Tax time is fast approaching, and hopefully you have your financial records in order, but in case you don’t here’s some advice on how to hire an accountant. While there are many aspects of your business that you can handle on your own, accounting is one worth turning over to a professional. Accounting goes far beyond simply sending invoices and tracking expenses; a good accountant can also help you with your taxes, as well as find ways to keep cash flowing.
First: Understand Your Needs
In addition to accountants, there are also bookkeepers and Certified Public Accountants that provide slightly different services from one another. A bookkeeper will set up your accounting software and enter receipts and invoices into the system weekly or monthly. She can also handle payroll data and quarterly taxes, as well as create monthly financial statements like balance sheets and cash flow statements. If your needs are simple and you don’t need help preparing your tax return, a bookkeeper may fit the bill.
An accountant, on the other hand, takes on more of the day-to-day bookkeeping needs of your company. An accountant can do everything that a bookkeeper can, with the addition of being able to prepare business taxes. Accountants are typically trained to interpret and analyze financial data, and you’ll pay more for the privilege.
And finally, a Certified Public Accountant (CPA) is an accountant who has passed a rigorous state exam. They’re the only ones of the bunch that can certify an audit. They also provide tax planning, and are highly qualified experts. Naturally, they’re the most expensive option.
Narrow Down the Selection
Ideally, the accountant or bookkeeper you end up working with will have experience with both small businesses and your industry. If you are unfamiliar with accounting terms like depreciation, chart of accounts, and cost of goods sold, you’ll want an accountant who will be patient at explaining it all to you. Remember: even if you hand your finances over to a professional, you still need to understand them. A good accounting partner will be communicative about her process, and will be willing to teach you.
You can hire an individual that works for several companies as a consultant, a smaller accounting firm, or a larger practice. I tend to go with one of the first two options, since they’re more affordable and service tends to be more one-on-one with smaller practices and solo practitioners.
Getting a referral from a colleague or contact can help you find someone faster. Check with others in your industry to find out who they use. Take into consideration your needs, your budget, and their offerings, then whittle your list down to your top three choices.
What to Ask
Interview each provider or firm, just like you would if you were hiring a full-time employee. Some of the questions you should ask include:
- What accounting software do you use?
- Do you provide software setup?
- Do you provide monthly bookkeeping?
- What is your hourly rate?
- Can you provide three small business references?
- Do you work onsite at the client location?
- What industries do you specialize in?
- Do you also prepare business taxes?
You want to find an accountant who you can trust with your finances, and who will be with you for years to come. Don’t overlook how important the selection process is, and spend enough time on it to find the best fit for your company.
Republished by permission. Original here.
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