A guide to hiring an accountant

Thinking of hiring an accountant?


It may not be the first profession that springs to mind when one thinks about property professionals, but an accountant can be mightily handy in many situations!

Accountants can analyse and organise financial accounts as well as give advice and assistance with applying for mortgages.

You might find an accountant especially useful if you have complicated financial affairs, are self-employed, or own a buy-to-let property.

Although it might seem counter-intuitive, hiring an accountant can save you a lot of money – as well as hassle and time.

When might I need one?

There are three common situations when you might find hiring an accountant especially useful:

  1. If you have complicated financial affairs, such as having money tied up in assets and not having a regular and demonstrable cash flow – this can create difficulties when applying for mortgages;
  2. If you are self-employed and are unable to prove that you have a regular cash flow – again, this can cause problems when applying for mortgages;
  3. If you are involved in buying property to let – accountants can assist you with tax-related work and make sure you pay the least amount of tax possible on buy-to-let or holiday homes.

In addition to these three common areas, accountants can advise you on choosing and ordering your finances to obtain the right mortgage and ‘tax mitigation’ (trimming the tax bills, associated with selling or renting out property, as much as possible).

What are the benefits of using a professional over a D.I.Y. job?

Accountancy is not really something that you can do for yourself – unless you are an accountant. It is highly specialised and requires expert knowledge. In addition to this, tax-related laws and loopholes emerge everyday so it is difficult for a non-professional to keep up with the current situation.

There are two main benefits of using an accountant: peace of mind and saving money. With regard to peace of mind, if you have an accountant working for you, you know that everything is in order; all the tax returns will have been sent, and that you are doing everything above-board. Depending on how complicated your property situation is, this can be a real boon.

The second, and probably most prominent, reason for using an account is saving money. If you are letting or selling a property, you will need to pay tax; an accountant can devise a scheme that is tailored to your situation and should be able to trim your overall tax bill by applying their knowledge of the property tax system to your specific situation.

Where can I find one?

Like most services, accountants can be found in the your local directory but this is not always the best way to find someone as you have no idea how fair their rates are or what the quality of their work is like.

An excellent way to find an accountant is to ask people in a similar situation to you who they use; if this is not possible, try asking your estate agent for a recommendation.

A list of several UK-based property-focused firms can be found on www.landlordzone.co.uk Please note that this is far from an exhaustive list: there are many thousands of firms in the whole of the United Kingdom, ranging from one-man high street practices to the "big four" accountancy firms.

What qualifications/accreditations should you look for?


There are several different accepted qualifications within the world of accountancy.

Widely accepted as the most prestigious accountancy qualification, the ACA chartered qualification is probably the best qualification, but other professional qualifications such as the ACCA certificate qualification are also fine. Another slightly more industry-focused qualification is the CIMA – again, this would be fine for the purpose of assisting you with property-related tax queries.

Perhaps as important as qualifications, however, is experience. You should really look to hire someone with no less than 3 years’ property accountancy experience, and preferably more.

You will probably have to pay a little more for experience, but ultimately it is worth it: an experienced accountant will be less likely to make errors and will probably have a better knowledge of the tax system and property market than someone who has only recently qualified.

Cost

The rates charged by your accountant will vary depending on location in the country and the amount of experience they have – as well as the job you are asking them to do. Quotations are free and you can obtain one by telephoning firms directly or by emailing them.

As a very rough guide, a chartered accountant, based outside London, should charge roughly £200-250 (not including VAT) for a landlord’s tax return and anywhere from £80 to £150 as an hourly rate.

It is important to get several quotes for the work; this way you can ensure that you are getting a good deal, and you may even be able to play of the firms against each other!


There are a few things to be wary of when dealing with certain less reputable firms.

Firstly, ensure that you are not being billed for phone calls and e-mails (most reasonable firms will not charge for this). Secondly, ensure that all fees or hourly rates are arranged in advance so that you have an idea of what the cost will be.

If possible, try to find an accountant who will bill you for the overall job as opposed to an hourly rate; this way, you know exactly how much you will eventually be paying. With an hourly rate, there is little incentive for an accountant to hurry.

How can I cut down my bill?

As mentioned before, ask around and get multiple quotes. Once you have done this, there is one more thing you can do: Be organised.

  • Being organised means filing bills and invoices and other such paperwork. You might also want to use accounting software such as Quicken or Microsoft Money to help order your accounts.
  • Anything you can do to organize your paperwork and cut down the amount of time needed by accountant will cut your bill.

For some jobs, such as providing advice on selling, you will not be able to do anything; but for many jobs, especially tax-related ones that landlords often face, a neat and ordered filing system could save you money!

Questions to ask your accountant

  • How long have you been practising?
  • Are you a property specialist/Have you got experience in this area?
  • Can you please give me a written quote with a full cost breakdown?
  • Do you bill for phone calls and e-mails or are they included in the service?
  • Are you willing to set a job rate as opposed to an hourly rate?

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