Last week I had the pleasure of interviewing Mr Alan Williams, one of the Directors and Founders of Nixon Willams accountants who I've mentioned several times previously. I'll let you read through interview for yourself, but I believe Alan has provided some really great insights and offered some extremely helpful advice - so I hope you find it useful!

In addition Alan has very kindly offered 50% discount to all readers of this blog for their first 3 months of service when quoting 'ONOLAN' as your referrer to Nixon Williams.

And so we begin!

Hi Alan, thanks very much for agreeing to a short interview both for myself and the readers! Could you tell us a little bit about yourself and your work / position within Nixon Williams?

I am one of the directors of Nixon Williams Limited.  My career took me through various of industries covering medical, bullion, chemicals, paper and transport, I gained my accountancy qualification with the Chartered Institute of Management Accountants (CIMA) in 1990.  I and my colleague set up the company in 1995, initially to handle the accounts for my contractor brother and his friends.  Through word of mouth, our reputation spread and we took on more and more clients, this is now our fourteenth year and I continue to take an active day to day involvement with the business and our clients.
You've been going since 1995 and have built up a very strong client base all over the country, even a couple down here with me in West Sussex as I understand it! How is it that you've managed to position yourself as accountants that are able to function effectively without being local to the client? Has this been significant to working with the number of IT specialists which you work with?
Our client base is spread throughout the country, in fact only a very small percentage of our clients are what could be called “local”.  From day one we set out to operate in an efficient way and remembering to keep the clients informed with what we were doing for them.  Unlike traditional accountants, we keep in contact with our clients throughout the year, rather than a once yearly or even quarterly reviews.  By efficient management we are able to process our clients details faster than many accountants appear to manage. The extensive use of email, telephone and post allows us to support clients from around the UK, whilst a visit to your doctor is best face to face, forward thinking accountants are able to provide a great service, at low cost from remote locations.  This is similar to many other service companies such as banks, insurance, pension companies etc, although I would add that all our staff are based in the UK, whilst some of our competitors have set up off-shore processing centre’s, all our processing and staff are located at our main office in the UK. We do work with many IT contractors, and I am sure that as they are familiar with new technology, they clearly understand that good service does not necessarily have to be on your door step.
As you may already know from reading the blog, I've just recently left full time employment to pursue my own business in website design and development, as many of the readers here have already done or are planning to do in the coming months. What advice would you give to us from an accounting point of view to really hit the ground running?
My basic advice would be to keep your administration simple.  All we ask is for clients to send copies of invoices, expenses, bank statements and any letters/forms from HMRC and we take care of the rest.  I have seen several thousand contractors accounts over the years, and in cases where they have got into difficulties it is due to unnecessary complication and not keeping in touch with their accountant.  Probably the worst case I can recall is a client who operated 24 bank accounts for his company, and then wondered why he lost track of where his money was!
One of the problems which we web designers have is that we love to have an application for every purpose, so right now I have about 4 different accounting/invoicing programs which I'm "testing" to see which I'll use in the future. Do you have a preference for accounting software? Are there any programs that a client of yours could use which would make your life easier?
We do not use accounting information used by clients, most clients have perhaps no more than 40-50 invoices a year and an individual accounting system for this level of activity is overkill.  Whilst we use systems to manage clients accounting records, my view is that there is no requirement for clients to use such software. Whilst some competitors require clients to input their own accounting details onto spreadsheets etc, you are basically paying for the privilege.  To paraphrase a popular quote, It is like your accountant looking at your watch when you ask them what time it is.
One of my main concerns with starting out on my own is that I'm finding it very tricky to forecast my income for the year - one month I might have two small client's totaling £1200 but another month I might have a large client who pay £6000, my rates fluctuate based on the size of the project as well as the frequency of the work which I receive. Is there an accepted way to forecast income with such large margins of potential fluctuation?
It is very difficult to forecast income when there is little certainly of future income.  Generally forecasts need some basis to be of any use, if you have a widely fluctuating income and it is not known when this is likely to come in, the forecast may have little relevance.  Perhaps you will need to forecast a base income level and treat extra income as a bonus as and when it comes in.  You will need to revisit the forecast as your income hopefully grows.
Another concern which I've had is what company structure to choose, I personally am currently a sole trader but I hope to employ people in the future. Could you offer any advice on the differences between being a sole trader and a limited company specifically within the web design industry? What type of individual would benefit most from each scenario?
I [can] think of few reasons to recommend trading as a sole trader, the limited company option has various benefits as a vehicle to trade through.  Some of the reasons are:
  1. With a limited company you benefit from limited liability so if the company fails, your personal losses are limited, as a sole trader your personal losses would be unlimited.
  2. If you wish to retain funds within the company for future growth, you will not suffer personal taxes on this profit.  You would only be personally taxed on profits as you withdraw them from the company.  As a sole trader you are taxed on the profits whether or not you spend or re-invest them.
  3. Some companies are wary of dealing with sole traders as in some situations they could be liable for unpaid taxes etc.  Companies that are aware of this issue tend to stay away from using some sole traders.  This is certainly an issue if you intend to gain work via agencies.

Generally in business, people expect to deal with a limited company, sole trader structures tend to be for smaller traders such as shops, catering etc.
When looking for an accountant (in general) what should web designers be on the look out for? Are there any practices or areas in accounting that are specifically crucial to our industry?

The simple answer is to engage Nixon Williams! – although this may be seen as a biased answer, I would tend to avoid typical high street accountants, whilst they have a place, my experience shows that they are not generally geared up to dealing with our type of clients on a regular basis and tend to only contact the client annually.  A specialist accountant will generally be more able to deal with your business and should charge you less, although check what you are getting, most of the specialist accountants offer the same all inclusive package, with just the fees being different.

Other than employing an accountant, what are some things that a web design company can do to really keep their books in order during their first year of trading?

A good accountant should be all that you need for this, there is certainly no need to employ someone to “do the books” – the size of the business rarely warrants this.

Any other advice you'd like to offer?

Remember that what you spend is still effectively your money, just because it has a company name on the cheque does not make it less painful.  Although you should get tax relief on most costs, this effectively will only reduce the cost by 21%, so you are still paying 79% of the cost, so do not waste money on something your business will not benefit from.

I'd like to thank Alan very much for agreeing to an interview with me and taking the time to answer all my questions! If you have any further questions please leave them in the comments, and don't forget to quote 'ONOLAN' as your reference for your 50% discount with Nixon Williams!