I receive emails every day asking for specific advice. There may be an obvious answer, but sometimes I don’t know whether I’m answering the right question. Accountancy is a complex area and usually a question can, or should, elicit a series of counter questions that grapple with the problem at depth. Whenever I’m asked a question I try to ask why five times to get to the root of the problem.
An example: new clients sometimes reveal they asked their old accountant whether they should incorporate and were told no, because since the rules changed a few years ago it’s not worth it. That answer is not technically wrong, but by missing the five whys they may have missed an opportunity. I’d begin with asking why they are asking the question in the first place. Do they want to save tax, and if so why? Perhaps they have surplus funds and don’t know what to do with them. Maybe they are an associate and want a deposit for a practice, or they are an owner in their mid-50s and want retirement funds. Two people who ask the same question shouldn’t be given the same advice.
Accountancy and tax, on the face of it, are black and white. They are governed by rule sets. But the art and skill set should be how we apply those rules to your individual circumstances, which involves a richness of information and relationship. I want to delve into your world and the more you let me the better the end results are going to be. Dentists spend a lot of time in clinical work and they’re cash rich, which can skew their perception of the tax question. For instance, if you see you’ve earnt £200k (in fact you may be fixated on this number because it’s so visible to you and have to pay £100k tax on it, you might feel that reducing that bill is a priority. But if we instead focus on growing your practice and making it more associate led, so it’s sale price is higher, the return could be much greater. Your practice could gain an extra £100k on the profit line, and an extra £500k on the sale price. You do have to look up and stand back from the hamster wheel to be able to appreciate these options.
We have a valuable process for new clients, with dedicated time to get to know them, their world and their unique pains. They may come to us wanting to pay less tax but feeling confused because they don’t understand how and why a tax liability has arisen. They might have a £50k tax bill, and their pain might not be the amount but the shock of discovering it with only a week before it’s due. Once we know what your pain point is we can help you.
The onboarding process includes a health check. Not just your trading figures but your personal budget too, and a wealth review. You might be generating surpluses which are left depreciating in a bank account. If a new client is planning to exit in 10 years, as we map their assets and pensions funds we will see if they are ready. So while we may simply be asked to do their accounts, we still look at the person and check whether we are meeting their seen and unseen needs. We want to make sure we are answering the right questions, even the questions they are not asking.
If you become a client of ours you can expect us to ask you a lot of questions. Don’t assume that when other accountants give you an answer that it is the final answer. They will be interested in gaining a deeper and broader understanding of you if they are in the business of giving you the best advice.
