'Woo'd' by a New Accountant - advice please

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
Hello,

I run the admin/ finance side of our family building business. I am taking final ( well hopefully ) technicial exams in June.

My father started and ran the Co for 30 years and then retired leaving myself and my brother to continue the business.

We have used the same accountant for all of that time. He is reliable, trustworthy, and we have a very good relationship with them. However, they seem to 'go through the motions' and whilst there would NEVER be any risk with them, there is never any tax efficiency advice etc.

Yesterday , I met a new accountant and was not expecting anything - loyalty and all that. However, he straight away explained that if I become a director, because if you take no more than 30K in dividends , only the 19% corporation tax is paid, with no further personal tax liability to myself. Thus saving the Co approx 5K per year in the difference of the PAYE and NI. - Better cash flow etc etc.He also said that our existing accountant uses 'archaic' layouts for our accounts.

1) Is the info correct - can I trust him?
2) I really liked the guy - and feel that maybe its time for a fresh start
3) Do I trust my instincts, and go with the new ( albeit a bit of a risk ), or stay safe and stay with the old.
4) What are your feelings about the loyalty thing?


Sorry for the epic post, but would really appreciate some objective advice.

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:'Woo'd' by a New Accountant - advice please

    sorry - that was

    'technician' exams - duh!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:'Woo'd' by a New Accountant - advice please

    Is your brother already a director and ,if so, why aren't you? Will it lead to problems in the company if you become a director?
    Then I think the first thing I would do is ask the existing accountant to explain why he is not doing this for you.
    I would then ask around about the new accountant to find out other clients views. After all, when you want work done, you would normally ask for three quotes and then view work done before making a decision.

    Regards
    Peter
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:'Woo'd' by a New Accountant - advice please

    thankyou farmergiles
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:'Woo'd' by a New Accountant - advice please

    In answer to your questions:

    i) This is fairly standard tax planning advice. Be aware that the corporation tax rate is now 20% and will increase to 22% over the next two years but, currently, the NI savings still make the low salary, high dividend approach very tax efficient. I constructed a chart (here) which shows how much tax can be saved at various profit levels.

    ii) It is important that you have a good working relationship with your accountant. Many clients come to me because their previous advisers were not proactive enough and forthcoming with ways to help their profitability and reduce their tax.

    iii) To be honest, the tax advice you have been given by the 'new guy' is so basic I would hate to think how much extra tax you have paid over the past 7 or 8 years in particular.

    iv) Times are a changing. In all industry sectors, particularly through use of the internet, people are comparing services for both quality and pricing. They are also able to conduct their own research into tax efficient structures. This has meant that the days of staying loyal to a particular service provider for the duration of a business are long gone.

    It sounds to me like it is time for a change. As Peter suggested, have a chat with three different accountants and get a feel for who will provide the best service for you at the right price.

    Good luck!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:'Woo'd' by a New Accountant - advice please

    Thank you so much for your reply Dean. It has put my mind at rest considerably.

    And - the experience has shown me how important the ethics are in this industry. One day ( post exams, and with some experience ) I hope to help people with their accounts. I hope that I can always keep up with the times etc.

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