Deciding that it is finally time to look for an accountant is a big step for any growing business, but you will have to make sure that your financial information — one of the most important areas in your business — is in the right hands.
It is highly likely that most people would first turn to their search engines when looking for an accountant. While it is completely fine to do a quick search for reviews when looking for the best pizza shop in your area, you might want to dig a little deeper when looking for someone to review your business financials and file your tax documents.
5 Main Factors to Consider When Choosing an Accountant
Whether through a referral or an online search, there are five key determining factors in choosing an accountant for your business:
1. Certification and Experience
Passing the CPA exam is a difficult process — intentionally so.
While all CPAs are accountants, not all accountants are CPAs. Make sure your accountant is trained well enough to meet the expectations and demands of today’s accounting profession. Although they got through some rigorous courses and exams in the past, they should also be taking continuing education and professional development courses to remain certified, licensed and on top of changing rules and regulations within the accounting landscape.
With all that said, nothing beats experience — so ensure that your prospective accountant has handled tax and accounting work in the field — since practical experience can’t be beat!
Don’t forget to consider whether your accountant is a one-person operation or part of a firm. Does your prospective accountant have a team that can handle everything that’s thrown at them or will you need to seek out another accountant as your business grows or the dynamics change?
Tax reforms in the US and Canada are occurring frequently and you need to ensure that your accountant is on top of the new rule changes. Usually, with a firm/team behind them, accountants are able to respond to changes in a quicker fashion, but it’s not always the case — there are may one-man/woman accounting firms that do a great job in keeping up with the changing tax landscape.
A one-person operation is most likely more cost-effective, something that’s probably important when you’re just starting out. That being said, having incorrect advice can be even more costly down the road — there's a lot to consider!
Thanks to the rapid advances in technology, accounting software has become more robust — adding automation and tons of time-saving features — transforming accounting into a fast-paced and dynamic industry. Accounting software, like Xero and QuickBooks Online, helps improve productivity by performing tedious accounting tasks while reducing one’s margin of error with a single click of the mouse.
One of the strongest features of today’s technology is the convenience of accessing real-time information no matter where you are, without having to sacrifice your business’ security. The more knowledgeable an accountant is with cloud-based accounting and business management tools, the more they can assist you in automating your business processes while providing you with financial visibility.
Furthermore, innovations, like tax return software, e-signatures and other cloud-based tools, eliminate the heavy load of paperwork and routine tasks while ensuring efficient tax filings and document management. With that said, accountants who stay up-to-date, welcome technological trends, and understand the power of these tools could pay more attention to value-added solutions and better cater to the needs of your business. As a business owner, the more tech-savvy your accountant is, the more efficient your relationship and communication will be.
3. Business Growth
Finding an accountant who has an empathetic ear and can truly connect and understand your business is essential.
It is crucial that your business receives all the support it needs and that you are comfortable with the people handling your accounts. Remember that your CPA’s role does not stop at tax planning and preparation — they are your trusted business advisors. They can be your source of light when your business is facing uncertainties and they can help you make the right financial decisions when you need some guidance. Look for an accountant who would treat your business affairs as they would treat their own.
I personally know a story of an accountant that many years ago saved a business from going under by helping them work out a deal with the bank for a loan. The bank agreed based on a business-case by the accountant, and decades later, this business is flourishing and employs just under a hundred people.
Accountants like this aren’t readily available — but you get the point. Look for someone that isn’t out there to just make a quick buck!
As a business owner, time is money, and choosing the right CPA can buy you more time, allowing you to focus on achieving your goals. Some accountants are willing to do bookkeeping and payroll for example, on top of the usual services they provide. Other accountants stick to the core stuff only, like financial statements and tax filings. You’ll need to evaluate where your strengths and weaknesses are and what your pain points are — so that you can free up your time to run and grow your business.
In addition to typical services many accountants offer, you must ensure that your CPA is comfortable with tax planning and/or coming up with a strategy to assist you, your family and your business in regards to planning for the future and setting up an optimal structure to ensure necessary tax deductions are being utilized.
When you’re just starting out, things may be quite simple — you may not even be paying yourself. But, as the business grows, you will undoubtedly be faced with tax optimization questions that include everything from whether you should pay yourself by salary, dividends or both to whether you should you set up a holding company. Although most CPAs are knowledgeable on basic business structures, you may need to involve a CPA that has specialized tax restructuring experience if your situation is unique. This doesn’t mean that you need to leave your accountant, but rather, have them work together on special projects when they occur.
Although the digital age has opened the gates to faster and more convenient methods of handling information, it also brought along new risks and threats.
Find someone who is proactive in taking regular security methods to keep their clients’ sensitive information safe. Do they use encryption software to handle your private information? What are their practices for data integrity and security? It is crucial that your CPA guarantees security that is “airtight” and has a very low risk of facing a security breach.
Unfortunately, hacking is commonplace, and email is not a secure way to transmit sensitive financial documents. Having your CPA share documents through a secure portal helps immensely, including performing regular backups.
There are lots of great CPAs out there and there is no doubt that you can form a relationship with a trusted advisor to help guide your business through its growth phase and beyond. Prior to doing so, take some time to evaluate where you need assistance and then start meeting with some accountants to determine which would be the right fit. If you have friends or family using an accountant that they enjoy working with, a referral would be a great way to start. Online articles, like this list of the 20 best small business accounting websites, are also a great place to build your knowledge base and get to know some accountants with a small business focus.
If you have some tips to share or if you're a small business accountant, please post a comment below.
The advice we share on our blog is intended to be informational. It does not replace the expertise of accredited business professionals.
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