Working with a small business accountant you trust can save you time and provide insights into your business that can help you make better decisions. Whether you want a third party to file your taxes, handle payroll or prepare financial statements, an accountant can help.
But how do you find an accountant? You don't want to hire just anyone. Ideally, you'll want to choose someone who can be a trusted advisor for many years.
Read on for tips on where to find a small business accountant and what you should ask potential candidates before hiring them.
How to find an accountant for your small business
Typing "small business accountant" into Google search probably isn't the best way to find someone who will be responsible for handling sensitive financial information about your business.
Instead, try to get a referral from someone you trust — preferably another small business owner who can vouch for the accountant's work, honesty and integrity.
If you can't get a recommendation from someone you know, consider checking out professional organizations like the American Institute of Certified Public Accountants (AICPA).
Individuals who are members of professional organizations typically need to meet certain criteria. For example, AICPA members have received extensive accounting training and passed a rigorous exam, demonstrating their knowledge of accounting practices.
It's also smart to find an insured accountant in case they (on their employee) make a professional mistake or give you inaccurate advice that causes financial losses.
Remember, no matter who you choose and how you find them, it's important to do your own vetting as well.
6 questions to ask before hiring a small business accountant
When choosing an accountant, ask them the following questions to understand their background and if they're a match for your needs.
1. How much experience do you have working with small businesses in my industry?
While many accounting practices are standard across industries, some are industry-specific. It's important to work with someone who understands the nuances of your industry and has experience helping companies like yours.
2. What licenses/training do you have?
Pretty much anybody can be a tax preparer or set up a bookkeeping business, says Roxanne Coffelt, CPA, CVA and owner of a boutique CPA practice. "You don't know if they've had any training, any experience. Or if they've been embezzling from their former employer. You don't know any of it," she says.
So, it's important to do your due diligence.
Coffelt recommends that business owners take an accounting class to understand the basics and help them spot potential irregularities in the books.
Don't be afraid to ask candidates about their backgrounds. "Even if you're just looking for a bookkeeper, I would want someone who's taken at least a couple of accounting classes," she said.
It's also important to find out if they're licensed. The two main licenses to look for are:
- Certified Public Accountant (CPA). To get a CPA license, candidates must meet certain educational and professional requirements and pass an exam. To maintain their license, they must complete continuing education requirements each year.
- Enrolled agent. Enrolled agents prepare tax returns, advise businesses on tax issues and represent companies in front of the IRS. Agents must have previous work experience at the IRS or pass a three-part exam to earn the designation. They have to meet continuing education requirements to keep their status.
3. What services do you offer?
It’s important to make sure your accountant offers the services you’re looking for before hiring them. Different people provide different small business accounting services, including:
- Filing tax returns. A small business tax accountant can help ensure your tax returns are accurate. “When you file taxes, they need to be filed correctly. If not, the IRS is going to be on your back, and you don't want that," says Abdullah Isel, a tax accountant and owner of Isel Accounting and Tax Services.
- Bookkeeping. Having an accountant track the money coming into and going out of your business can help you manage your cash flow and free up some of your valuable time.
- Prepare financial statements. If you plan to apply for a loan, get a lease or buy expensive equipment, you need accurate financial statements to show creditors you can make the payments.
- Payroll. When you outsource your payroll function, your accountant handles paying your employees, withholding the appropriate deductions and sending the information to the IRS.
- Benchmarking. Get help comparing your financials to other companies in the same industry, so you can see how you stack up compared to the competition.
4. Who will I be working with?
If you decide to work with a firm with multiple accountants instead of a solo practitioner, find out who will handle your business.
5. What records do you need access to?
The answer to this question will vary based on the types of services your accountant provides. Records may include bank statements, credit card statements, bills, profit and loss reports, balance sheets and more.
6. What is the size of the largest company you worked for?
If the biggest company the accountant has worked for is a two-person mom-and-pop shop with annual revenue of $500,000, and you have a 30-person company with yearly revenue of $6 million, it may not be a good fit. Choose someone who can handle the volume of work your business generates.
How much does an accountant cost for a small business?
When it comes to pricing, there is no standard. Fees vary based on the size and complexity of your business, the services you receive and your geographic location.
How NEXT helps small business owners
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