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Choosing the right accountant is one of your most important business decisions. In addition to managing your tax planning and preparation, an accountant can serve as a general business advisor as well as counsel on the best use of available funds and financing options. A good accountant should also be able to network you into the other professionals you need for your business including attorneys, insurance brokers, and financiers.
When interviewing potential accountants, you want to ask questions that help you learn about three areas:
- Experience: What is the expertise of the accountant?
- Comfort: Do the accountant’s personality and business practices mesh with yours?
- Services: What exactly can the accountant do for you?
Use the questions below to help you during your selection process:
What type of businesses do you typically serve?
This question should reveal how experienced the accounting firm is with companies such as yours. Look for a detailed answer in which an accountant provides examples of clients that have similar needs to yours. It is important to hire an accountant who understands the unique tax requirements of small businesses, and is familiar with tax regulations as they apply to your particular industry. The accountant should also be familiar with your industry’s specific practices, especially when it comes to understanding where your company stands in terms of key financial baselines and ratios.
What recent tax code changes should my company be aware of?
The tax code changes continually, so it is essential that your accountant has a method in place for keeping up to date on new and changing regulations. Ask a prospective accountant about his or her method for staying current. For example, some accountants take advantage of the continuing education programs of reputable organizations such as the American Institute of Certified Public Accountants (AICPA).
What would you have done differently on my recent tax returns? Why?
Develop some examples of strategies used on your most recent tax return and ask the accountant to react to them. This will enable you to learn about the accountant’s personality and how he or she explains things to you. These questions will also enable you to gain an understanding of how aggressive the accountant is in terms of interpreting the tax code – you want to be sure that his or her position regarding risk is in sync with yours.
What should I do to improve my cash flow? How can I tell if I’m carrying too much inventory? Is there anything I can do to speed up my collections timing?
These questions will help you determine if an accountant understands your business and can provide business counsel related to asset management. While you’re not looking for free advice, you do need to be sure that you’ll be working with someone who can help you take pre–emptive steps to avoid a financial crunch.
What kind of software do you prefer?
Now that most small businesses manage their accounting and bookkeeping electronically, it is important that your respective information systems are compatible with those of a prospective accountant. If you’re using software such as QuickBooks, can they interface with your software data files from this program? If they recommend another software solution, do they have the resources to help you implement this financial information system?
How many audits have you been through? What was the outcome?
It is important to have an accountant who stands by its work and knows its way around an IRS audit. Your accountant should be prepared to represent you in the event of a dispute with tax authorities, and should be experienced enough to defend its interpretation of the tax code during an audit.
How do you bill?
Some firms will charge by the hour (or segment of the hour), and others will charge by the project. Expect to pay an hourly fee if your company keeps an accountant on retainer. Also find out if the firm bases its fees on the skill level of the person handling your account. This structure saves you from paying top–dollar when the agency is completing low–level tasks.
Who is the day–to–day contact? Will the same people always service us?
It is important that your firm feels it will receive the level of customer service and support it needs. You want to be sure that you are comfortable with the person you will be dealing with on a regular basis, and that the people handling your account will be familiar with your particular issues. It can be time consuming, costly, and frustrating if you have to explain a tax or financial issue again and again as you wend your way through a firm.
How long does it typically take you to call back? What is the typical turnaround time on reports?
These questions should not only be asked of the accountant, but also should be posed to client references the accountant provides to you to help you understand the agency’s responsiveness.
What services do you offer beyond tax planning and preparation?
Many accounting firms now offer a range of services that can benefit your small business. These can include retirement or estate planning, bookkeeping or record keeping, and management.
If I need referrals to other business resources can you help me?
A “plugged in” accountant candidate will answer this question with enthusiasm for the opportunity to connect you with other professionals who can help your business. Look for someone who discusses the resources he or she typically refers to – including attorneys, bookkeepers, and financiers – or who details how they keep in touch with a wide business network that can help you.
The previous content is provided by OPEN: The Small Business NetworkSM from American Express.
