A strong and qualified accountant may be one of the best strategic hires for your team. However, a solid small-business accountant often has to embody unique skill sets in order to be a good resource.
Here are seven questions to keep in mind during your search for the right accountant for your business.
1. Do They Have Certification?
Accountants are regulated by their state’s licensing board, and the American Institute of Certified Public Accountants (AICPA) administers the profession’s certification exam. The AICPA notes that while “[a]ll CPAs are accountants ... not all accountants are Certified Public Accountants. The principal differences between accountants and CPAs are education, experience and opportunity.”
If you prefer an accountant who is a CPA, consider asking for both a resume and a copy of their certification. A person unwilling to provide documentation might be a red flag. However, you can go to your state’s accounting board and get a request for certification form.
2. Do They Have Small-Business Experience?
While certification may be an important factor for small-business owners to look for, it’s not the only one. “Just because an accountant has a CPA designation does [not] mean [he or she] would be a good fit," advises Clinton Jones, owner of Clinton Jones & Associates and a CPA with more than two decades of experience. “A CPA that has worked in one or two areas of accounting—i.e., auditing, government contracting, tax—for 20 years may not translate very well to a small business.”
A small-business owner’s personal finances may be tied to the business’s finances. This may present unique financial issues for the small-business owner that large businesses do not necessarily have. Accordingly, a seasoned small-business accountant may understand these matters and advise you on developing strategic operating systems, policies and corporate structures that may greatly assist the business. There are many tax consequences and penalties for improperly commingling funds, and a strong advisor may help ensure your success early on by setting up your operations properly.
3. Do They Have Specializations, Designations and Credentials?
On the AICPA’s website, there are several areas of specialization for CPAs including Accounting, Auditing, Business Valuations, Financial Management Reporting, Fraud/Forensics, Internal Controls, Personal Financing and Tax. Consider your business and rank these areas and understand where your most urgent needs are. Then ask the candidate about all of them. A red flag: if the candidate’s specialization and your needs are not aligned.
4. Are They Knowledgeable About Current Legislation and Its Implications on Small Business?
Tax and business laws are constantly in flux and can affect your small business's bottom line. For example, the tax implications and employer requirements associated with the Small Business Jobs Act of 2010 and the Affordable Care Act of 2010 both are complex and have a direct impact on small businesses. Ask the candidate for examples of how those acts have been implemented and how they would impact your business. Again, a red flag might be if the accountant cannot provide you with specifics for those acts as well as other changes to the tax code that may be relevant to your business.
5. Are They Informed About Your Industry?
Different industries have specific issues, and a good accountant may not only understand small businesses but may also comprehend how different industries operate. For example, the way a restaurant’s cash flow looks may be different from that of a dry cleaner's or plumbing business. An accountant may understand that reality and provide sound strategies on the challenges of your type of business model.
Moreover, understanding your industry may be important in deciding whether a business works with W2s or 1099s. In industries such as construction, this is a matter of significant importance. Misidentifying a worker may be a costly mistake for a small-business owner, and an accountant who specializes in that industry can be a tremendous resource and help you avoid such mistakes.
6. Do They Have Glowing and Multiple Referrals?
There are many sources you can ask for recommendations. SCORE is a nonprofit association dedicated to mentoring small businesses and providing them with tools for success. Your local SCORE office might offer referrals. Consider contacting other small businesses within your industry through your local chamber of commerce to see if they have recommendations as well. Personalized testimonies and specific examples of how an accountant worked through a challenge, or how they were proactive in meeting deadlines or helping a business implement cost savings policies that aided in growth are all things that can provide tremendous insight.
7. Do They Have Great Communication Skills?
A strong accountant should hopefully be an excellent communicator. That includes being a good listener and educator. A great accountant will help ensure that you understand your financial responsibilities. Also, do not discount the importance of demeanor and your comfort level with the candidate. You will spend a lot of time with this person, sometimes discussing very sensitive financial topics about your business. Solid and honest communication rarely hurts.
These are just a few questions to consider when selecting an accountant for your business. When you do your homework, it may help you find the right fit and help ensure your business’s profitability, compliance and success.
For more tips on how to help ease your way through tax season, access our exclusive guide, It’s Tax Time: A Business Owner’s Survival Guide.
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This article was originally published on February 25, 2015.