5 questions to ask when picking a CPA accountant for your Small Business
The backbone of all firms, including small businesses, is accounting. What exactly is accounting though? The answer may seem obvious but a lot of people overcomplicate its definition. In short, accounting is a tightly organized way to track exchanges. You cannot compromise or take shortcuts with your company’s numbers and subsequent reporting. As a business, you want accurate data so you can make wise financial decisions; inaccurate data = inaccurate reporting. Your records must be impeccably maintained and, to avoid any detriment to your business, acquiring the services of a qualified CPA is invaluable. Regardless of whether you are employing a full-time accountant for your company or enlisting the services of a CPA firm, you need to know what to look for.
This post will review five essential traits that you should think about and want in your accountant and CPA.
1) Focus on the Right Qualifications
There is a misnomer about accounting: that accounting is just crunching numbers. There are many different varieties of accounting, and the accountant you choose needs to have a background that suits your industry. Accounting is not just about numbers in the sense that your CPA or accountant must also have the traits and background needed to analyze your particular industry. For example, a technical CPA has an accounting skill set whereby he or she dives into intricate technical issues. As wonderful as this CPA might be, his or her skillset may not match that needed of a small business focused on the restaurant industry. It is essential that the accountant you employ or outsource to has an in-depth understanding of your industry. This is because this CPA will directly, or indirectly, interact with all components of your business. This might sound silly also, but don’t tolerate impatience or easy frustration on the part of your accountant- this is a clear indication that this particular person is not cut out for the task. Cooperation and effective communication are “must haves” for your CPA!
2) Figure Out What You Need- then Begin the Hiring Process
Ask yourself the following questions before you hire your in-house accounting employees or outsourced CPA firm:
- What are your business’ overall needs?
- What are your business’ specific accounting needs?
- Do you need assistance processing accounts payable and accounts receivable?
- Do you need assistance processing sales invoices?
- Do you need assistance filing your business’ taxes?
- Do you need assistance with payroll accounting?
- Do you need assistance creating budgets for your business?
- Do you need assistance producing your financial statements?
Ideally, you want a CPA or accounting firm that can do and handle all of the above, and more. And, you can get that if you ask the right questions of your potential hirees or outsourced accountants. Remember that your revenue alone will not determine your accounting needs. For example, let’s look at two different types of business owners. Business owner one owns and operates a high-end art gallery that sells a couple of pieces each month. Business owner two owns and operates an auto repair shop where a lot of purchases are made every day and keeping track of inventory is critical. Though larger in revenue, the art gallery owner has less accounting details to monitor and track. In contrast, the auto repair shop will absolutely require frequent and comprehensive accounting and bookkeeping.
3) Hire an Accountant or CPA Firm which Understands Your Business
In the accounting profession, open communication and understanding between parties is of the utmost importance. When hiring an outside CPA firm, realize that this firm has a lot of catching up to do before it can even touch your numbers and financials. The CPA firm you choose needs to thoroughly understand not only your industry but your specific business. This firm should be eager to work with you and be able to walk you through its process whereby clear expectations for both parties (the firm and your business) are clearly outlined. Warning signs to be on the lookout for a firm that has a slow response time when you try to contact it. Also, some firms simply have too many clients and not enough employees; this could mean that enough attention may not be given to your needs…or that you’ll be overlooked.
4) Choose a Full-Service Accounting Firm
If the accounting firm or CPA you are working with does not perform financial analysis and review your business’ financial health, in addition to performing everyday accounting tasks and completing your taxes, you might want to rethink this business relationship. An ideal relationship would be one where your accountant provides you with key health indicators on a practically daily basis. These indicators include, but are not limited to, revenue, gross profit margin, net profit, accounts receivable, accounts payable, aging accounts receivable and inventory statistics. The more aware you are of where these indicators stand, the better and wiser your business decisions will be.
5) Do Not Try Do-it-Yourself Accounting
Accounting is a very specialized career path- this is why people have intense schooling focused on accounting, and why your CPA works for years for his or her CPA designation. Do-it-yourself (DIY) accounting is just not a good idea if you don’t have an accounting background. Such experience allows a person to understand the big accounting picture and the way to execute a process it in an error-free fashion. Although accounting is not always perceived as a glamorous duty, it is usually the most important aspect of a small business’ success equation
If you want to help your business, consider leaving accounting to the professionals. Employ a CPA firm so you can rest easy at night knowing that your accounting is in good hands and adhering to all best practices. As a small business owner, don’t spend your time figuring out accounting software and data entry; spend your time focused on building your business. A CPA should be a partner in your entrepreneurial dreams. You don’t want to dread a trip to your CPA like you dread a trip to your dentist. Thomas Huckabee, CPA of San Diego California is an expert small business accountant who can help you succeed. Please contact our office for further information.