Fitting The Bill
Position yourself for growth in 2017—join us live at the Entrepreneur 360™ Conference in Long Beach, Calif. on Nov. 16. Secure Your Seat »
As the end of the year approaches, new goals and dreams for next year take shape. But no matter how successful or disappointing 1997 was for you, you can't leave it behind yet--Uncle Sam won't let you forget. So begins your first business decision of the year: Do you keep your own business records and file your own returns or hire someone else?
"It's very difficult and time-consuming to keep up with all the new tax laws and technical jargon," says Peter Pfister, a CPA at Kurchin & Co. in Red Bank, New Jersey. "By hiring a professional, the business owner can better use his or her talents to the fullest and concentrate on growing the business."
It's an important decision; don't make the mistake of doing the job badly or hiring the wrong person to do it for you.
Assuming you've resolved to seek help, you're ready for your next task: where and how to find a CPA. One of the best ways to narrow your selection is through referrals. These can come from anyone you trust--a friend or a coworker you respect or your attorney, banker or chamber of commerce. "Calling your local CPA society or scanning the Web can also uncover good sources," Pfister says. "If you know your business is going to grow, don't wait until you can't handle it yourself."
Conrad Theodore, a freelance writer in Lake Forest, Illinois, has been a home-office entrepreneur since 1993.
Who Qualifies for the Job?
Don't just hire the first person recommended to you. Ultimately, the accountant you'll entrust to handle your most private financial information must be a personal choice. With this in mind, there are several things you should first consider.
Don't underestimate the importance of a CPA. Those three letters are awarded only to those accountants who've passed a rigorous, two-day, nationally standardized examination. Most states require CPAs to have at least a college degree or its equivalent, and several also require post-graduate work.
Accountants usually work for large companies; CPAs deal with a variety of businesses, large and small. You can only hope an accountant is well-educated and versed in your particular needs. Passing the CPA examination, on the other hand, speaks volumes about your CPA's capabilities. And only a CPA can perform some of the tasks you may need handled, such as auditing or certifying financial statements.
Remember, though, that not all CPAs provide the same range of services. One may help you with your tax planning, while another can give you more in-depth financial counseling. So don't just pick a CPA from the Yellow Pages; talk to several and ask what their specialties are.
Perhaps you need help compiling a financial statement. Maybe you need tax advice or management consulting. With a little research, you'll find that some CPAs are better qualified to handle your needs than others. Referrals are the best way to find qualified help. If you're opening a restaurant, for example, ask other restaurant owners for recommendations.
Once you find someone with the expertise you're looking for, find out the size of his or her clientele. For Mark Feldman, a graphic designer in Chicago, this was an important issue. "I had been using a firm that was too big for my needs," he says. "So I was paying for more service than was necessary."
An accounting crisis is not a good time to find out how accessible your CPA is. Make sure the CPA you hire is willing to spend the amount of time with you that you expect. If the accountant has some good ideas--but is rarely available to discuss them--you'll wind up frustrated and resentful.
Something for Every Business
A CPA can offer a wide range of services, from basic consultation to complex strategy construction. Pfister recommends you use your time and money wisely when selecting the CPA's duties. "You don't want the individual to spend his time doing your payroll when he or she can do far better things for you," he says.
And don't just hand all your financial documents over to your accountant and await further instructions; be aware of your financial concerns and make suggestions. Here are a few of the services a CPA may offer:
- Setting up accounting systems
- Analysis of transactions for business loans and financing
- Auditing, reviewing and compiling financial statements
- Managing investments
- Manage-ment-consulting services on such subjects as benefit plans, compensation plans and data-processing systems
- Planning tax strategies and preparing tax returns
- Minimizing tax liability
- Representing you before the IRS and other tax authorities
The Bottom Line on Fees
CPAs normally base their fees on the time required to perform the services you request. According to the American Institute of Certified Public Accountants, there are no "fee schedules" common to the profession. It all depends on the type of service you need, the CPA's level of expertise and the complexity of the work required.
Pfister says most CPAs bill on an hourly basis but cautions not to base your decision solely on the fees. "Like anything else, you get what you pay for," he says. "If you hire the right person, the cost may pay for itself."
Select your CPA carefully. By doing your homework now, you can have a long-term working relationship with someone who can help you avoid problems and meet your financial goals.
When a CPA signs his or her name at the bottom of your tax return, you can be confident that a qualified person prepared it accurately. This should give you the opportunity to put the year to rest and start setting higher goals for the future.
Ask the following questions before you hire an accountant:
1. Are you a CPA? (Don't assume all accountants are CPAs.)
2. Are you licensed to practice in your state?
3. Where and when did you receive a license to practice?
4. Where did you go to school and what degree(s) did you earn?
5. What is your specialty?
6. Who are some of your clients? (Call some of these clients and find out if they're satisfied with the service they've received.)
7. How big or small are your clients' companies? (And what size were they when you began your relationship with them?)
8. How accessible are you? (Some are only available during business hours, while others will give you their pager and home telephone numbers.)
9. To what professional organizations do you belong and how active are you in those groups?
10. What are your fees? (Ask to see some current invoices.)
The American Institute of Certified Public Accountants Web site (http://www.aicpa.org ) provides links to news updates, accounting-related software, state CPA societies and answers to frequently asked tax questions.
Kurchin & Co., 125 Half Mile Rd., Red Bank, NJ 07701-6749, (732) 747-0500