How to Choose an Accountant

Hiring the right accountant is one of the most important decisions you’ll make as a business owner. And don’t assume that you have to have a big company to need the services of an accountant. Most small businesses rely on accounting services when their financial challenges have become too complex for them to handle without expert help.

Perhaps you’re looking to improve the financial function of your company. Or maybe the accounting software you’re currently using doesn’t give you the kind of insight and feedback you need to reach your business goals. Are you having problems transitioning from cash to accrual accounting? Maybe your financial statements are often incomplete or inaccurate. These are all valid reasons for hiring a certified accountant.

They can help you look at the big picture. It’s probably one of the most financially rewarding business relationships you’ll have as an entrepreneur, so it’s in your company’s best interests to find a competent, reliable, and experienced person who can save you time and money year after year.

General accounting services cover four main areas:

  • Auditing
  • Accounting and record-keeping
  • Tax advice
  • Business advisory services

These four areas usually overlap. For example, your accountant can help you put together the financial statements required to get a loan. They also give you some advice on what you could do to improve your chances of getting your application approved. They are providing both auditing and business advisory services.

For basic accounting services, you can get a bookkeeper. For more complicated accounting, payroll services, and tax planning, you will need a certified public accountant. Some business owners, especially in the beginning, prefer to do these things by themselves, but as their business grows, they often come to the conclusion that their time would be better spend on other areas and leave accounting concerns to specialists.

Once you’ve decided it’s time to hire an account, you need to actually look for one. Here are some of the things you should consider.

Know What You Need

Before you start looking for an accountant, you need to figure out what responsibilities you want them to handle. Many small companies don’t have such a high volume of financial transactions that would require having a full-time or part-time accountant on staff.

If that’s the case, you might want to start by hiring an accounting firm or an outside accountant. This usually costs less than covering the salary and benefits of a full-time employee.

An accounting firm or outside certified accountant will prepare financial statements such as your balance sheet, income statements, cash flow statements, and tax returns while also providing you with advice based on analyzing your financial documents.

Most accounting firms charge an hourly rate, and the rates can be different according to the complexity of the accounting functions. Keep in mind that they should also be helping you save more money than the fees they’re charging.

Once your business revenue grows and the transactions get more complex, you might want to consider keeping a full-time accountant on staff. Their responsibilities usually include:

  • Daily transactions
  • General ledger
  • Chart of accounts
  • Preparing and analyzing financial statements
  • Cost accounting
  • Price variance analysis
  • Treasury and cash management
  • Payroll and fixed assets

When looking for a certified accountant or accounting firm, you don’t want to just do a Google search and go with the first results because you need to make sure they’re a good fit for your company. The biggest and most well-known firms might have a different set of clients and won’t understand the challenges you face as a small business owner. It’s generally better to go with a firm that’s a similar size to yours. They probably have more experience with small or mid-sized businesses, and their fees are more likely to be within your range.

Does Location Matter?

Before affordable high-speed internet and cloud accounting, it used to be important to get an accountant or accounting firm that’s close by. But these days, they really could be working from anywhere because they can get access to the same data no matter how far they are. You no longer have to limit your search to the same city or even the same state.

Of course, that all depends if you’re willing to work with them through email, phone calls, video conferencing software, and secure accounting software. If, on the other hand, you’d rather have face-to-face discussions or you need someone that can attend business meetings with you in-person, then you’ll have to search for an accountant or accounting firm that’s located nearby or willing to travel from time to time.

Key Qualifications

After you decide whether you want to hire a full-time accountant or work with an outside accounting or accounting firm, you need to think about qualifications. Since more than half of start-up executives are running a business for the first time in their lives, they can often be naïve about their requirements.

Most people believe that all an accountant does is review annual accounts and ensure tax compliance. However, that’s just part of it. They can also help you save money on taxes, find investors, access grants, and government funding pots as well as sell shares.

This all depends on their certifications. A certified public accountant or CPA has obtained an undergraduate degree and passed the requirements for state certification. To remain licensed and certified, they need to continue their training through additional courses.

CMA or certified management accountant can meet accounting requirements as well as participate in your company’s management team. Just like CPAs, they must pass an exam and continue their training through additional courses. There are other designations a CPA can hold, such as CVA or Certified Valuation Analyst, PFS or Personal Financial Specialist, and ABV, which stands for Accredited in Business Valuation.

In addition to relevant certifications, you should check what kind of experience they have in your industry. Some accountants or accounting firms specialize in non-profit organizations, others with retail companies, construction contractors, or auto dealers. You need someone that has experience preparing financial documents and tax returns for companies in the same market sector and of a similar size. If they also have a few larger clients, it could be a good sign because it means they’ll know how to handle your accounting needs as your company expands.

Moreover, accountants offer different levels of engagement, so ask how often you’ll be in contact. Less contact usually means lower fees. If you choose to work with a larger accounting firm, ask who will be dealing with your account because it’s often not the person you’ll initially speak to, and you want to make sure you won’t be passed to an office junior.