Choosing a Small Business Accountant: A Step-By-Step Process
Understanding the financial situation of his or her business is critically important for a small business owner. While some owners are capable of keeping their own books and preparing financial statements, for most owners it is not their strength and not how they should spend their time. If you are like most owners, you are better off finding a small business accountant that is suited to your business and leave those tasks to him or her.
The first step in selecting an accountant for your small business is establishing some basic criteria of the professional skills and characteristics you need in the accountant of your choice. Will he be acting as a bookkeeper, entering all of the basic transactions of the business, or will he take your input and turn it into useful financial information? Does he need to set up your accounting software for you? Will he do your tax returns? Will he need to provide advice on obtaining bank financing?
You don't need to be too exact at this point in the process. You just need to have a general idea of what roles you want the accountant to fill.
The next step in finding the right accountant for your small business is simply getting a short list of names of potential accountants to consider. If your friends have small businesses, ask them if they recommend their own accountant. Your lawyer, banker or insurance agent may also be in a position to suggest accountants who would be appropriate for your business. Finally, there are many internet directories of accountants that can provide lists of accountants in your local area.
Once you have gathered the names of several accountants, you should prescreen them using available resources such as their own websites. Eliminate any that don't seem to meet the basic criteria.
Next, contact the accountants remaining on your list and schedule an interview with each of them. Meet each accountant face to face. Your accountant and your attorney will be your two closest advisors as your business grows, so you should be comfortable that you can openly discuss your problems with them and feel confident in their answers.
At the interview, you should not plan to ask for specific financial or accounting advice except as needed to assess their ability to answer questions and communicate their answers to you. Instead, you should focus on determining their capacity to meet the long term needs of your business for accurate and understandable financial information. Among the topics to cover are:
- Are the accountant's clients companies similar in size to yours? Some accountants look mostly for large businesses and may not be as interested in servicing your small business.
- What type of clientele does the accountant generally serve? If yours is the only construction company among a client base that is most retail stores, he may not understand the financial dynamics of your business and his usefulness as an advisor may be limited.
- Does he understand the legal and tax differences of your form of business. In particular, partnerships pose special accounting problems that an accountant who serves primarily sole proprietors and S corporations may not adequately grasp.
- Does he have sufficient knowledge of federal, state and local taxes to provide advice to your growing business, both in preparing current returns and planning for the future?
- Are his fees clear, and in line with your expectations? If his office will be providing routine bookkeeping in addition to preparing financial statements and tax returns, does he have staff that can provide those services at appropriate rates?
- Can he provide references that you can verify?
By following the systematic approach outlined here, you can be comfortable at the end of the process that you have made an informed decision in choosing the right accountant for your small business.
