What qualifications does my limited company accountant have?

For most limited company contractors, your accountant is likely to be the advisor you engage with more than any other. In this guide, we look at the professional qualifications held by accountants and accountancy firms.

As you’re entrusting the financial well-being of your business to a third party, you need to be sure that your books are in safe hands.

So, aside from the usual ‘top things to consider’ when choosing an accountant, how do you know that your adviser is technically proficient?

Although you will find many competent accountants without any formal qualifications, a professional accounting qualification carries a lot of weight and demonstrates that the holder has a high level of expertise and experience.

In this guide, we look at what the main UK accountancy qualifications mean, in practice.

The word ‘accountant’ isn’t a protected word

Surprisingly, anyone can call themselves an ‘accountant’. It’s not a protected term.

You can set up and run an accountancy firm whatever your experience or skill level. Their only legal requirement is to register with HMRC under the Money Laundering Regulations.

However, you can only call yourself a ‘chartered’ accountant if you hold the relevant qualifications.

AAT qualification

For accountants starting on their professional journey, they will usually have AAT (Association of Accounting Technicians) qualifications, of which there are three levels:

• AAT Foundation Certificate in Accounting
• AAT Advanced Diploma in Accounting
• AAT Professional Diploma in Accounting

These qualifications are internationally-recognised and equip accountants with the practical skills required to succeed in the role.

Many staff working for accountancy firms are studying for an AAT qualification.

What are chartered accountants?

In order for an accountant to gain chartered status, they will have had to study the subject to a very high level while also spending a number of years in the industry.

Chartered accountants will usually be members of trusted and respected professional bodies, such as:

• the Chartered Institute of Management Accountants (CIMA).
• the Institute of Chartered Accountants in England and Wales (ICAEW).
• the Association of Chartered Certified Accountants (ACCA).
• the Institute of Chartered Accountants of Scotland (ICAS).

So what benefits should you expect to enjoy when you hire a chartered accountant?

Fully regulated

When working with a chartered accountant, you get the benefit of a qualified professional who’s bound by a strict code of standards and ethics. Member firms undergo regular quality and compliance monitoring of the work they do.

Protection should things go wrong

If you use an unregulated or unqualified firm, you won’t have any protection should things go wrong and you need to make a complaint and gain some kind of redress. Members of the ICAEW, for example, must have professional indemnity cover of at least £1.5m.

Multi-skilled professional services

As well as helping you deal with the everyday accounting tasks familiar to all small company owners, chartered accountants often offer a wide range of extra services, including investment advice, probate, tax, insolvency and audits.

Although most contractors won’t need to explore these ancillary services, you might at some stage need professional advice on other matters, especially if you’re actively growing a business, or encounter some problems down the line.

Staying current with tax legislation

Another major advantage of having a chartered accountant in your corner is the ability to remain compliant and current with changing tax laws. Sometimes they may change without you realising it. Regulated firms will typically have access to regular tax updates from their professional body and other sources.

This is particularly important in the contracting industry, for example, which has been disproportionately targeted over the years. If you’re running your own limited company, your accountant should be well versed in dealing with IR35, the Off Payroll Rules, and the MSC Legislation.

Wealth of experience

Chartered accountants have to earn their right to be called as such, meaning they’ll have built up a lot of real life experience and an ability to make sound judgements.

Contractor accountants and qualifications

One thing to bear in mind when you hire an accountancy firm is that not all of the personnel you deal with will necessarily be qualified.

The firm might be a regulated firm of chartered accountants, but only a few members of staff will be individually qualified.

You will often have an ‘accounts manager’ who will deal with your day-to-day queries, but only a qualified accountant will sign off your annual accounts, or provide certain types of financial references.

But importantly, as long as the firm itself is regulated by a professional body, you know that you have a certain level of protection should anything go wrong.