What is a proactive accountant?

Most accountants say they are proactive, so it annoys me when I pick up new clients who have been left to their own devices for a year or more.

If you are running a business a genuinely proactive accountant can make a tremendous difference. He or she:

• Calls you regularly during the year and definitely before your financial year-end.
• Suggests things you can do before the year-end to save or postpone tax.
• Looks at your overall finances, not just your business ones, and your family.
• Makes suggestions based on Budget changes – for example, ways to get out of child benefit tax charges or benefit from the pension changes in the 2014 Budget.
• Looks ahead six or twelve months and suggests ways to deal with business risk.  For example, right now every Oaktree client with borrowings is being advised to put measures in place to deal with interest rate rises before they start happening.

If you are running a limited company your accountant:

• Advises on a suitable share structure for you and your family.
• Updates dividend paperwork during the year.
• Looks carefully at the last dividend in the tax year to ensure it fits in with the personal tax situations of shareholders.
• Advises you regularly on what the minimum company bank balance should be to avoid problems with HMRC.

If you are a limited company contractor your accountant:

• Keeps you informed about the changing rules on IR35 and relevant tax cases.
• Keeps a detailed risk register dealing with anything your contract legal review highlighted as a potential weakness.
• Gives you an annual report showing exactly how much extra tax you would pay within IR35.
• Spells out each year the factors which have helped you, in his or her view, to have a robust case for not being within IR35.

Any accountant who turns up only after the year-end, by definition, is a reactive one.

Friday 20 June 2014