How to Choose an Accountant for a Small Business
Choosing The Right Accountant For Your Small Business
With a good accountant by your side, your business can prosper. Your small business accountant is many things: bookkeeper, payroll expert, tax preparer, and business advisor. A good small business accountant can save your business time, help your business grow, offer sound advice to help you avoid unnecessary fines, penalties and taxes.
Even if you decide to handle daily accounting tasks yourself using accounting software, you may still wish to work with a small business accountant for your annual audit or business tax preparation. It will save you countless hours, as well as ensure that your books are kept completely above-board by having a neutral third party, your accountant, review them.
Hire an Accountant or Work with a Firm?
Should you hire an accountant full-time, or work with an accounting firm? The answer depends on the stage of your business and the intensity of your accounting needs.
Companies with complex general ledgers, large payrolls, complicated sales tax filings and other financial issues may wish to consider hiring a full-time staff member. If you think the job warrants 40 hours a week (or more), then consider hiring a full-time accountant.
Most small businesses, and especially startups, benefit by handling their own daily accounting needs such as issuing invoices, and reconciling receivables and payables. They may only need an accountant a few times a year to file taxes, prepare year-end statements, and consult with on special business issues. For such small businesses, finding the right accounting firm is the least expensive option.
The Differences Between an Accountant and a Bookkeeper
As you consider the many options for tracking your business’ finances, you may wonder what the difference is between an accountant and a bookkeeper. Many business owners use the terms interchangeably, by there are subtle differences between the two professions.
- Bookkeepers: A bookkeeper typically records and updates the financial records for a business. He or she enters information into the general ledger, reconciles bank and checking accounts, issues invoices and reconciles payables. Bookkeepers are an essential part of many small businesses, especially those which have many transactions that must be recorded on a daily basis.
- Accountants: Accountants perform functions similar to that of a bookkeeper, but with the addition of tasks such as analyzing financial records, creating budgets, completing state and local income tax forms, providing businesses with their balance sheets and more. An accountant may have additional training and education that enables them to delve into financial records and make recommendations to business owners about steps to take to improve their company’s profitability, save money, and more.
Many business owners can handle typical bookkeeping tasks themselves but call upon the skills of an accountant to help them with their annual reports, taxes and financial consultations.
There are both bookkeeping and accounting firms, as well as independent consultants and people seeking employment. You’ll have to choose whether or not you wish to work with an outside firm on an as-needed basis or have someone on staff who will handle these job functions daily.
Make List – and Check It Twice
Assuming that you want to find a firm to work with, the first thing to do in your quest for the perfect small business accountant is to make a list of the skills you need to help your business be successful. Just like any other profession, accountants specialize in different areas. Some may be more familiar with nonprofits or personal accounting than business accounting, for example. You want to find someone in your area who is well-versed in small business issues.
Consider the following as you jot down your list:
- Do they typically work with small business?
- If so, have they ever worked with a business such as yours? (Restaurant, retail store, professional office, etc.)
- What services do they offer?
- What services do you need? Consider items such as payroll, sales tax filing, annual taxes, etc. Do they offer the services that you need?
- How much experience does the accountant have?
- Do they suggest using a specific accounting software package if you wish to handle some of your accounting needs yourself? If so, do they offer set up or support for this software?
Once you know the skills you need in an accountant, then it’s time to find them. You can start with local business owners who may know of an accountant they can recommend. Finding someone is just the first step in the process. Building a long-term relationship with your accountant is an important step at ensuring your business remains healthy and profitable.
Hire an Accountant
If you’ve chosen to hire a full-time accountant for business, then the first thing to do is to create a job description. Decide, based on the list you brainstormed, what tasks they will need to perform daily, weekly, monthly and quarterly. Determine desired educational experience, work experience required, and accountabilities for the position.
Once you have a job description in writing, it is much easier to place help wanted ads. The resumes sent in response to your ad will be better targeted the clearer and more detailed your job description.
Unusual Methods of Hiring an Accountant
Some companies know that they want an in-house accountant but may not necessarily want to hire a full time person for the job. You can hire temporary help, but consider offering a part-time accounting position.
Companies that need an accountant only once every few months but still do not wish to outsource their accounting to a firm may consider hiring an interim or project-based accountant. There are recruiting agencies who specialize in finding and placing temporary accounting and bookkeeping staff. They may be able to fill a specialized position, such as a quarterly accountant or one who works exclusively with nonprofits, for example.
No matter which method you choose to hire an accountant, be sure to have the proper hiring paperwork on file. An independent consulting agreement and a W9 is a must for hiring a freelancer, while those you hire as full or part-time employee should complete typical new hire paperwork and verification of eligibility for employment.
Find an Outside Firm
If you are a member of your local Chamber of Commerce or other business networking groups, turn to your own group for references. There are probably one or more small business accounting firms within the local Chamber. Get to know them at Chamber meetings. You can also ask other local business owners who they use for their accounting, and whether they are satisfied with the services they’re getting.
Request an introductory meeting at their office to see if they’re a good fit for your business. Many accountants offer a free consultation. It’s a good chance to discuss your business and get a feel for how well the accountant understands it.
You may be satisfied with a small business accountant who comes with glowing references. However, it is a good idea to ask your potential accountant about the types of business he or she traditionally works with. A small business accountant who works with a wide range of small businesses probably has the depth and breadth of experience needed to understand your business. Others may wish to find an accountant who specializes in a specific clientele, such as restaurants, medical professionals, or other industries.
Choosing Accounting Software
Some small business owners are already confident in their accounting skills, and wish to handle this task themselves. There are plenty of accounting software options that make it much easier to build your general ledger, reconcile banking and credit card statements, and track receivables and payables. Most also enable you to run reports on your accounts, customers, and balance, which can help you look at your business’ finances critically to see how well you’re achieving your annual financial goals.
The benefits of using such a package are many. You will save a great deal on monthly fees to an external accounting firm or to hire a full-time accountant if you can maintain your basic books yourself. If you also need help with tax preparation or filing, you can also consult with a professional accounting firm and ask them to review the books you’ve kept with the software. This combination of “do it yourself” and expert advice is often a smart move for companies not yet ready to hire a full time accountant but in need of professional advice.
Learning How to Use Your Software
An important aspect of keeping your own books is learning how to setup and use your accounting software properly. Consider setting aside time for one or more of the following tasks after you’ve purchased your software:
- Personal training: Companies such as QuickBooks certify accountants and others to offer training in their own unique software. Look for a certified instructor who can come to your place of business and provide training sessions to those using the software.
- Online videos and courses: There is a wide range of online instruction available in almost every software package you can think of, including accounting software. From free YouTube videos to paid classes on sites such as Skillshare and Udemy, you can find self-paced training in how to use your entire software package or specific portions of it, such as reports or integration with other third-party software.
- SBA classes: Many local SBA offices run workshops for local business owners to enhance their skills. This includes classes in accounting and accounting software. Local colleges, universities and adult education programs may also offer in-person training in the software of your choice.
Your accountant is an important member of the business team. Accountants do much more than balance the checkbook. Their insights can help you chart a course to success for your small business. When it comes to choosing a small business accountant, act wisely and prudently for small business success.