What an accountant does

The work, grouped

GOV.UK describes accountancy services as recording, reviewing, analysing, calculating and reporting on financial information for other people. Its examples include bookkeeping, preparing and signing accounts, tax advice, and help with completing and sending tax returns.¹ In practice the work falls into four groups.

Accountants are not only backward-looking. Some provide management accounts, forecasts and regular advice as part of their service, so you may not need a separate finance director for this. See Management accounts: what good looks like, and Part-time finance director for when more senior help may be worth it.

Dealing with HMRC for you

You can authorise an accountant or tax adviser as your agent to manage your tax affairs with HMRC.² They can then talk to HMRC and file returns for you. It is worth confirming in writing that this is part of the service.

What an accountant does not take over

• Your legal responsibility. A company's directors stay responsible for its accounting records and accounts. Small company accounts that claim audit exemption include a statement that the directors acknowledge this.³
• An audit, unless they are registered for it. A statutory audit can only be done by an auditor who is a member of a recognised supervisory body.⁴ A small company may be exempt from audit.³
• Work you have not agreed. If a service is not in your engagement letter, do not assume it is being done.

What may cost extra

There is no standard package. What one firm includes, another charges for separately. ICAEW tells its members that if they set a fixed fee, they must be clear about what work the fee covers, and that a client who asks for a fee breakdown must be given one.⁵

Work that may sit outside a basic fee, depending on the firm:

• bookkeeping, if you do not keep your own records;
• payroll, priced by the number of people paid;
• VAT returns;
• directors' own Self Assessment tax returns;
• dealing with an HMRC enquiry;
• management accounts and forecasts;
• one-off advice, such as on selling the business or taking on investors.

Ask for a written list of what is in and out before you agree. Our guide How accountancy fees work explains the ways firms charge.

Accountant, bookkeeper or both?

A bookkeeper keeps the day-to-day records. An accountant can do that too, but can also prepare accounts, deal with tax and give advice. See Accountant or bookkeeper? for which one fits.