How To Pick the Right Accountant for Your Small Business

The life of a small business owner can be a lonely one. Trying to do a million things at once to keep your business on a successful track is no easy feat.

Add making sure the government is happy, and you could end up with a bunch of sleepless nights.

So why spend them alone?

An accountant can be your best business advocate and your connection to sanity in a world of craziness.

Or juggling “all the things” can be your worst nightmare.

I’m a perfect example. During my first three years in business, I blazed through three different accountants. What a waste of time and money.

I don’t even remember how I found the first one though it was probably through the suggestion of a business colleague. I realized after about three months it wasn’t the right fit for me and started looking around.

I thought I did it right the second time. Nope! All was well until that accountant decided to sell out to someone else and never bothered to tell her clients. (That’s a story for another day.) The person who took over was a very clear mismatch.

After that a little legwork proved prudent, and my current accountant has been with my company for about ten years. If you spend some time going through the process outlined in this post, you can avoid the headaches I encountered.

Picking the right accountant for your small business is similar to choosing the right doctor for your health care. You want someone who is skilled and qualified.

Do You Need A CPA?

Depending on your business, you may or may not need an accountant that is certified as a CPA (Certified Public Accountant) — most small businesses don’t. When you choose a CPA, you are putting your financial security in the hands of a person who is supposed to be certified and up to date on every rule and regulation that applies to you and your business.

So, how can you choose the right accountant for your business needs?

The good news is that technology provides you with plenty of options for finding and working with an accountant.

But that’s the bad news, too. There are so many choices; it can be tough to narrow them down.

Services can range from completely virtual to totally hands-on. Let’s take a look at three steps to get you from overwhelmed to done.

The 3 Step Process For Choosing An Accountant

You’ll want to use a three-pronged approach to finding an accountant that’s perfect for you and your business.

Step 1 – Interview Yourself

Step 2 – Ask Friends and Family for Recommendations

Step 3 – Interview the Accountants

Step 1: Interview Yourself

Yep, I know. Sounds kind of funny. 🙂 You need to find out who you are and what you want. Put yourself in your prospective accountant’s office chair.

• What will you expect from your accountant?
• What kind of things will be deal makers and deal breakers?

It’s a good idea to know who you are and what your expectations are before you begin the next step. You can’t hire an accountant until you know what you’re looking for.

That means you need to take the time to think through your requirements before you make the first call. Take a few minutes to answer the following 10 questions before you proceed. Answer each question with a simple Yes or No.

1. I’m comfortable having a business discussion via e-mail.
2. I’d rather have business discussions on the phone.
3. I’m more comfortable if I can be face-to-face with someone during a business discussion.
4. I’m on top of my tax situation and fully aware of my obligations.
5. I’d rather not learn the ins and outs of the tax code; someone else can do that for me.
6. I hate organizing the financial papers that come with owning a business.
7. I get a lot of satisfaction from sorting through monthly receipts and tracking how they impact my business.
8. I prefer working with a large firm.
9. I’d rather do business with a small specialized firm.
10. I’m willing to dedicate cash resources to get the results I need.

Let’s take a look at what you said to help you decide where to start looking for an accountant and what type of firm you’ll select.

• Geographical Proximity  If you answered questions 1 and 2 with a yes, that means you are open to the possibility of having an accountant who may not be in the same city as you. Your comfort level with technology as a communication tool can be an asset you will put to work for you once you’ve made your selection. If you simply must have your discussions face-to-face, you’ll need to limit your search to your local area.
• Service Level  A yes answer to question 4 indicates you may not need to hire a full-time accountant as long as you’re willing to use your time for tax issues. You may be comfortable with someone who provides minimal direction and support of the activities you complete. On the other hand, if just thinking about all the reporting requirements and tax regulations makes you sick to your stomach, you’ll need to consider someone who can take on those responsibilities for you.
• Paper Handling  Some people just love taking all the invoices, sales, and expense receipts and making sense of them. But most people don’t. A yes to question 6 means you will need to seek out an accountant who can complete those details for you.
• Business Size  There are a variety of accounting firms, from small independents to huge companies with hundreds of employees. If you often feel lost in the crowd when working with large firms, then your best choice would be a small or mid-sized company. Although larger firms have a wider breadth of knowledge, it’s tough to establish a personal relationship with the people in the firm who may be handling your account. Sheer turnover can cause you frustration and wasted time and effort. A smaller firm is typically more connected to their clients on a personal basis and can provide specialized consulting and advice.
• Service Fees  Typical fees for accounting services range from $75 an hour at the low end to more than $300 an hour at the high end. Paying more doesn’t necessarily equate to better service or better advice. Some accountants work strictly on an hourly basis and others prefer a retainer. Think about your cost tolerance by checking your budget before you start interviewing.

Knowing what your requirements are will help you narrow down the next step of your search so you end up with just the right person.

Step 2: Ask Friends and Family for Recommendations

Friends and family are often a good resource, so why not ask them? Find out if their tax professional is taking any new clients or if they have time to give you advice.

Be honest with them.

If Uncle Al says his accountant is still using paper spreadsheets, tell Uncle Al you need someone with a computer. Then move on to the next opinion.

Get at least three good recommendations of accountants to interview. Don’t just ask friends and family for a name, ask them why with a few tough questions like:

• Why do you like using them? Be specific.
• What kind of business advice and tax advice have they offered you recently?
• Was their advice helpful in saving money?

Step 3: Interview the Accountants

Twenty or thirty years ago, accountants were often considered bookkeepers. Today, they are much more involved with business rules and regulations, and many have specified training in small business and taxes to help set them apart. The trick is to figure out exactly what you should look for in an accountant.

Here are some questions you should ask the accountant to ensure a good business fit:

• What kind of creative business advice will you offer me? – Sure they can crunch numbers but can they offer creative ways for you to save money now?
• Is your business tech-savvy? Staying at the forefront of technology, as a business, is a great indicator of keeping up with the times. As technology is able to produce info faster, your accountant should be the first to know.
• Who are your other clients? This indicates whether or not your accountant has dealt with businesses like yours and how busy they will be during tax time.
• Are you active in the local business community? Can your accountant introduce you to people who can help make business changes they suggest?

And then you want to dig a bit deeper to ensure a perfect fit. Here are some questions to help you do that:

• Do You Specialize in Businesses like Mine? Although this question may seem unimportant, it’s really one of the most critical. Retail has different requirements from service or manufacturing. Businesses that sell to the government have special commitments. Rules and regulations can be many or few. You want someone who is an expert on the tax issues that impact your business. If they’ve never worked with a business like yours, it could end up costing you more money in the long run.
• What Have You Done for Others? If all this accountant has done is provide reports and complete tax returns, that may be less than what you are looking for. Make sure they describe business results that are comparable to those you may be seeking. This is a good time to get three references to call.
• How Will I Be Charged? Let them give you a rundown of what they offer and the corresponding fees for the services. Do they offer a bundled package? Is everything a la carte? How does it compare to your requirements? Spend some time talking about exactly what you are looking for and what the exact cost will be. Discuss ways to minimize your cost if possible.
• What Is Your Education and Experience? How many years has the accountant been doing what they do? How do they stay up-to-date on current tax rules and regulations? Are they a general accountant or CPA? Unless your business has certain requirements like regular audits or complicated loan applications, a general accountant should work fine for you. The key here is to make sure their knowledge isn’t antiquated and that they are continually learning. The last thing you need is an expert who’s working from a playbook that’s 20 years old.

Plan on setting aside at least 30 minutes for each interview. Your interviews should be conducted in a face-to-face meeting unless you’ve chosen to consider an accountant who is not close to your business.

Even if the accountant is local, you may choose phone interviews just to save yourself time. But be careful doing that. You’re going to be working with this person for quite some time on very confidential issues about your business. A face-to-face meeting can help you clarify how easy this person will be to work with.

Remember as you conduct your interview to stay on topic. Don’t talk about tax issues. You are interviewing and trying to find out what type of fit this person will be for your business, not trying to solve problems.

It’s Time To Make Your Decision

What’s It Feel Like? Did this person seem to be genuinely interested in your business and working with you? Will you feel comfortable questioning them and asking for advice as your business grows? Do they listen?

Remember you will be spending a good bit of time communicating back and forth. The relationship is a very important part of this business agreement.

After you have done some soul searching, asked people you trust for recommendations, and interviewed at least three accountants or accounting firms with the difficult questions you needed to ask, it is time to pick your accountant.

• Sit down and go over the qualifications of each accountant or team of accountants. Weigh all the pros and cons and decide who would be the best accountant to hire.
• Don’t forget to write each accountant you rejected a simple thank you note with one or two reasons why you did not choose their firm. This will show them that, although you appreciated their time, your decision was based on specific facts.
• Don’t burn bridges – you never know when you could be back in their office. Most professionals appreciate honesty, so don’t be afraid to tell an accountant why you didn’t choose their firm.

Now that your accountant has been hired, it’s time to get to know each other.

With the difficult part over, take a few minutes to visit your accountant and find out what he or she will expect over the year, leading up to tax time.

Maintain a close relationship with your accountant and you, and your small business will benefit nicely for years to come.