Selecting an Accountant
It’s hard to find a good accountant — so hard, in fact, that it has become something of a running joke in the small business world. Here’s one way to find a good accountant:
Ask him or her this question:
Q: What’s the definition of an accountant?
And hope to get this answer:
A: Someone who solves a problem you didn’t know you had in a way you don’t understand.
Okay, so maybe that’s not entirely fair. But as with most humor there’s a grain of truth to the joke. Most small businesses choose an accountant — either appointing a “numbers person” on staff or hiring accounting services on a contract basis — when the financial challenges become too great to handle without expert help. Maybe you want to better the financial function of your business. Or perhaps your accounting software isn’t providing the type of data you need to grow your business. Having trouble switching from cash to accrual accounting? Are your financial statements inaccurate or incomplete? These are all good reasons to look for an accountant.
Choosing the Right Accountant
Many entrepreneurs who launch their own businesses start out by wearing the accountant’s hat and doing their own taxes, in addition to doing just about everything else in the business, too. It’s become easier for a layperson to keep track of their business finances with simple bookkeeping software such as QuickBooks, and Microsoft Office Small Business Accounting. But there comes a time in a growing enterprise when it makes sense to hand over responsibilities for taxes, accounting, and the rest of the financial functions to specialists. The right accountant can help a business with tax returns, long-term tax planning, business planning, payroll tax preparation, and even personal tax planning. It is an absolutely vital decision. You are trusting an accountant with your financial future as a small business. You’re hoping that it is someone well versed in what you need, and someone who has extensive business experience and can help you from a financial perspective.
When is it Time?
Many small businesses don’t have the volume of financial transactions that necessitate hiring a full-time — or even part-time — bookkeeper or accountant on staff. Then again, the financial situation of their business is such that they could benefit from more regular financial review and planning and up-to-date accounting — instead of leaving every invoice, receipt, and ledger to hand off to the tax preparer at the close of the fiscal year.
Should you Use an Outside Accountant?
An accounting firm usually handles the following accounting functions:
- Tax return preparation
- Preparing financial statements, including the balance sheet, income statement, and statement of cash flow
- Analysis or problem-solving advice
Every company is different. A business owner may expand the scope of work to include recording of transactions, but usually this is the responsibility of the “inside” accountant – it usually isn’t profitable to pay a firm to perform this duty.
An accounting firm may offer an hourly rate schedule. There may be different rates for different accounting functions depending on the level of complexity and who in the firm is actually performing the tasks. Keep in mind that a good tax expert should save the company money over and above his/her fees. The total annual invoice may appear high, but you now are getting a professional review of your statements and performance.
The Key Qualifications
You need to determine what qualifications your accountant should have before beginning your search. A non-certified accountant may be precisely what you need to handle your business’ financial statements, analysis, and bookkeeping. However, when it comes to tax advice and return preparation, business owners usually look to accountants who are certified and licensed. Here are some of the qualifications you may wish to consider:
Certifications: A CPA has an undergraduate degree, and has met the exam and experience requirements for state certification. A CPA must take continuing education courses to remain certified and licensed.
Industry expertise: In addition to certifications, you should look for some type of expertise in photography. Some firms have a specialty in auto dealers, others specialize in construction contractors, others work with non profits, and some may have experience in retail.
Complexity: Your decision on what qualifications to seek in an accountant must also take into consideration what services your business needs from an accountant. Maybe you only seek a firm to prepare your tax return and compile end-of-year financial statements. But if you also want tax and financial planning advice, or retirement planning advice, you may need to seek someone with different qualifications or background. Even with the latest convenience options in tax preparation, such as e-Filing and tax software, it is sometimes easiest to simply let a tax accountant do the work for you.
Finding a Referral
Find out who and/or which firms your friends and colleagues are using. Ask people in similar industries for names or referrals. Word of mouth is one of the best ways to identify good candidates for your business. Maybe your corporate attorney can make a recommendation. Your industry trade association also can be a good resource.
In a lot of relationships, the accountant is a trusted business advisor to that small business. They act as more than just outside accounting help. They’re a counselor to the family and they are involved in so many aspects of the owner’s business that the relationship has to be a trusting relationship.
Interviews and Reference Checks
Keep in mind that small business cannot afford to make a hiring mistake – especially with an accountant. The accountant will have access to the company’s books, records, and other proprietary information. It is imperative that you take the time to interview the firms and individual candidates. Check if they have experience in photography. If you are interviewing outside firms, ask to meet with the staff members who will be serving your account. Get comfortable with the firms’ culture and most importantly, the time they will dedicate to serve your business in a prompt manner. Make sure communication is clear and direct even with negative news or advice. Finally, check references. This is an important decision and the business owner must perform adequate due diligence before making a decision.