Do you dread THAT email from your accountant or bookkeeper? You know the one – the one you’re scared to open once it pings into your inbox. The one that delivers not only the news about your tax bill but as if that’s not enough, also the bill for their fees. Whether you’re getting them to prepare the accounts from scratch, or just using them for the tax return, there are ways you can help minimise these fees.
Make sure your records are complete, with supporting documents
Regularly review your bank and credit card statements to ensure that every transaction is accounted for with supporting documents. Unsupported transactions mean your accountant will spend time (and fees) chasing you for answers and if they don’t get what they need may exclude items as genuine business transactions, which could increase your tax liability.
Provide clear explanations
Accountants are not Google – they don’t know what every possible purchase is on this planet – and if you don’t make it clear from the offset, either they or you will need to spend time finding out. This also applies to any transaction that is out of the norm – for example, a receipt not backed up with an invoice. Trust me – when you’re questioned on a transaction that happened more than a year ago, you’re far less likely to remember the facts!
If you’re doing the bookkeeping yourself, make sure each transaction entry includes useful information. Otherwise, a simple note on an invoice or even a list of ‘points to be aware of’ in an email will be well received. Be kind to them and they will love you as a client!
If it gets left to guesswork, you’ll risk your transactions being miscategorised based on assumptions by the accountant which will provide unreliable figures for you to compare against for past and future periods as well as potentially incorrect tax treatment.
Don’t be late!
You won’t be their favourite client if you’re always that one that leaves everything to the last minute – or worse, late. Ensure you give them enough time to accurately produce the necessary documents and filings for the required deadlines to avoid late filing penalties and interest. It’s in your benefit to get sorted early; you’ll give yourself more time to pay the tax bill, and also potentially save on accountancy fees – it’s not uncommon for accountants to increase their fees depending on how close the submission deadline is. If you’re consistently late they may even decide to stop working with you.
Have a separate bank account for your business
Make sure you have a separate bank account for your business transactions ONLY. Mixing business and personal only makes life difficult for the accountant, understanding which is which, leading to more queries, and question marks over ‘business’ items that could potentially be personal too, which may be disputed by HMRC.
Make sure the bookkeeping is accurate
If you’re doing the bookkeeping yourself, you need to make sure you have the time to dedicate to it and are confident that you have the knowledge to make a good job of it. Do it wrong and it will only result in a large mess that the accountant will need to fix which could incur significant fees. Consider whether outsourcing your books to them or a separate bookkeeper would be cheaper in the long run.
Understand your financials
The more knowledgeable and organised you are with your business financials, the more aware you’ll be of the ‘condition’ of your books, giving you time, if needed, to get them to a certain quality before you hand them over to your accountant. Not only will they have fewer questions, but any they do have you’ll be able to answer easily and quickly.
Have a think about where you could be going wrong and what you need to improve on. Apply the above and it’s not only going to help save money, but it’s also going to save you a lot of time and make your year-end a hell of a lot smoother!
If you’re ready to take control of your finances, so it becomes part of your routine and growth strategy, instead of just the year-end tax panic, sign up to my newsletter for regular tips and advice.