Business insurance for accounting firms

For an accounting firm, the biggest risk is a mistake in a client's books, payroll or tax return that costs the client money. The cover for that is professional indemnity insurance, and for authorised accountants it is often a requirement. Because the firm handles clients' financial information and sometimes their payments, cyber and crime insurance are also worth a look.

An accounting firm's biggest risk

Mistakes at an accounting firm are rarely big all at once. They are small and they repeat. A wrong VAT rate in a client's bookkeeping template, a benefit left out of the payroll run, or a tax return filed a day late. The client only notices when the Swedish Tax Agency gets in touch, and by then the mistake has run for several periods.

Typical claims from clients concern:

• tax surcharges, late-filing fees and interest after a mistake in a return,
• extra costs for correcting the books and filing corrections,
• salary paid out wrongly that cannot be recovered,
• a decision the client made based on incorrect year-end accounts.

Example: The VAT deducted twice. A firm keeps the books for a retail company. A large supplier invoice is booked twice, and the input VAT is deducted twice in the VAT return. The mistake is found in a check by the Swedish Tax Agency a year later. The retailer has to repay the VAT with interest and receives a tax surcharge, and it claims that the firm should pay the surcharge and the interest. The firm's professional indemnity insurer investigates the claim and assesses what the firm is liable for.

What most accounting firms need

Professional indemnity

Pays the client's financial loss when it is caused by a mistake in the firm's work, and helps the firm answer unfounded claims. There is more on how it works on the page about professional indemnity insurance.

Cyber

The firm has access to clients' accounting software, bank accounts and personal data about their employees. A breach at the firm can hit many clients at once. Cyber insurance gives help during the attack and pays the costs of recovery and downtime.

Crime

Firms that pay clients' invoices or have access to their accounts are a target for fake invoices and false payment instructions. Crime insurance pays for money lost through crime, within the limits of the policy terms.

The basic cover

Property, general liability and legal protection are usually included in business insurance.

What clients and contracts require

To become an authorised accountant (auktoriserad redovisningskonsult), you need liability insurance. Many firms also use standard engagement agreements with general terms that cap the firm's liability at a set amount. Make sure the cap in the agreement and the insurance limit line up.

How much does it cost?

The premium for professional indemnity mainly depends on fees, the number of accountants, which services the firm provides and the limit chosen. For more on pricing, see how much business insurance costs.

SNI codes

SNI is the Swedish industry classification. This page covers companies with these codes:

• 69201 Accounting and bookkeeping
• 69202 Year-end accounts consulting
• 69203 Tax consultancy

Frequently asked questions

Does professional indemnity cover a tax surcharge the client received?

It depends on the policy terms. Claims for tax surcharges and late fees after the firm's mistake can be covered, but some terms exclude them. Check your försäkringsbrev (the policy document).

Is my professional body's insurance enough?

Some professional bodies offer group insurance for their members. It may be enough, but compare the limit with what your largest clients require and with the liability cap in your engagement agreements.

Do I need cyber insurance if I only work in cloud services?

The cloud provider protects its servers, not your logins. If your account is hijacked, the incident is the firm's, and the clients are the ones affected.

Does the insurance apply after I stop working for a client?

Professional indemnity usually covers claims made while the policy is in force, even if the mistake was made on a finished assignment. That is why the policy should stay in place for as long as claims can arrive.