Responsibility of a business owner

What you should know and how to find the right accountant.

Sometimes we fall into the trap of thinking our accountant handles everything. The age old saying ‘oh my accountant handles that’.

It’s understandable as to why we say and think that. There is so much regulations, legislation and rules, that it can be a minefield to navigate. Most business owners are good at what they do. From window cleaning to marketing agencies. Those running the business are focused on the industry they are in, not their accounts.

So they outsource their accounts to a ‘professional’ to handle.

At what point does it no longer become the accountants’ job, what is the company director liable for?

Due to the digital advancements in the financial field, more accountants are offering a one stop shop for business owners. Automatic bank feeds, receipt capture and weekly reports delivered via email. It’s all too easy getting comfortable and thinking your accountant has everything covered.

But did you know that if accounts are submitted to HMRC incorrectly, it’s not the accountant who is liable. It’s you, the business owner. Whilst most accountants are regulated and audited, if something is wrong with the business’ financial records, unfortunately it’s on your hands as the business owner.

This can be a scary thought. You’ve put your faith in the hands of a trusted professional thinking they are taking care of it, only for HMRC to be sending fine letters to your doorstep.

There are a few reasons this might happen. These can be mitigated by understanding;

  • what you as a company director are responsible for
  • what to look out for in an accountant
  • why you need to be transparent
  • how to build a great relationship with your accountant

We’ll run through those points today, making sure you’re in the best place possible to run your business.

What are company directors/ owners responsible for…?

Pretty much most things.

Unfortunately, it’s your name on the door which means the buck falls to you. As a director the responsibility, especially for your financial matters, is on you. You are liable.

Whilst a good quality accountant will help in building processes and measures to ensure regulations are met, it’s important that you as a business owner are completely transparent.

An accountant will typically form and submit a set of accounts based on the information you provide and have made available. That is part of an accountant’s job. To ask the right questions and ensure they have all the right information.

But if you’re not telling them about those cash in hand jobs that go into a ‘separate’ bank account… it’s on you.

The accountant’s job is to support the business, making sure you’re aware of your tax responsibilities, that your employees are being paid and so on. It’s not the accountant’s job to become liable for your business matters.

What should you look out for when instructing an accountant?

Did you know that nearly a third of accountants in the UK are ‘unregulated’? Meaning there are some people out there with little to no financial qualifications or regulation procedures. It can be a pretty scary thought. When was the last time you checked your accountants’ credentials?

Fear not, we hear to help you on this one.

When looking for an accountant it’s good to know who their regulated body is. Whilst this again does not offer you absolution from HMRC and well… the law, it does help with knowing you’re in ‘safer’ hands.

A regulated accountant will be registered to a professional/ governing body. Some of the most well-known are; ACCA, ICAEW, AAT. These are all governing bodies which require an accountant to pay a membership, evidence they possess the official qualifications and go through regular inspections.

To find a regulated accountant you can visit the governing bodies websites directly and use their ‘find an adviser’ search functions.

Accountants that are regulated mean that they have a code of conduct and regulations to follow. From proving they have done anti money laundering checks to various other regulations.

Each governing body has their own strict requirements. Using a regulated accountant is a simple, not completely full proof, safeguard. Knowing you’re dealing with a trained professional who is having their work checked.

The best way to think about this is when you see the ‘food & hygiene’ ratings at restaurants and takeaways. They are being regularly inspected to ensure standards are met.

You wouldn’t eat at 1/ no star restaurant, so why should your company’s finances be treated any differently?

Look for regulations and qualifications first.

Why transparency with your accountant matters

AML – anti money laundering. This forms a large part of inspections from governing bodies and transparency of bank accounts and monies in the business is needed to complete these checks.

When you first engage an accountant, they should ask and run checks. Such as anti-money laundering. If you make it difficult and are not 100% transparent with your accountant, it’s likely they will let you go as a client. The risk is too high for them.

Regulated and high-quality accountants know the cost of not running checks and sticking to procedure. Every year your accountants governing body will run a ‘at random’ spot check (audit). Making sure that your accountant has done and is meeting key regulations. If this is not done correctly it can be serious. From fines to even jail time should the governing body find suspicious activity.

Accountants are not the ‘wheeler and dealer’ who will hide your money from HMRC. It’s their job to actively ensure this is not happening. That your accounts are reported correctly and with the advances of technology in this field, it’s easier for accountants to spot when a client is up to no good.

It’s legit or quit for most accountants out there.

How to build a great relationship with your accountant

Building a strong relationship with your accountant is imperative to your company’s success. The whole industry has moved forward and accountants are now able to predict your future cashflow with ease, set up automatic invoice chasing, sort your CRM system out and much more.

However, this can only happen if you are transparent and willing to work with your accountant. Don’t hide or shy away from things… communicate frequently.

Yes, maybe you made a mistake with some accounts a while ago… now’s the time to be upfront and let your accountant know. They’ll be the best person to not only offer advice, but to set up procedures ensuring that it doesn’t happen again.

Accountants are working tirelessly to be more proactive than ever. But they can’t see and know everything. By working proactively yourself and asking questions… even the ones you don’t want to, will lead to a better relationship.

A better relationship with your accountant leads to better business.

Okay, so you’ve run your checks and got a great accountant. You’ve been upfront, expectations have been set and the relationship is blossoming.

What’s next?

The sky’s the limit. With the amazing advancements in technology such as Xero, Quickbooks & Receipt Bank, accountants can begin to automate your day to day bookkeeping processes.

Where you might have sat there on a Sunday night typing out all those receipts not knowing what you can claim back and realising you’ve just lost a fuel receipt, there’s other business owners sat with their feet up.

The new age accountant now utilises tools like Receipt Bank, so you can take a quick snap of your receipt on the go, with that information automatically uploaded into your account’s platform. Saving time and reducing the amount of ‘lost’ expenses. 

In return, you’re giving the accountant a constant stream of up to date information. Which enables the accountant to turn your business into one that looks forward and plans a better future, rather than looking back and worrying about tomorrow’s cashflow.

While each accountant is different and offers vary, building automation and cashflow projections to run a better business is how we work with our clients here at Bidwell. We work with transparent clients in this manner as we’ve found it enables us to offer even greater value.

Knowledge is power

You should now understand that your responsibility as a company director/ owner is to be 100% transparent with your accountant. Any HMRC submissions or undeclared earnings are on you. You’re liable.

A high-quality accountant will ensure you are meeting HMRC and other business regulations, whilst also transforming your business for the better. Offering greater visibility and more time back for you to spend running your business.

Whilst there are a fair few unregulated accountants out there, you now know what to be on lookout for.

If your accountant is not registered to a professional body, not running anti money laundering checks or speaking to you less than once a year, then there might be something amiss here and it’s worth asking some questions.

It’s perfectly natural at this point to have more questions. To help, subscribe to our newsletter filled with exclusive content and insights. If you have any questions about the above or think you might need to look at your options, give us a call on 01908 380391.

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