One of the most important advisors a small business owner can have is a good accountant. But how exactly do you find one?
While you don’t technically need an accountant, odds are you going to be too busy focusing on running your business to do all the paperwork yourself. According to SCORE (Service Corps of Retired Executives), there are a number of things you will need your accountant to do.
- Identify every tax deduction you're entitled to take
- Recognize problems early (such as disappearing inventory, increased costs for products or equipment or customers who aren’t paying on time), before they have a chance to bring down your business
- Maintain your cash flow at acceptable levels
- Figure out whether it’s time to raise (or lower) your prices
- Put together the financial reports you need to get loans and investment, and
- Prepare your tax returns quickly and accurately.
Where to find one
The first place to look for an accountant is the American Institute of Certified Public Accountants which has a directory of CPAs, accounting companies, and local accounting societies. Chartered accountants tend to do commercial work within corporations, rather than doing public practice work for other entities.
If you are more comfortable with a female accountant – as many the majority of startups are now owned by women – you can check out the American Society for Women Accountants.
Joshua Dubrow of the New York State Society of Certified Public Accountants Small Business Outreach Committee said that many people’s first instinct when looking for an accountant is to reach for the Internet.
"There's Google, obviously,” Dubrow said. “There’s goodaccountants.com, there’s a ton [of sources]." But he warns against just picking someone from the Internet. "You're looking for someone that’s going to help you financially, not only just with taxes but to help your business grow, so you really need to meet with someone face-to-face."
You can seek recommendations from other small business owners, preferably in a similar in industry to yours. In fact, "the best way to look for an accountant is word of mouth through similar type businesses,” DuBrow told BusinessNewsDaily. Bear in mind that you don't necessarily need to go to a big firm – some of the best accountants have their own practices and are self-practitioners.
Do your homework
Once you've found someone you’re interested in, what then? Some things to do and consider:
Do a background business check and ask for client references, then arrange a meeting to discuss who you are, what you want to do, what steps you’ve already taken, and what type of entity you’re setting up, advises Renee Cooper, President of the Philadelphia chapter of American Society of Women Accountants.
Discuss whether you want the accountant to provide payroll services.
Do you want just an accountant or an accountant and bookkeeper in one? Some accountants are willing to do bookkeeping, some aren’t. You should decide if you want to pay the accountant's rate for relatively mundane daily or weekly bookkeeping duties, or if the accountant will work for you only on a periodic basis (weekly, monthly or quarterly) producing statements and evaluating the health of the business. While many may think an accountant is someone you meet with once a year, a good accountant should be involved in your business on a more regular basis. A good accountant can add significantly to your bottom line by setting up and structuring your business operations efficiently.
You also want your prospective accountant to be able to ask you the right questions. Simply ask the candidate if he or she has any questions about your business. If none, find another candidate. You need to know how proactive to the accountant will be. The more involved the accountant is in your business, the better value you’ll get.
Ask how readily available your accountant is going to be, how much time will be dedicated to you, whether the work will be done at your place of business or at the accountant's.
Decide how much to budget for paying your accountant. Every business is different so there’s no easy answer, and prices vary by region and locale. In the Northeast, you can expect to pay between $250 and $400 per hour. In a small town, in today's economy, the hourly rate could be as low as $40. If price is a major concern, you may be able to negotiate a flat fee based on the service not the time spent.