How to select an accountant

19 November `20

Choosing an accountant is not a simple task. I’ll explain things you should consider when selecting an accountant and compare Crunch, FreeAgent, Xero, Sage and Quickbooks.

Accounting v Bookkeeping

When selecting an accountant it’s important to be aware of the difference between an accountant and bookkeeping. 

Bookkeeping is the process of inputting and tracking data. For example, inputting expenses, creating and sending invoices and recording payments.

Accounting on the other hand is the process of bringing the data together, filing the required documentation to HMRC and companies house. For example, creating the year end accounts, calculating and filing corporation tax and submitting your VAT.

Some accounting services provide both accounting and bookkeeping, some provide bookkeeping with a little bit of automated accounting and some don’t offer any accounting at all.

Making Tax Digital

Making Tax Digital is a government plan to make submitting tax easier, efficient and more effective. At the moment only VAT is supported, however Self Assessment will come in 2023 and Corporation tax after. 

This is great news as it means more will be done with automation and therefore it will become cheaper and easier to do.

Choosing an accountant

Every business will have a different criteria for selecting an accountant. You’ll need to think about what your priority is.

Some things to consider:

  • Your business sector? Are you a contractor?
  • How much can you afford to pay? Trying to save money?
  • Do you have employees? Do you require payroll?
  • Do you have a lot of expenses? Do you need to store receipts from your phone?
  • How do you want to communicate? Do you prefer the personal touch?
  • How much time do you have? How much do you want to do?
  • How much do you know? Comfortable submitting tax forms yourself?

Once you’ve thought about what’s important to your business, you can select an accountant. Below I’ve listed the most popular cloud based accountants at the moment.

Crunch

£71.50 + VAT a month with a £25 + VAT setup fee

The package includes:

  • Bookkeeping (create invoices, expenses etc)
  • VAT registration and filing
  • Dividend calculations and vouchers
  • Accounting advice
  • Corporation Tax filing
  • Annual Accounts at year end
  • End of year PAYE
  • Bank feeds linked to account

The package does not include:

  • employee payroll (extra cost)
  • submitting confirmation statement (extra cost)
  • self assessment filing (extra cost)
  • Receipt scanning app (£3.50 + VAT extra)
  • Project tracking

Crunch Accounting specialise in providing accounting for contractors. They provide both online bookkeeping software and accounting advice / services. 

If you contact them, be aware that their advice can lack a personal touch. Also, if you ask questions that are outside of the realm of contracting accounting eg. property or investing, they will not be able to help you.

If you intend to just do contacting via an Ltd and nothing else, Crunch is fine. However, for other types of business, then I don’t think they would be for you.

If you register with Crunch and pay for 12 months you’ll get 10% off.

More about Crunch

FreeAgent

£14.50 + VAT a month for 6 months then £29 + VAT a month

The package includes:

  • Bookkeeping (create invoices, expenses etc)
  • Automated VAT filing
  • Dividend calculations and vouchers
  • Corporation Tax forecasting (not filing)
  • Receipt scanning
  • Automated Payroll
  • Bank feeds linked to account
  • Project tracking

The package does not include:

  • Accounting advice
  • Corporation Tax filing
  • submitting confirmation statement
  • Annual Accounts at year end
  • End of year PAYE

FreeAgent is a platform for bookkeeping. They have a platform to search and hire their recommended accountants.

If you register with FreeAgent and pay for 12 months you’ll get it for the price of 5 months

More about FreeAgent

Xero

£24 + VAT a month

The package includes:

  • Unlimited users
  • Bookkeeping (create invoices, expenses etc)
  • Automated VAT filing
  • Bank feeds linked to account

The package does not include:

  • Payroll ( £5 + VAT a month )
  • Project tracking ( £5 + VAT a month )
  • Receipt scanning ( £2.50 + VAT a month )
  • Accounting advice
  • Corporation Tax filing
  • submitting confirmation statement
  • Annual Accounts at year end
  • End of year PAYE

Xero is a standard bookkeeping service. Like most they provide a VAT submission service.

More about Xero

Sage

6 months free then £24 + VAT a month

Package includes:

  • Unlimited users
  • Bookkeeping (create invoices, expenses etc)
  • Automated VAT filing
  • Bank feeds linked to account
  • Receipt scanning

The package does not include:

  • Payroll ( £7 + VAT a month )
  • Project tracking
  • Accounting advice
  • Corporation Tax filing
  • submitting confirmation statement
  • Annual Accounts at year end
  • End of year PAYE

Sage is a very large company and well known for their accountancy software. Their service is purely bookkeeping.

However, the offer of 6 months free is a good offer, if you’re happy with their features.

More about Sage

Quickbooks

£20 + VAT a month (£10 a month for first 4 months)

Package includes:

  • Up to 3 users
  • Bookkeeping (create invoices, expenses etc)
  • Automated VAT filing
  • Bank feeds linked to account
  • Receipt scanning

The package does not include:

  • Payroll ( £4 + VAT a month )
  • Project tracking
  • Accounting advice
  • Corporation Tax filing
  • submitting confirmation statement
  • Annual Accounts at year end
  • End of year PAYE


More about Quickbooks