How to Find the Right Accountant
As a business owner or manager, the relationship between you and the person you choose to do your accounting and taxes is far more important than you may realize. In a small business, the accountant functions almost like a partner – chances are you will look to that person for advice and help with business decisions; thus, it is crucial that the relationship be comfortable and trusting, particularly in today’s volatile and complex economy.
“CPAs are more than just individuals who do your yearly taxes,” says business consultant and author Maria Marsala. “The right accountant can advise you on a long list of other services, which may include advice on your accounting system, financial performance, estate/tax planning, retirement and payroll management. CPAs are a crucial part of a business owner's professional team along with a banker and a lawyer.”
Here are seven tips to finding and hiring an accountant is best suited for your security business:
1. Conduct a careful prospect search.
While you may get lucky going with a recommendation from a friend, do your homework first. “The best way to locate a compatible accountant is to ask around the community,” says CPA and tax advisor Genevia Gee Fulbright, Durham, NC.
Ask bankers, insurance agents, small business owners, even other local business owners. “If it is not a direct conflict, consider using the same CPA,” Fulbright says. “The information you share with your accountant is strictly confidential, and licensed accountants are bound to strict non-disclosure requirements.”
“One of the most important factors in selecting an accountant is the quality of the customer service he or she provides,” says Vincent G. DiAntonio, CPA, J.D., of Pennsylvania’s Hass & Co. “This is reflected in everything the accountant does – from how quickly the client gets a return telephone call to the accuracy and reliability of the advice provided. Sometimes a recommendation from a friend is the best way to find a good accountant since some do not advertise. Many, in fact, acquire new clients solely through word of mouth. That gives them a strong incentive to provide quality customer service.”
2. Verify your prospect’s credentials.
“Some individuals working as bookkeepers or accountants have no formal license or education in accounting,” cautions Navin Sethi, CPA and tax manager with Rothstein Kass of Walnut Creek, Calif. “That’s why you should do a thorough investigation before you hire an accountant. The best way to protect yourself is to hire a certified public accountant (CPA).
“In order to earn the CPA credential, an applicant must meet the requirements of the state or jurisdiction in which they practice,” Sethi continues. “The CPA applicant must also pass the national CPA exam and, depending upon the state, have some actual practical work experience before receiving their license. Finally, a CPA must adhere to requirements to take specified amounts of continuing professional education courses annually to retain their license to practice. Your benefit is that you will be working with a professional who is required to keep up-to-date on the latest and best accounting methods.”
3. Check their references.
Checking an applicant’s references is one of the most important steps in the hiring process. While it may be rare, even professionals can misrepresent their backgrounds and credentials or simply leave out important information.
Checking references takes a little time, but human resource professionals know that it is a simple step that could save you from hiring someone who is woefully unqualified.
4. Find out if you are comfortable with the person.
Fulbright emphasizes the importance of the chemistry between you and your accountant. “Make sure that you have clear goals for your business and that your prospective accountant understands them,” she says. “Go to lunch, have a conversation. That will help you to decide if you are both on the same page.”
Every expert interviewed for this story agrees with the need to have an at-length personal interview before hiring an accountant.
5. Use the 60-percent rule.
Keep in mind that there is a wide range of specialties open to CPAs, from individual taxes to large corporate clients, to small businesses, and everything in between.
“Look for a CPA who has 60 percent of his or her business coming from small business owners like you,” Marsala advises. “They are more apt to keep up with the laws regarding clients they deal with most often. Your business is probably incorporated or is an LLC, so you want to make sure that the person specializes in corporate accounting, including financial statements and audits.”
6. Consider your special needs.
If you have or are anticipating unusual accounting problems in your business, you should look for an accountant with specialized training or experience.
“If you are in need of an outside audit for your business, additional designations such as CFE (Certified Fraud Examiner) would be helpful,” Fulbright says. “If you need a business appraisal/valuation someone with an ABV (Accredited Business Valuation) designation or CVA (Certified Valuation Analyst) designation would be an advantage.”
“The biggest problem many small business owners have is stepping back to take the time to evaluate their business,” says Baltimore-based CPA Carol Katz. “They are so busy running the business and keeping up with the paperwork that they do not allow enough time to plan ahead. You should always consult with your accountant before entering into any significant business or financial transaction. Undoing a poorly thought-out transaction or removing assets from an entity without causing unnecessary taxes can cost much more than the time spent on a planning meeting and document review.”
“The nature of small businesses requires owners to consider succession planning,” DiAntonio adds. “Generally, succession planning consists of either transferring the business to the next generation, selling the business outright to a third party, or, perhaps, to an employee. This will often be one of the most significant life events of a business owner and should be planned appropriately by a trusted advisor. Typically, a CPA who knows the business and its assets can bring additional value to a potential sale or transfer. Also, once the business is converted into cash or a revenue stream, a financial planner can assist the client in maintaining and growing the client’s wealth.”
7. Do not be afraid to make a change.
Despite your best efforts, it is always possible that you will find yourself working with an accountant who simply is not right for you and your business. If you should find yourself in that position, experts say you should not hesitate to look for a replacement. Your accountant is too important to your success for you to compromise.
Business owners should continually review where they are in the life cycle of their professional careers. “They may need to change the business form of the entity as their business grows,” Katz says.
Some entrepreneurs may need tax-savvy ways to bring in family members to whom the business will eventually be transferred. If there is no succession planned, there probably should be a proposed structure for eventual sale of the business, including buy/sell agreements among partners. “If the accountant used when the business was small no longer seems effective, then it may be time to move to another with more expertise,” Katz adds.
William J. Lynott is a veteran freelance writer who specializes in business management as well as personal and business finance. For more info, please visit www.blynott.com.
