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Last updated: 19 March 2024
Accountant vs financial advisor: which do I need?
If you’re looking for help with your business finances, you might be debating whether to hire an accountant or a financial advisor. In this guide, we look at the difference between the two to help you decide which might be best for you and your business.
Choosing between an accountant or a financial advisor is a common topic for small business owners – and understandably so, as there are some similarities (but also some key differences) between the two.
Keep reading to find out what those differences are, when you might need an accountant, and when you might need a financial advisor.
What’s the difference between an accountant and a financial advisor?
When looking at small business finances, both an accountant and a financial advisor can provide valuable help and advice for you and your business. To understand the difference between an accountant and a financial advisor, it’s helpful to look at what each of them does.
What does an accountant do?
An accountant will typically review and analyse your business’s financial performance to ensure that your finances are all being managed and processed accurately and legally.
Here are some common tasks that an accountant will look after:
Reviewing and analysing bookkeeping figures
Tax planning and preparing tax returns
Helping you maximise your income and be as tax-efficient as possible
Setting up accounting software and establishing processes
Consultation and advice on general financial decision making
Planning a financial strategy for your business
Dealing with payroll issues
Accountants are there to help you stay on top of your daily business finances and keep you up-to-date with the latest tax laws. A good accountant will also be experienced in identifying potential risks or areas of your business that need attention.
The one area that an accountant won’t be able to help you with is advice for investing money – for that, you’ll need to enlist the help of a financial advisor.
What does a financial advisor do?
The main focus of a financial advisor is to essentially help you achieve your financial goals. In order to offer their services, financial advisors in the UK need to have specific qualifications and are regulated by the Financial Conduct Authority (FCA) – which protects you as a consumer.
Based on their expertise and qualifications, a financial advisor will be able to guide you on all aspects of business and/or personal finances. You’ll often find that many financial advisors will specialise and you’ll be able to find an advisor who is particularly experienced in working with small businesses.
Here are some popular areas that a financial advisor will cover:
Planning and setting financial goals for your business
Budgeting and financial planning
Investments and asset management
Tax planning
Cash flow modelling
Choosing the right financial products
When do I need a financial planner or an accountant?
A financial planner (or advisor) typically sees the bigger picture of your business and its finances, which can make them an excellent resource to help you plan and establish financial goals.
Equally, a financial planner will be able to help out if you’re thinking about investing any of your or your business’s money.
Financial planners can also act as a type of business adviser to help you identify new opportunities for your business – or areas that might have room for some improvement.
On the other hand, you might want to enlist the help of an accountant if you need some more hands-on help keeping your business finances in order. An accountant can save you a lot of time when dealing with paperwork, filing taxes and other complex financial tasks.
An accountant can also be useful in helping you decide whether being a sole trader or a limited company is the best choice for your business.
Wondering how much an accountant will cost? Check out our guide on accountant fees in the UK:
How much does an accountant cost for a small business?
What does an accountant do? Having an accountant is a great help for tradespeople. Accountants range from unqualified bookkeepers to those with professional qualifications. As well as handling your accounts and tax returns they can also offer helpful business advice. However, it’s worth noting that
Benefits of hiring a personal accountant vs financial advisor
Here are some of the benefits of hiring a personal accountant vs a financial advisor.
A personal accountant can:
Give you advice on how to plan or set up your business
Help you plan your financial strategy
Explain the implications, benefits and drawbacks of the various legal structures and advise on which would suit you best
Oversee all your bookkeeping to ensure all your finances are in order
Manage financial tasks when you don’t have the time
Make sure your business is as tax efficient as possible as it grows
A financial adviser can:
Help you invest money strategically for your business
Assess the viability of your business model against your long-term business goals
Work with you to outline a financial plan and timelines to achieve a profitable business
Prepare a formal plan for transferring your business to a new owner when approaching retirement
Provide niche expertise to help you predict, plan for and minimise any financial issues for your business
Look at the bigger picture and act as a business adviser to provide useful advice
Provide insight into the best way to generate and/or invest funds for your business
In summary, a financial adviser is usually there to help you grow your business and achieve your financial goals, while an accountant will make sure that everything you’re doing is done accurately and legally.
FAQs
Does an accountant give tax advice?
Yes, tax advice and planning are one of the most popular tasks for an accountant dealing with small businesses. They will help you plan the most tax-efficient way to run your business and offer advice on any tax exemptions or support schemes, deal with HMRC paperwork, and even process your tax returns.
Is a financial advisor ever worth it?
That depends on you and your business’s financial circumstances, but many small business owners will say that hiring a financial adviser is often money well spent. They can help you make important financial decisions, and plan your business’s financial goals and strategy to achieve them.
Can a financial advisor also be an accountant?
Financial advisors will have specific qualifications, and some may be qualified accountants and be able to provide accounting services, as well as financial advice. If you’re looking to hire a financial advisor and/or accountant, just make sure you choose someone with the relevant qualifications and accreditations (such as ACCA and FCA) to provide the services you need.
At what point is it worth getting a financial advisor?
If you feel that you need help with your finances, or you’re confused about making financial decisions for your business – now is the time to hire a financial advisor.
A financial advisor can help with investing or saving money, planning realistic and achievable financial goals for your business, and choosing the best financial products to use.
What is a CPA vs financial advisor?
A certified public accountant (CPA) refers to accountants in the US who have gained their CPA qualification, which sets out the professional standards for practising accountancy according to the American Institute of Certified Public Accountants (AICPA). The equivalent in the UK would be an accounting and finance professional who is a member of the Certified Public Accountants Association (CPAA).
