There are a number of factors that determine the success or failure of a business venture.
Accounting ranks near the top in importance.
Accounting is the language for business. If you learn it like a language, you’ll be better able to understand what your business is saying. If you can’t understand the finances of your business, you are setting yourself up for serious consequences, from lost profits to mismanaged cash flow. There are few who know the language better than an accountant, and a good one will save you time and money year after year.
Choosing an accountant is no easy task, and it’s not something that should be rushed. There is a process to follow and things to consider. Here are some pointers.
Does location matter?
It wasn’t long ago when it was important to have your company’s accountant located nearby. Business owners carried their accounting records in by the box so their tax accountants could ready their returns. Technology has made it possible for companies to manage their businesses online, making location less of an issue.
If you’re satisfied with working via email, phone calls, video-conferences, or cloud-based accounting software, then your accountant could be on the other side of the world. This gives you freedom to find someone who really comprehends the specifics of your business or industry.
Alternatively, you might prefer a warm-blooded handshake from time to time or find it useful to have your accountant join you for business meetings. If this sounds like you, then you might limit your search to accountants in the neighboring region or to those willing to travel to your business when the time calls for it.
Can they serve your needs?
A good accountant does more than just manage your accounts and complete your tax forms. The best accountants are proactive, anticipating your business needs and recommending strategies that will save you money and keep you out of trouble. These are just some of the situations that your accountant should be able to assist with:
- If you’re just starting your business, your accountant can help you with your business plan, developing realistic financial projections and relevant financial reports that will enhance your chances for success.
- Accountants can advise you on your company’s legal structure, helping you find the one that best fits your tax situation and protecting you and your assets from outside business risks.
- Due to the large number of small businesses and the relatively low number of IRS auditors, it’s unlikely you’ll face an audit. But if you do, it can be expensive, stressful, and time-consuming. A good accountant can give you advice on how to work through the process or even handle it for you, taking away a lot of pain and stress.
- If you’re applying for a business loan, an accountant might help tip the scale in your favor. Banks like to know they will get their money back. Your accountant can help present facts and figures that back up your loan application and can answer any questions your banker might have about revenue projections and expenses.
- If you’re buying or selling a business, an accountant can look into the company’s accounts in detail and find out if anything looks wrong. They can also assist you with a business valuation that will help you better understand the value of the transaction. Don’t forget to include your lawyer. Together, the accountant and lawyer should discover all there is to know about the business deal.
What about fees?
There’s no one method that accountants use to charge their fees. Some bill by the hour, some will work on a monthly retainer, others will bid out a project fee. As a small business owner, hopefully the art of negotiation is already in your toolbox. If not, learn it and be prepared to put it into action. The accountant might not agree with your negotiated fee structure, but if you don’t ask you’ll never know. A quick discussion before the work progresses will ensure a fair price and will help to set your expectations for the value you’re about to receive.
The interview process
You need to consider several factors before taking action. An interview will help ensure that you find the accountant that best fits your business.
You may also pick up free advice along the way that will not only assist in determining the type of accountant you need, but will also help you more clearly understand your own business requirements. Like any other interview, don’t forget to ask for referrals and verify the information. Not sure what questions to ask? Here are a few sample questions to consider:
- What type and size of clients do you work with?
- Are you a CPA, and if so, how long have you been one?
- Who will be working on my account?
- How do you charge for services?
- Are phone calls and routine business and tax meetings included in your fees?
- If my company grows, can you grow with me?
Intuition is a powerful tool in business. Though it isn’t always correct, it definitely shouldn’t be ignored. Ask yourself if you can trust your accountant with the intimate details of your business — and your life. If that sounds more like a marriage than a business relationship, there’s a good reason. Your accountant will become familiar with the inner workings of your business and personal life. The best ones are there when you need them and are your partner in everything but your name. Become familiar before you say “I do”, and get ready to grow your business.
Adam Hennen is a principal with Olsen Thielen & Co. Ltd.: 651.621.8523; firstname.lastname@example.org; www.otcpas.com.