So you’ve come a long way from keeping a hodge podge of receipts in a box under your desk. You know that you need to take your accounting to the next level by working with an accountant, but do you need a sole practitioner or a practice? Or maybe a bookkeeper — but you’re not quite sure, because don’t bookkeepers just provide the same services as accountants? If the whole process of finding an accountant has got you overwhelmed, we’re here to help.
Here’s our guide to the three main types of accounting options for your small business:
Sole practitioners
A sole practitioner is an accountant who works by themselves, handling potentially all the financial needs of their clients. They can do loads of different things for your business, including compliance work (such as filing your statutory accounts, VAT, and other tax returns), give you tax advice, answer any questions you might have about your finances or your financial future, ensure that you claim all your allowable costs, and even give you advice about your business structure.
Pros:
You may get much more personalised service from a smaller firm, and some smaller firms are very specialised, which can be good if you only need one specific service. Also, a solo practitioner may be able to provide you with service that’s more tailored to your business which you might not get with a bigger firm.
Cons:
A solo accountant might not be able to handle all of your accounting needs, especially if they only specialise in one type of service. And while all accountants must be certified, there’s no absolute guarantee of service with a sole practitioner, whereas a larger practice has specific hiring standards. Finally, if it turns out that you and your sole practitioner accountant aren’t a good fit, you’ll have to start all over with another accountant, whereas in a bigger firm you could usually just switch accountants.
Large practices
There are also larger accounting practices made up of teams of accountants and sometimes other professionals too. They can generally provide any service that a sole practitioner can, and may be able to provide more specialised or large scale services, like international financial management. Many larger firms also have auxiliary services, such as business process outsourcing, logistics, or even human resources management.
Pros:
Whatever your accounting needs, chances are there will be someone at a larger practice who can take care of them. Bigger firms may also have experience working with different types of clients, which can mean they’re better suited to meet specific needs.
Cons:
You may get less personalised attention at a bigger firm, and you may pay more. Additionally, you may have to work around pre-specified packages or services, which means you might end up paying for things that you don’t really need.
Bookkeepers
A lot of people think that accountants and bookkeepers provide the same services, but actually, they focus on different areas of your finances. While an accountant can analyse what’s going on with your finances and give you advice about what to do (among many other things), a bookkeeper focuses more on the day to day finances of your business. This includes things like processing invoices and similar transactions, maintaining payroll, and reconciling accounts.
Pros:
A bookkeeper can be great for keeping the finances of your business running smoothly on a day to day basis. They’ve got your back when it comes to making sure that your financials are tidy (and legal) and help prepare data for an accountant to analyse.
Cons:
There are several important services that a bookkeeper can’t provide, including corporate reporting, tax advice, and audit help. This means that if you hire a bookkeeper, you may need to work with an accountant as well.
No matter which kind of service you go with, there are a few things you need to do yourself.
While it can be tempting to just dump a big box of receipts on your accountant’s desk come tax time, if you really want to get the most out of your relationship with them you need to be tracking expenses throughout the year. Ideally, you’ll use an accounting software that you and your accountant can collaborate on throughout the year. That way both of you can keep on top of things — and seriously minimise your stress come tax time.
Clear Books has a directory of dozens of accountants for your business to choose from.
