10 questions you must ask when you’re a limited company investing in property
You’re thinking about setting up as a limited company to invest in property. You’ve done your research and discovered that you could be much better off by doing so. And to save an incredible amount of tax, you’ve found out that setting up a limited company is much cheaper and quicker than you had imagined. Those lifestyle goals you’ve set for property investment could be achieved much faster.
Your friend has suggested that you use his accountant. He’s always done a good job on his personal tax. You’ve booked an appointment to meet with him, but you aren’t sure how to assess whether he’s right for you. Fear no more! Here are the 10 questions you need to ask any prospective accountant before hiring them to take care of your property investment tax affairs.
1. How long have you been an accountant?
This question is a good starter for ten. You want to hire someone who has a track record of helping small businesses leapfrog the hurdles they face.
2. What type of clients do you normally work with?
This is the perfect follow-up question. The accountant understands small businesses. That’s good news. You need to know that they understand your business: property investment. You want to hear that they have several clients on their books who are like you. This should give you confidence that they will understand unique challenges and keep up to date with current property tax issues, for example.
3. How will you help me to prepare for my tax returns?
What you should expect to hear is that the accountant will help you prepare early. They will help you collate all the forms and documents you need to submit your tax returns and company’s annual return. You should also expect to hear about how the accountant plans to keep you updated with any relevant tax changes. At this stage, it’s good to ask about your personal Self Assessment returns – the whole process is much easier if managed by the same accountant.
4. How will we communicate with each other?
You need to be clear about how you will be communicating with your accountant. Do they expect a face-to-face meeting, or are they happy to hold Skype meetings, for example? Can you send in all your documentation electronically, or will they expect hard copies?
Don’t underestimate the importance of this. Poor communication could lead to official letters from HMRC being misdirected and result in fines. So, my advice is to set the communication rules early.
5. Can you explain a certain tax deduction rule to me?
Do a little tax research before you step into the accountant’s office. Know a tax rule that applies to property investment inside out. For example, how tax relief on mortgage interest payments is changing and the effect on higher rate taxpayers. Ask the accountant to explain it to you. This should help to assess their up-to-date property tax knowledge, as well as their ability to explain complex rules to you. If they aren’t sure of the answer, it’s a massive red flag against hiring them.
6. Who will be working on my account?
You don’t want to hire an accountant who outsources work, and you want to know that there will be a named person looking after your company accounts. You need to know that there will be someone familiar with your business and how you work.
7. Could you advise me on what accounting system I should use?
There are many accounting systems available today. These remove the need for pen and paper, or complicated spreadsheets. They can integrate with bank accounts. You can attach invoices, receipts, and other important documentation to them. They make the process of keeping your accounts up to date easier and less time-consuming.
If the accountant has a preferred accounting system for you to use, you should listen to their advice. They can integrate with your system, meaning you have even less work to do. The workflow becomes a smooth process, and you should never be rushing around to hit tax deadlines.
8. How much do you charge?
You want to know in advance how much you will be charged for the accountancy services offered. Will they be charging hourly, or as a set fee per item of work processed? Will they invoice you with a single bill, or could you spread the cost by paying monthly?
9. Can you summarise how you will help me improve my bottom line?
Always ask this immediately after asking about charges. Your accountant should tell you about how they will help to minimise your tax liability, keep you tax compliant, and ensure completeness and timeliness to avoid fines and penalties.
Even better is the accountant who outlines one or two strategies that might be used to help you retain more of your profits.
10. Have you got any references I could contact?
Finally, ask for references. You must check out that what the accountant has told you is true, and that the accountant will live up to the high standards they have set themselves when answering the previous nine questions. If they can’t supply references, don’t hire them.
Now ask yourself this question
There’s one final question you need to ask before closing the deal: does the accountant speak your language? Most of us aren’t financial and tax experts. We’re property investors. When it comes to complex tax issues, you’ll probably need them explained in simpler terms.
While your accountant is the expert, you also need to understand your responsibilities and the financial standing of your limited company.
Get ahead of the game now. Contact Gladfish today on +44 207 923 6100 and book a strategy consultation. During our session, we will be able to recommend accountants who are experienced with property investors like you.
Live with passion and fun,
Brett Alegre-Wood
