Before you read on, let me make you an absolute promise, putting my professional credibility as a Xero Gold Partner and British Accountancy Awards Finalist on the line, that this is no gimmicky sales blog or fake news headline. It is simply a frustration-motivated call out to anyone that reads on to not assume that your accounts are being managed tax efficiently.
In the last month, I have taken on a number of new clients where I have saved them a significant amount of tax. It is not because I have access to any secret schemes, neither am I favoured with inside knowledge that is hidden from any other accountant. All that I have done (as I do for every single one of my customers) is taken the time to look at their individual situations and recommend appropriate action. Every accountant could (should) be doing this!
Losing tradition and gaining £6k
One of these new customers moved to us from a traditional firm with a one-size-fits-all approach. As with most of these type of accountancy practices, they employ specialists in each area. This sounds like a sensible and efficient strategy, doesn’t it? And it may work very well for the firm itself – but let’s consider the impact working like that has on you, the customer.
A specialist looks after everyone’s personal tax returns; elsewhere another expert is looking at the company tax return; a dedicated company accounts person is dealing with that aspect of the business; and in another department an efficient bookkeeping team are beavering away. The result is that no one is taking an overall view (or responsibility) to spot opportunities, between these different areas, that might minimise tax. Don’t get me wrong: accuracy and compliance are still critical to good accountancy, but there is so much more to getting true value and a return on your investment. Why pay more tax than you need to?
With this client, I simply reviewed every aspect of his situation, as a bigger picture opportunity. We looked at his salary vs dividends, recent changes in thresholds, his wife’s work status and various other details. The result was a £6,000 saving in tax, a saving he will make every year if legislation is unchanged.
Our fees were actually higher than his previous accountant, but the value we delivered in our first meeting and will continue to deliver every year makes his return on investment significantly higher.
When the taxman pays your mortgage…
For another of my new customers, simply by going through the same process of looking at every aspect of their accounts, I found them £18k per annum in tax savings. They are a local company and had been using a large top-75 accountant for years (I won’t say who but it’s a name you’d recognise). A similar scenario had clearly been happening, with a systematic, cookie-cutter approach in operation. When I presented the owner of the business with my findings he sat back and after a moment said, “in ten years that would pay off my mortgage”.
The very least that should happen!
I believe, that in the modern day, particularly with all the software and real-time accountancy tools available (like Xero), the least that should happen is an annual meeting between the business owner and their accountant. If your accountant has got even the faintest idea of business (above mere compliance accounting), and they are diligently committed to saving you more than they cost you, an annual planning meeting is essential.
An annual pre-yearend tax planning strategy meeting, where the right questions are being asked, is a valuable part of what we deliver at Meades & Co. All of my clients are offered one of these and if you aren’t I suggest you ask your accountant why not?
Call if you’d like to know what questions you should be asking them…