Selecting the Right Accountant for Your Business Follow this advice for making one of your most important business decisions.
Choosing the right accountant is one of your most importantbusiness decisions. In addition to managing your tax planning andpreparation, an accountant can serve as a general business advisoras well as counsel on the best use of available funds and financingoptions. A good account should also be able to network you into theother professionals you need for your business including attorneys,insurance brokers, and financiers.
When interviewing potential accountants, you want to askquestions that help you learn about three areas:
- Experience: What is the expertise of the accountant?
- Comfort: Do the accountant's personality and businesspractices mesh with yours?
- Services: What exactly can the accountant do for you?
Use the questions below to help you during your selectionprocess:
- What type of businesses do you typicallyserve?
- What recent tax code changes should mycompany be aware of?
- What would you have done differently on myrecent tax returns? Why?
- What should I do to improve my cash flow?How can I tell if I'm carrying too much inventory? Is thereanything I can do to speed up my collections timing?
- What kind of software do youprefer?
- How many audits have you been through? Whatwas the outcome?
- How do you bill?
- Who is the day-to-day contact? Will thesame people always service us?
- How long does it typically take you tocall back? What is the typical turnaround time on reports?
- What services do you offer beyond taxplanning and preparation?
- If I need referrals to other businessresources can you help me?
What type of businessesdo you typically serve?
This question should reveal how experienced the accounting firmis with companies such as yours. Look for a detailed answer inwhich an accountant provides examples of clients that have similarneeds to yours. It is important to hire an accountant whounderstands the unique tax requirements of small businesses, and isfamiliar with tax regulations as they apply to your particularindustry. The accountant should also be familiar with yourindustry's specific practices, especially when it comes tounderstanding where your company stands in terms of key financialbaselines and ratios.
What recent tax codechanges should my company be aware of?
The tax code changes continually, so it is essential that youraccountant has a method in place for keeping up to date on new andchanging regulations. Ask a prospective accountant about his or hermethod for staying current. For example, some accountants takeadvantage of the continuing education programs of reputableorganizations such as the American Institute of Certified PublicAccountants (AICPA).
What would you havedone differently on my recent tax returns? Why?
Develop some examples of strategies used on your most recent taxreturn and ask the accountant to react to them. This will enableyou to learn about the accountant's personality and how he orshe explains things to you. These questions will also enable you togain an understanding of how aggressive the accountant is in termsof interpreting the tax code - you want to be sure that hisor her position regarding risk is in sync with yours.
What should I do toimprove my cash flow? How can I tell if I'm carrying too muchinventory? Is there anything I can do to speed up my collectionstiming?
These questions will help you determine if an accountantunderstands your business and can provide business counsel relatedto asset management. While you're not looking for free advice,you do need to be sure that you'll be working with someone whocan help you take pre-emptive steps to avoid a financialcrunch.
What kind of softwaredo you prefer?
Now that most small businesses manage their accounting andbookkeeping electronically, it is important that your respectiveinformation systems are compatible with those of a prospectiveaccount. If you're using software such as QuickBooks, can theyinterface with your software data files from this program? If theyrecommend another software solution, do they have the resources tohelp you implement this financial information system?
How many audits haveyou been through? What was the outcome?
It is important to have an accountant who stands by its work andknows its way around an IRS audit. Your accountant should beprepared to represent you in the event of a dispute with taxauthorities, and should be experienced enough to defend itsinterpretation of the tax code during an audit.
Some firms will charge by the hour (or segment of the hour), andothers will charge by the project. Expect to pay an hourly fee ifyour company keeps an accountant on retainer. Also find out if thefirm bases its fees on the skill level of the person handling youraccount. This structure saves you from paying top-dollar when theagency is completing low-level tasks.
Who is the day-to-daycontact? Will the same people always service us?
It is important that your firm feels it will receive the levelof customer service and support it needs. You want to be sure thatyou are comfortable with the person you will be dealing with on aregular basis, and that the people handling your account will befamiliar with your particular issues. It can be time consuming,costly, and frustrating if you have to explain a tax or financialissue again and again as you wend your way through a firm.
How long does ittypically take you to call back? What is the typical turnaroundtime on reports?
These questions should not only be asked of the accountant, butalso should be posed to client references the accountant providesto you to help you understand the agency's responsiveness.
What services do youoffer beyond tax planning and preparation?
Many accounting firms now offer a range of services that canbenefit your small business. These can include retirement or estateplanning, bookkeeping or record keeping, and management.
If I need referralsto other business resources can you help me?
A "plugged in" accountant candidate will answer withquestion with enthusiasm for the opportunity to connect you withother professionals who can help your business. Look for someonewho discusses the resources he or she typically refers to -including attorneys, bookkeepers, and financiers - or whodetails how they keep in touch with a wide business network thatcan help you.
The viewsand opinions contained herein are not necessarily those of AmericanExpress and are intended as a reference and for informationalpurposes only. Please contact your attorney, accountant or otherbusiness professional for advice specific to yourbusiness.
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