admin posted on August 13, 2009 16:13
How to Select the Right Accountant
Accounting is the heart of every business—if you were to remove the heart, just like in life, the “body” of your business would die. Accounting is the piece that controls the lifeline (money) of your business, so choosing the right accountant can mean the difference between success and failure. It is important to make a good choice the first time because once you have selected an accountant, it’s difficult to switch. Your accountant gains detailed knowledge of you, your business and your data, so transitioning to another accountant takes time and money. The end result is that many businesses who work with mediocre or bad accountants don't make the change to a better one simply because of the switching costs. However, would it really cost you more?
A large number of business owners don’t thoroughly consider their needs when selecting an accountant. That is because most don’t really understand what their needs are. This article provides information and questions to ask when selecting an accountant that can truly help your business grow.
Why An Accountant?
You may be thinking to yourself “I don’t need an accountant—I can do the bookkeeping on my own.” To some degree that’s true. If you have training in the field, you could do the data entry and possibly even the bookkeeping with enough knowledge and experience. However, do you have the time? With accounting being the time-consuming area of most businesses, it’s hard to keep up and take care of the rest of the operations of the business at the same time.
If you don’t have some accounting training, it could end up costing you more money in the long run than if you had just hired an accountant in the first place. Is your business following Generally Accepted Accounting Principles? Do you know how to set up your Chart of Accounts properly? Do you know when it is acceptable to make journal entries? Do you know how to do a CVP analysis?
There are many rules and regulations that need to be followed to stay compliant with the IRS as well. These aren’t usually taught in Business Owner 101, so most people don’t know what they are. For example, did you know if you’re an LLC you can’t pay yourself a paycheck, but if you are an LLC who files as an S-Corp you’re required to?
Good accountants do more than just record daily transactions, submit payroll, and print basic reports—they actively analyze, interpret, and convert that data into usable business intelligence to put more money in your pocket more often.
Misguided Views and Stereotypes
Movies have molded the accountant image into a geeky, pencil pushing, bean counter who crunches numbers all day. With an image like that, it can make it hard to see what value they can provide for your company. Instead, they look like just an additional overhead expense.
Accountants are usually seen as the guy who delivers the bad news or seen as only needed when things are thoroughly messed up. Hiring an accountant doesn’t mean you’ve failed, it just means you want your business to succeed and excel. When companies are in trouble, the first person they turn to is typically an outsourced accountant.
Skills and Qualities to Look For
Just like choosing a doctor, you’ve got to pick an accountant you not only feel comfortable with, but one who has the experience, education, and training. It should also be someone you like and trust. When it comes to your money, you want to make sure you have an accountant that will protect it and nurture its growth over time.
Among being honest, ethical, and showing objectivity, your accountant should:
- Provide Accurate and Timely Information- Your numbers are only as accurate as the person who enters them, regardless of what accounting software you use. Not only do they need to be accurate, they need to be timely as well. What good are your reports and numbers if you are receiving them two or three months after the fact? Having accurate and timely information is critical for management’s decision making timetables.
- Be a Business Consultant- An accountant should be able to help your business grow and excel. Accountants who function as a trusted business consultant will assess business problems and offer specific solutions. They can offer advice on internal controls, risk management, inventory, employee performance, pricing, and even marketing. An accounting professional who really understands your business from the inside out should be a trusted business advisor who is highly motivated to see you succeed.
- Be Easy to Get a Hold of and Quick to Respond- If you were to call with a question, how long will it take them to respond? If they regularly take more than a day to respond, you should find a new accountant. As their client or boss, you should be their top priority.
Make sure you find out what services they provide. Even if they offer a large variety of services, pick the ones that you actually need. If they don’t offer want or as much as you would like, keep looking.
Questions To Ask
- What kind of creative advice will you offer? A good accountant should also be able to demonstrate quick and creative business ideas and information. Ask them to offer three quick ideas on how your business might be able to save money right now. Ask them for examples in which they’ve offered useful business advice to other clients that quickly increased the company’s performance.
- Are you tech savvy? There is accounting software that is available to everyone. However, the programs are only as useful as the person who installs them and runs the applications. Even if you’re not up-to-date about technology, do your homework to be able to determine if a candidate understands the role computers play in turning business information into business intelligence. For example, ask them what technology they use and what role the internet will play in keeping in touch and interchanging financial information.
- What kind of clients have you had? Asking about current or previous clients will help you determine how much experience they have had with your industry. What is their experience in working with companies like yours, have they worked with other industries, or has it been primarily one industry? How long have they been doing accounting for small to medium size companies vs. publically traded companies? This will give you a better idea if they are a good match for your company.
- How do you calculate fees? Ask the accountant what fees there are and what is included. Find out rates for anything extra you may want as well. Also, find out prior to hiring them if a simple 5 minute phone call or a one page fax means an hour of billable time. If so, walk away. Make sure the value you are receiving is worth the price you are paying for their services.
- Are you active in the local business community? In other words, who do you know who could help me? Find out whether the prospective accountant can introduce you to people who might be useful to you, including prospective customers, suppliers, bankers, business coaches, and investors. Ask for examples.
- Why should I use you? As a final question, it’s always good to let the prospective accountant make the case for why you should use them. For example: “There are a lot of accountants out there, why do you thing you are the best choice or why are you a better fit than the next accountant?” The accountant should be able to tell you why they are unique and what they can bring to the table.