Tips to Choose an Accountant for Your Small Business

Irrespective of the industry your small business falls into, you cannot understate the value of a good accountant. You can get a bookkeeper for basic accounting services, an accountant who has a degree in accounting for more complicated accounting and payroll services, or a certified public accountant who can help with tax planning and also prepare taxes. All of these people can share strategic advice for business growth.

Know What You Need

But before you choose an accountant, you need first to understand the kind of work or responsibilities you want the accountant to handle for your business. If you need monthly financial statements and bookkeeping tasks, a non-certified accountant or bookkeeper can be hired. But to get tax planning advice, tax returns prepared, or audited financial statements, you need a CPA or certified public accountant.

Look For Small Business Experience

Beware of big accounting firms. You need someone who works with small businesses, and it could also be a bonus if the accountant works with businesses in your industry. While working for clients from a specific industry for a long time, some accountants get to know the related challenges very well. If the accountant has been dealing with several clients like you, he/she can guide you well about making the right financial decisions for the growth of your company.

Decide Whether You Need an Accountant or a CPA Firm

Many small business owners start by managing their taxes on their own. Unlike the past, it has become much easier for business owners to do simple bookkeeping tasks with the help of advanced software like QuickBooks, Xero, Sage, and similar others.

Ask for Recommendations

One way to find an accountant for your business is to ask other business owners about whom they use. Nothing is better than a recommendation from one of your peers. Ask about their experience of working with their accountant or bookkeeper, and get some idea of the budget you’ll need to have to pay for these services

How to choose an accountant for your small business

Picking the right accountant is a vital business decision, so you’ll need to arm yourself with the right assessment questions. Charlotte Simmonds hears the experts’ views on what these should be

Choosing the right accountant is one of the most important decisions a small business can make. A good one can save you time and help your business grow; a bad one could cost you much needed money. Yet with thousands to choose from, it can be a daunting call to make. So when it comes to selecting and working with an accountant, what are the questions every small business owner should ask so as to make the most informed choice?

Why should I hire you?

Hiring an accountant can be “even more important” than taking on a member of staff, says Clive Lewis, head of enterprise at The Institute of Chartered Accountants in England and Wales (ICAEW). “If you get the wrong person, you can miss out on things you should know,” he explains, “and that can be very costly.”

Charlotte Chung, senior policy advisor at the Association of Chartered Certified Accountants (ACCA), says the key thing to query during the hiring process is how the accountant will add financial value to your company. “Look for someone who can act as a business partner. You want them to demonstrate the skills and knowledge of supporting a small business.”

Therefore, take your time with research. Both Chung and Lewis advise meeting with a least three candidates before making a final choice. There are a few fundamental questions that must be asked during these meetings

How to Choose an Accountant Who Is Also an Advisor

Accountants help you keep an eye on major costs as early as the startup stage, a time when you’re probably preoccupied with counting every paper clip and postage stamp. Accountants help you look at the big picture.

In fact, perhaps no other business relationship has such potential to pay off. Nowadays, accountants are more than just bean counters. A good accountant can be your company’s financial partner for life — with intimate knowledge of everything from how you’re going to finance your next forklift to how you’re going to finance your daughter’s college education.

These four disciplines often overlap. For instance, if your accountant is helping you prepare the financial statements you need for a loan, and he or she gives you some insights into how certain estimates could be recalculated to get a more favorable review, the accountant is crossing the line from auditing into business advisory services.

Services

Most accounting firms offer tax and auditing services. But what about bookkeeping? Management consulting? Estate planning? Will the accountant help you design and implement financial information systems? Other services a CPA may offer include analyzing transactions for loans and financing; preparing, auditing, reviewing and compiling financial statements; managing investments; and representing you before tax authorities.

Personality

Is the accountant’s style compatible with yours? Be sure the people you are meeting with are the same ones who will be handling your business. At many accounting firms, some partners handle sales and new business, then pass the actual account work on to others.

Questions to Ask When You Choose a Tax Accountant

If you are considering early exercising of a significant number of options or are thinking about selling options in the public market for the first time we highly recommend retaining a reputable tax accountant. We realize this means you will incur a fee, but it is highly justified given the risk you take on incurring significant unforeseen taxes if you don’t consult a great tax accountant.  It is not as easy to quantify the savings from hiring a tax accountant as it is from hiring an estate planner (see our recent post by Abe Zuckerman regarding Estate Planners), but it’s just as necessary. Like most people, you’re probably not sure how to choose a tax accountant.

Do they have expertise in areas relevant to you?

If you work for a technology company that issues stock options or RSUs, then make sure your accountant has worked with plenty of other clients in the same situation.  Better yet, make sure she has clients who work in more senior positions than you because with seniority usually comes more complexity. A true professional will tell you if she is not appropriate for the job, either because your return is too simple to warrant her help or too complex due to her lack of relevant experience (a common example where a lot of experience is needed would be the area of oil and gas partnerships)

How many years of individual tax experience do they have?

An appropriate tax advisor should have a minimum of five years experience doing individual tax returns. Experience with a large firm is usually better than a small firm because she will have been exposed to a broader set of issues and her training should be better

What license(s) do they have?

It would be preferable for your tax preparer to have a CPA (Certified Public Accountant license) although it is not technically required. Tax Attorneys should have a LL.M in Tax (an advanced tax degree for an attorney).

Do they have an advanced degree?

A CPA can do tax work even if she hasn’t had any special training in tax. I know that sounds crazy. That’s why it might make sense to look for someone with more advanced training like a tax specialty within an MBA. My tax advisor, Bob Guenley (who has written a number of guest posts for us), told me he only took one tax course in college and learned a lot on the job, but getting his MBA in tax made a whole world of difference. His MBA included individual, partnership, corporate and fiduciary tax, which is more than one needs if she wants to specialize in individual tax, but it’s awfully nice to have someone advise you who has that broad perspective. An advanced degree isn’t necessary if your accountant has taken advanced classes in personal tax as part of her ongoing Continuing Professional Education requirement. There is no correct answer to this question. I just think your tax advisor/preparer needs to have taken several courses emphasizing personal taxes.

Choosing an accountant

When choosing an accountant, look for one that will suit you or your business. Some accountants specialise in tax returns for individuals or for businesses in a particular industry, and others are experts in a particular area of tax.

If you’re an employee

An accountant can be useful if you have multiple jobs or income from investments. They can also help you claim all the tax deductions you’re entitled to and make sure your tax return is correct.

If you work for yourself

If you work for yourself as a sole trader, contractor or freelancer, an accountant can help.

Help with your business

If you run your own business, an accountant can help you set up and maintain your financial records. They can also help you meet your tax obligations.

Finding the right accountant

A good place to start looking for an accountant is recommendations from people you know