4 Secrets for Finding The Right Small Business Accountant
April 09, 2015
You started your small business because you have a passion for your product or service, not so you could spend hours poring over accounting records to do your taxes. Many business owners say the best advice they've ever received was to hire an accountant to take care of the financial forecasting, recordkeeping and taxes. As part of our ongoing series on financial literacy, here are some things you should look for in a small business accountant.
Dig Into the Degrees and Licensing
You want your accountant to be competent, of course. But if you don’t understand accounting, how can you evaluate that? One way is to make sure that your accountant is a CPA, or Certified Public Accountant. The requirements to become a CPA are stringent. Most states require 120 semester hours of higher education plus two years of public accounting experience before a candidate can even sit for the CPA exam.
The American Institute of CPAs maintains a website that includes a directory of all state boards of accountancy and other accounting organizations by state. Make sure you access the board of accountancy for your state if you want to determine if the accountant you are considering is a CPA licensed in your state.
Examine the Expertise
Be on the lookout for an accountant who has experience working with small business clients. Just about all CPAs have experience with large, public accounting firms, but you want an accountant who has also worked in small businesses. If your accountant understands your particular business, that’s even better.
Make sure your accountant has experience filing tax returns for your business type. If your business is a C Corporation, don’t hire someone who usually does personal income taxes. Make sure they know the ins and outs of entities like yours.
If you already have an accounting software program that you like, make sure the accountant you hire is well versed in that particular program.
Follow the Fees
When you are trying to determine how much to budget for your accountant, think about what you want them to do. If you want someone to just do your taxes and give you advice on forecasting, budgeting and tax saving strategies, hiring a CPA at $200 to $300 per hour is well worth the investment. You will probably only need them for a few hours each year.
If you want someone to do data entry into your accounting software program, to manage your accounts receivable and payable, and to reconcile your bank accounts, hire a bookkeeper. For $30 to $40 an hour, a good bookkeeper will get your financial paperwork in order so that you’ll only need your accountant at tax time.
'Fit' is your Friend
Judging whether your accountant is a good ‘fit’ for your business may be subjective, but you should still consider it. Meet with prospective accountants to determine if they have a similar working style to yours. If you are a relaxed, go-with-the-flow type of business person, you may not want to choose an accountant who is nitpicky and high strung. You want someone whose skill set complements yours, but not someone who is so different from you that you can’t understand when they explain things to you, and vice versa.
Consider other details of the accountant’s practice as well. If you feel strongly about working with the same person all the time, choose a sole proprietor or a small firm. If you like being able to meet in person, make sure the accountant’s office is close enough to yours that it’s not a chore to get there.
Above all, make sure you trust your accountant to give you good advice and handle your financial affairs in an ethical way.