Even if you use accounting software, you still need to consider hiring an accountant. While your bookkeeper can do your taxes and even prepare financial statements, accountants can provide valuable advice on cash management techniques, spot important trends and more. So, how do you know when the time is right to bring in a financial guru — and what to look for?
If Your Books are in Good Shape, Why do You Need an Accountant?
You may be the most brilliant QuickBooks user ever created, or you may have a bookkeeper with incredible talents, so why hire an accountant at all? The answer is simple: great accountants may offer bookkeeping services, but their real gifts lie with their ability to understand the numbers as they relate to your business.
First, an accountant handles all regulatory financial details and reporting. Annual taxes are certainly a part of this, but it also includes quarterly and annual reports. Yes, software can often meet these requirements as well, but an accountant is likely to analyze the numbers first.
Accountants read numbers like you read your favorite trade journal (or maybe a mystery novel). They don’t just see where you’ve been, but they can also predict where you’re going with an amazing degree of accuracy. The numbers often tell them that it’s time to change spending habits or even raise prices. And, if you’ve been delaying the purchase of expensive equipment, they can tell you when to start shopping. Unless you already have this type of knowledge in your own head, an accountant can make a real difference to your bottom line.
Are all Accountants Basically the Same?
You probably already recognize that your personal accountant may not be your best choice for handling your business financials. As a general rule, business accountants all understand the rules and regulations that are specific to business. After that, however, you have to consider certain factors that would make them the right choice for your business.
You may hear terms like Certified Public Account (CPA) and Chartered Accountant (CA) bandied about. Both types of accountants are highly qualified to meet most of your needs; but CAs earn their credentials based on standards set in the UK, while CPAs are credentialed in the US and may be qualified to provide more services.
Depending on the complexities of your business dealings, you might also want to choose an accountant with experience within your specific industry. Tax and other considerations are bound to differ considerably between a real estate agency and a toy factory. An accountant with years of experience in either industry is likely to read the numbers differently and offer the most appropriate advice.
Unless you choose to hire an in-house accountant (not likely for small businesses), you need to decide how much travel is too much when you want to meet in person. There are definitely advantages to in-person meetings if you need someone to walk you through complicated financial decisions, showing you papers that explaining the concepts, assisted by the occasional hand gesture. But, this doesn’t come up that often, and there are alternatives.
Thanks to technology and the Cloud, online meetings are incredibly effective. You can work together while viewing all pertinent data (and even hand gestures) as if you were in the same room. In fact, you might even see things more clearly this way.
If you’ve never heard of virtual accountants, they are real human beings who provide fully-remote services that often compare admirably to those provided in person. Many small businesses prefer this type of support because it is typically less expensive, more convenient and more efficient than in-person services. You may not recognize your accountant’s face if you meet him or her on the street; but, you don’t have to pay travel expenses for the privilege of a little facial recognition.
Experienced accountants bring value to your business by helping you save money through recommendations on anything from reigning in unnecessary expenditures, eliminating products that will never gain you a profit or spending wisely. Still, you have to balance savings against the premium prices charged by highly-qualified accountants. If you’re not yet comfortable with the concept of virtual accountants, think again if you operate on a tight budget.
You won’t have to make small-talk over dinner, but understand that accounting has its own language. If you don’t know the difference between fixed and current assets or between a balance sheet and a cash flow statement, you want an accountant who is willing to explain these things in plain language. Your decisions depend on it.
Next, make sure that you’re comfortable with their methods. For example, how much time during an interview does an accountant devote to his or her ability to find unusual tax breaks? If you’re comfortable with this approach, then at least make sure that you’ll receive full support during tax audits.
Just as important, small business owners’ finances often spill over into their personal finances. In other words, you may need your business accountant to work with your personal accountant from time to time, or at least share data. Make sure that they know about each other — and that they can stay on the same page.
How Do You Choose?
If you have used the above considerations to research your choice, it’s still challenging to narrow it down to one perfect fit. A good professional network might be helpful in making the choice, especially if they have experience with one of your choices. It also takes little time to check out listings with the Better Business Bureau.
Also, don’t be shy about asking for and checking references. If you habitually check buyer comments before making online purchases, then you certainly should do the same before starting a long-term relationship concerning your money. Make sure that you’re comfortable with your choice before saying “you’re hired.”