7 things you shouldn’t be asking your accountant about

Do you know what you should and shouldn’t be asking your accountant about? That may seem like a strange question, but you're often only paying your accountant to do your tax and compliance. They may do your year-end accounts and maybe some bookkeeping, but that’s essentially it. 

The mistake many business owners make is expecting their accountant to deal with many other things they’re not paying for. An accountant won’t tell you about the current position of your business or where you might be going in the future, and they won’t tell you how to plan for taxes and things like that. 

So if you’re wondering what else your accountant could not be expected to deal with for you, keep reading!

#1: You shouldn’t be asking your accountant about your pricing

As the Pricing Queen, you know I talk a lot about pricing - but your accountant will not help you do that. You have the numbers and my pricing calculator to be able to work it out for yourself. Go and work out what your price should be, based on how many hours you want to work and how much time you want to spend working. Lots of the podcast episodes in series one talk about how to package and how not to price by the hour. So go and listen to some of those episodes if you need help with this.

#2: How much you can pay yourself isn’t something for your accountant to answer

Your accountant will tell you how to pay yourself, which might be in the form of dividends or paying yourself a salary. And if you're self-employed, you need to make sure you keep back enough for that. But your accountant won’t tell you how much you should be taking out of your business and how to make sure you've got enough to be able to pay yourself.

So take a look at what you are paying yourself. How much do you want to pay yourself? How much do you need to pay yourself? Because you don’t want your business to be a really expensive hobby for you. It's essential to know how much you expect to pay yourself and how much you take out of your business. What comes in the top might be £5k a month, but if you're paying £5k a month in expenses, you're not paying yourself anything, and you need to move away from that as quickly as possible! It's a business, and it needs to earn you money.

#3: How to plan for your business is down to you

Another thing your accountant shouldn’t tell you is how to plan. So that’s everything from budgeting to tax planning and planning for VAT registration etc. Your accountant generally looks backwards. They'll make sure you do your VAT return on time and submit your accounts on time, as long as all the information is available. They'll also submit the correct taxes and ensure you're not paying any more than you need to. But they won't make sure that you’re planning for that sort of thing. It’s up to you to decide what you’re going to do if you become VAT registered. Are you going to put up your prices by 20%, or will you have to absorb some of that or have a mixture of the two? Your accountant doesn’t look at what your business plan is for the next 12 months and plan accordingly - you have to. 

#4: You need to make sure you have enough money for taxes

Your accountant won't ensure you’ve got enough money to pay tax. So you need to be planning and making sure you keep aside enough for things like corporation tax and income tax, which don't come around more than once a year. You can suddenly get shocked by a huge tax bill if you’re not putting money aside to cover it. Part of that is submitting things early so you've got time to plan for it. But it's also having forecasts in place to understand those numbers.

#5: Don't ask your accountant how your business is performing

When it comes to seeing what's happening financially in your business and how to manage your costs, your accountant can’t help you. I get that your annual accounts aren’t the most beautiful thing to look at, and nobody ever looks at them unless looking at a business on Companies House. But your business performance is something you need to look at personally - and that means looking at your accounts.

It's kind of seeing how much cash is in the bank. How much have you outstanding in debtors? How many people do you owe money to, and how many people owe money to you? It’s about what’s happening in your business now. Your accounts are usually nine months out of date, and that’s a big gap in time, and you can't be looking at that. Now I know I want to know what my financial position is at the end of each month. Did I make enough? Did I spend too much? What is happening with that, and how is my business performing?

#6: Don’t be asking your accountant to understand your business

An accountant doesn’t have to understand your business. They’re doing your accounts, which are essentially the same for everybody. Yes, there are some different things - some businesses have stock, some take all credit card payments, and some might manufacture - but essentially, accounts are structured the same for everybody. And it's a process of going through and tidying up the numbers, making sure you're reporting all the right things and submitting on a compliance basis. But they don't need to understand your business. And again, unless you're paying them to, they don't understand your business, and they don't need to. They’re just making sure you're compliant with what needs to go on. So really think about what you're expecting from your accountant and what you’re assuming they will and won’t do. 

#7: Forecasting how your business will look in 12 months is on you

And the last one is expecting your accountant to answer what your business will look like in 12 months and how the cash flow will work for that. I think it's really looking at are you going to run out of cash? Will you be able to afford to invest in things? What about taking on staff and things like that? Your accountant won't help you with that sort of thing.

It's really important to get to grips with what your accountant should be doing for you and what you expected they would do. Because there's often a massive gap between those two things. You're usually paying them to do two or three days work a year, to do your accounts and your tax. Yet you're expecting them to also understand your business, sort out your bookkeeping and all of that sort of thing when you're probably not paying for any of that.

So have a think about whether that's something your accountant can offer if you need those things. But it's also something that I believe you should know. You should understand your business and what it looks like, even if you don't want to do the work yourself. You should know what's happening in your business financially, no matter how painful that is for you.

And if you’re looking for help getting clear on your numbers and pricing etc., check out my pricing calculator - you’ll find it here.