No business is an island. Many small business owners (SBOs) turn to attorneys, bankers, insurance agents, staffing services, and so on, to support their growing businesses. But one professional tops the list in order of importance to small businesses – accountants.
An accountant can do many things to help SBOs manage their finances, some well known some less well known . At the end of the day, a good accountant is an invaluable resource who can help you make more informed decisions about managing your taxes, hiring, developing budgets, protecting cash flow, and more.
But where do you find a good accountant? What criteria should you use for evaluating one?
In this article, part of our Small Business Guide to Accounting series, we answer these questions and put you on the right path to a rewarding accountant relationship.
How to Find an Accountant for your Business
The first thing to recognize about finding an accountant is that the relationship is for the long haul. An accountant is a trusted advisor who will get to know and advise on the most intimate details of your business. Searching online for such a valued resource is like opening a can of worms, you’ll be bombarded with sponsored ads and listings with no real way of determining who’s worth pursuing and who’s not.
Instead, start your search with referrals. Pick the brains of fellow business owners, ask your lawyer, or banker. Your local chamber of commerce or Small Business Development Center are great meeting points for business owners. Attend a few networking or meet-up events, you’ll be surprised how eager your peers are to offer recommendations.
Understand the Difference Between a CPA, a Bookkeeper, and an Accountant
Not all accountants are created equal. So, it’s important to understand your accounting needs before you start your search.
A bookkeeper, for example, is someone who can help record transactions, such as accounts receivable and payable, pay sales taxes, etc. But a bookkeeper can’t offer financial or tax advice.
An accountant, on the other hand, does all the above, but they also prepare financial statements (profit and loss statement, balance sheet, etc.) and taxes.
However, a regular accountant is not recognized by the IRS as representing clients. For this, you’ll need a CPA or tax attorney.
A CPA is top of the ladder when it comes to accounting. They have passed exams and achieved certifications. A CPA is more knowledgeable in tax codes than an accountant and is eligible to sign tax returns on your behalf and represent you in front of the IRS in the event of an audit. In addition, a CPA can perform financial statement audits and reviews.
To find a CPA you can use your referral network or search the American Institute of Certified Public Accountants (AICPA) website.
How to Evaluate Candidates for your Accounting Needs
Once you have a pool of possible candidates, it’s time to find out which one is the right fit for your needs, business, industry, and preferred way of working. As you meet and greet accountants, have a list of prepared questions:
“Tell me about your experience with small business”. Small businesses have unique challenges and dynamic accounting needs. Focus can shift in the blink of an eye from cash flow concerns to taxes to hiring to needing help with a loan application. What experience does the accountant have with small businesses? Do they work much with businesses structured like yours, whether you’re a sole proprietor, LLC, partnership, or S corporation? Ask for references to back up any answers.
“How familiar are you with my industry?” Accountants often specialize in certain industries. If you’re a franchise, for example, it would be helpful to have an accountant who understands franchise business models.
“What range of services do you provide?” 71% of small businesses turn to an accountant to help with tax preparation. But that’s not all they do. Accountants can provide long-term strategic advice and help with important accounting tasks like budgeting, payroll, accounts receivable management, as well as informing growth decisions like hiring, financing, etc. In addition to asking what services they provide, don’t shy away from asking how they can help you grow your business too.
“How do you bill for services?” Most accountants charge by the hour. However, others may offer a monthly retainer. Dig deep to understand what the fee includes, are there any add-ons? Shop around to get an idea of a price point and model that works for you.
“Who’s my point of contact?” Since an accountant is a trusted advisor, find out who you’ll be working with day-to-day. Smaller firms may team you with a senior partner which might be a better fit for you as you seek to build a lasting relationship. Larger firms may not provide this kind of personal touch.
“How will you get to know my business?” Even if your accountant is just doing your taxes, they need to get to know your business so that they can help you make informed decisions. How will they approach this task? Other things to consider is how you’ll work together? What kind of schedule will they keep? How often will you meet (in person, by phone)? How quickly do they respond to questions and requests?
Choosing an accountant is one of the most important decisions an SBO will make. Take your time with your search, don’t just rush into a relationship during tax season, plan, assess your needs, but don’t put off this important milestone in your business growth until it’s too late.
Previously in the Small Business Guide to Accounting:
Which is the Best Accounting Method for your Business, Cash or Accrual?
What an Accountant Can Do for Your Business, and What They Can’t
Disclaimer: The information in this blog doesn’t replace the advice of a tax or legal expert. Fundbox and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. If you have any questions about your small business tax situation, talk to a professional.