and if you don’t, you should feel confident that you can ask your Accountant or Bookkeeper questions about them. If you ever feel that you’re not comfortable or confident in the answers, then you must challenge it.

If they’re not sure, you need to be happy they won’t make something up or gloss over it but will tell you they need to go away and find the answer out. The accounting regulations and tax laws are vast, and no-one can be expected to know or remember everything!!!

If this makes you feel uncomfortable then flip the situation around. If this was your client wouldn’t you want them to understand what you’ve done and why?

As far as we are concerned, the best accountant isn’t the one that will tell you they can “save you vast amounts of tax” or they can offer you “cheap fees” but it is the one that will tell you they want to work hand in hand with you, and understand your business, and absolutely do the best job they possibly can for you.

So, trust your instincts and if it doesn’t feel right……………..

Don’t be afraid to ask!

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