Why good accountants need to be more visible to small businesses

Whilst Small and Medium Enterprises (SMEs) account for around half of the turnover in the UK private sector[1], our own AAT research shows that over a quarter (26%) of small business owners have next to no accounting knowledge[2].

Surprisingly, despite having no accounting knowledge, small business owners, on average, don’t hire a qualified accountant until just over a year into operating their business; a period where 20% of all small businesses in the UK will fail[3].

It doesn’t add up. Keeping a tight grip on finances is one of the most fundamental factors in a business – small or large – either succeeding or failing. Without this, business owners may find themselves unable to pay their suppliers, cover their overheads, grow at the pace required to meet targets, know whether they can afford to launch new marketing or influencer campaigns or simply forecast effectively.

In reflecting on why small businesses are waiting a whole year to engage with a qualified accounting professional, when the first 12 months are one of the most crucial periods, there’s a variety of possible reasons. It may be that they are too busy getting the business off the ground to spare a thought on the accounting side, trying to keep costs to a minimum or perhaps they’re unsure who to use and, as a result, push the task of searching for the right option down to the bottom of the pile.

Whatever the reason, accountants – good ones, at least – can save new enterprises significant sums through effective financial planning, far outweighing their fees. A sentiment seasoned business owners agree with, as over a third (33%) advise others to hire an accountant[4].

Which brings me onto where can small business owners find an accountant? Well, actually, that should read – where can small business owners find a qualified, trusted accountant?

There is a real lack of knowledge around the accounting industry, and too many assumptions. For example, six out of 10 people have no idea that an accountant can practise without a qualification[5]. Or that around one third of all accountants practising in the UK are not members of a professional body. What’s more worrying is that most people don’t even know that they should be worrying about these things. They assume that any practising accountant adheres to standards and regulations.

Which, to be fair, is perhaps a fair assumption. How many of us ask to see the DBS check of our children’s nursery worker? Or ask our GP to produce evidence that they are suitably qualified to be in the position they’re in. We all just assume that their employer will have done these checks – or that the Industry itself has these things in place.

Any business owner should go into a partnership with an accountant with their eyes wide open, knowing exactly who they are working with. It’s up to them whether they use an accountant who is unregulated or not, but given the fact that four in 10 have suffered financial losses due to poor accounting[6], it emphasises the significant benefit to business owners choosing to work with someone who is appropriately qualified.

This is why easy-to-use, online search tools, that give business owners access to skilled and professional accountants, are so key. AAT provide one such tool with a Member Directory, allowing users to find anyone with an AAT license at the click of a button. This is an example of how, as a sector, we can work to ensure people are protected from rogue accountancy.

With tools like this, business owners can search by location, so can find an accountant located nearby to them if this is important, or can search by the name of the accountant, if they have been recommended someone specific by a friend or colleague. They can also select the accounting service they require help with, whether that’s bookkeeping, budgeting, forecasting, accounts preparation, tax, payroll – the list goes on – so they can match with an accountant that specialises in the specific topic area they are looking for.

It’s not just business owners that can benefit from accountant directories. It’s accountants themselves. It’s essentially a way to promote their services, drive more potential clients to their business, without having to spend a penny. In a nutshell, it’s free advertising. In AAT’s case we get searches every month on our Directory from a variety of small businesses, owners and founders, all looking for accounting services.

An accountant who is a member of a professional body will be regularly engaged in CPD (Continuing Professional Development) activity, enabling them to keep their knowledge and skills up-to-date as well as developing new abilities. It is worth emphasising that those who are members of a professional body also need to continuously meet rigorous ethical and professional standards, demonstrating that commitment to high standards of professionalism. This provides essential assurance, not just to new clients, but to those already engaged, helping to retain a client base.

It’s vital that small businesses are able to find skilled, professional accountants, who are fit for purpose. With 60% of small firms in the UK failing during the first three years of operating[7], navigating the challenges of the early months and years can be further assured by accessing appropriately qualified accountancy advice.

For further information on our Licensed Member Directory please visit https://www.aat.org.uk/find-an-accountant-or-bookkeeper

[1] Federation of Small Business, 2023 stats

[2] The research for AAT was carried out online by Opinion Matters between 18 and 21 November 2022 amongst a panel resulting in 2,010 UK adults (Aged 16+) & 500 Small Business Owners (Aged 18+) responding.

[3] Research by Fundsquire, a global start up funding network

[4] The research for AAT was carried out online by Opinion Matters between 18 and 21 November 2022 amongst a panel resulting in 2,010 UK adults (Aged 16+) & 500 Small Business Owners (Aged 18+) responding.

[5] AAT, Opinion Matters, February 2021

[6] AAT, Survey of businesses, 2023

[7] Research by Fundsquire, a global start up funding network