Choosing an Accountant for Your Small Business

by Margot Carmichael Lester, Staples® Contributing Writer

When I moved to California, I needed a local accountant for my small business. I used referrals from friends, interviewed a handful of candidates and decided on a very nice, experienced CPA firm. I thought I was all set, but I didn’t realize I was a tiny client for a very big firm that defined small businesses as 100 to 250 employees. I found it impossible to get the level of support that I needed, and they never fully understood my finances or tax situation. It ended up costing me a lot in cash and stress. But you can avoid such a fate by following these tips for choosing an accountant.

Action Items for Choosing an Accountant

Get Referrals: Ask colleagues, bankers, investors and lawyers to refer you to accountants they trust. Ask each referrer to describe what their accountants did for them. Listen for advice and support they provided that are similar to your needs, like “helped me restructure my financing,” “showed me how to save money on payroll processing,” or “found additional deductions.” Understanding how your candidates helped other small business owners is a good indication of how they can help you.

Set Criteria: Develop a list of selection criteria for vetting referrals. Include direct experience working with enterprises your size (remember: even a small business focus in a large firm may be too big). Industry experience is also important because “accounting rules and terminology often differ between industries,” notes Calvin Harris Jr., a CPA and president at Harvin Consulting in Columbia, MD. Finally, assess affordability, but don’t shop on price alone.

Conduct Interviews: “Meet with at least three candidates,” suggests Jim Metzler, vice president, small firms, with the American Institute of Certified Public Accountants. “The biggest mistake small business owners make is not interviewing enough accountants. Nobody ever says, ‘I had a great day at work interviewing a bunch of accountants.’ But it’s the only way to find somebody who’s going to keep up with changes in your business and the tax code.” Make sure you’re interviewing the person or team who will actually do your work, not just the partner in charge of sales.

Listen to Your Gut: Make sure you like and trust the candidates who meet your criteria. After all, you’re going to be working together a lot, so qualitative and emotional factors are important. If your Spidey sense tingles, choose someone else. “A bad accountant can be a big detriment to your business,” warns Gail Rosen, a CPA in Martinsville, NJ.

5 Questions to Ask Prospective Accountants

The questions you ask when interviewing your candidates are key for demonstrating their experience in accounting for small business. Here’s what you should ask and what to look for in their answers.

1. What’s your experience in my industry and with businesses of my size and type?

Listen for specific examples similar to your situation. If the candidate can’t offer any, then he or she is probably not the accountant for you.

2. What are your credentials? 

CPAs have completed rigorous exams, are required to take frequent professional education classes and are bound by an ethical code of conduct. The CGMA designation shows expertise in management accounting on par with a CFO. The PFS credential means the CPA is skilled in personal financial planning, often valuable to small business owners.

3. What’s the process for getting the work done? 

Understand who’s doing the work (the partner, junior staffers, etc.) and how the process works. What’s your access to the partner or more knowledgeable staff? Listen for words like “planning” and “check in,” which indicate a proactive accountant.

4. How do you charge and what’s the fee structure? 

Ask for the estimated cost of a typical relationship with a business of your type, size and industry. Establish how they bill for quick questions and advice, including phone calls and emails.

5. Could you provide references? 

In addition to the people who provided the referral, check in with the CPA’s additional references, specifically a client, an attorney and a banker.

How to Use an Accountant

Once you’ve finished choosing an accountant, get ready to get to work. Here are some tips for creating a great working relationship with this new business partner.

Do Your Part: Make the most of the partnership by keeping accurate records and filing on schedule. “Information that’s a mess or incomplete costs everyone time and money,” Metzler says. And don’t make major financial decisions without talking to your CPA first.

Ask & Answer Questions: Don’t be afraid of seeming dumb — accounting is complicated. “Small business owners should expect their CPA to explain things to them,” Harris says. “It’s your business and it’s your responsibility to understand its financials.” A good accountant asks a lot of questions, too, and it’s your job to answer them honestly.

Stay in Touch: Resist the temptation to engage only at tax time or when you’re in a jam. “Make contact with your CPA at least three times per year,” Metzler suggests. In mid-summer, check in on cash position and projections. Before year-end, identify important changes in revenues, expenses and tax statuses. And, of course, check in right after the New Year to prepare taxes. It’s also important to use your accountant as you would other trusted advisors, so determine a fee and process for handling quick calls for counsel.

Armed with these tips, you’re ready to find a great accountant to help you manage your business’s finances.

blog comments powered by Disqus
We welcome your comments about the articles on the Staples Business Hub. Please follow these simple rules when submitting your comments: Do not mention our competitors, the price you paid for products, URLs, or your personally identifiable information (such as your full name or address). Be considerate and courteous. Do not attack or insult other users, use violent language, or engage in name-calling. These types of comments will be removed. Our moderation team may read comments before they are displayed.