Unfortunately, some small businesses have this misconception that just because there is free cloud bookkeeping software out there, that they can get away with not hiring an accountant or bookkeeper.
You need someone who can give you strategic accounting advice at every stage of your business venture. From startup activities to succession planning, they should be able to keep your books in tip-top shape.
When it’s time to look for a tax accountant, you want one who not only can help save you money and avoid potential trouble with the ATO, but also can provide useful information for your business. “We tend to think of accountants as numbers people, but a good accountant does more than just figure the numbers,” says Ed Lyon, certified tax coach. “A good accountant will communicate what the numbers mean to us.”
So shop around, interview accountants and figure out which one is the best fit for you and your business. Here are 10 key questions to help you make the decision:
For some small-business owners, it’s crucial to have someone who can provide proper accounting advice during every stage of your venture — from startup to succession planning. But choosing right certified public accountant can be a challenging task. You want to find someone who communicates well, helps you strategise and maximise your business’s finances, is affordable and is willing to adjust to your risk tolerance within reason.
As a CPA who has worked with hundreds of clients, I know that many business owners – either out of self-confidence or apathy and disappointment with the accounting profession – have chosen to forego hiring a CPA and used some type of software or online service to prepare their tax returns themselves. However, I strongly encourage you to at least have a CPA review your tax return if you prepare it yourself, and have a semi-annual planning session to make sure you aren’t missing out on tax advice that could save you bundles — or an unpleasant visit with the Internal Revenue Service.
Regardless of how often you choose to see your CPA, having a good one can be priceless. But how can you find the right CPA for your business?
1. What kinds of clients do you work with?
You want to make sure your accountant understands your type of business. A restaurant will have certain rules to follow for wages and tips, for instance, just as a construction business must deal with issues related to contract workers and a real estate development firm will have certain criteria about how income is reported. You need an accountant who has worked with other businesses like yours and knows the ins and outs of the industry.
2. Are you available year round?
Some accounting firms shut their doors during holiday periods – like Christmas to mid January. But when you’re running a small business, you’re going to need help all year, says Melissa Labant, CPA. “If something comes up, you don’t want to wait until tax season in order to get your issue addressed.”
3. Who will be doing the work?
Accountants will often outsource work to a third party. This doesn’t mean their services are bad, but you want to be sure they are forthright about who is doing the work, says Kerry Kerstetter – CPA. If you want to talk with someone familiar with your bookkeeping and that’s a third party, it likely will be difficult to speak with him or her directly, Kerstetter says.
4. Are you a conservative or more aggressive accountant?
Some accountants want to write off everything they possibly can, while others take a more conservative approach. It’s important to figure out where you fall on the spectrum and find an accountant who agrees with your philosophy, Lyon says. If accountants tell you they specialise in finding red flags that could trigger audits, they may be hesitant to maximise your deductions. For example, some accountants believe taking a home office deduction might be a red flag to the ATO, Lyon says.
5. How do you bill for your services?
Some accountants charge by the hour; others bill a flat rate. If you want to take a more hands-on approach to your bookkeeping, an hourly rate might be better because you won’t have as much continuous work for an accountant, Kerstetter advises. Regardless of the billing approach, be sure to get an estimate of an accountant’s likely fees. Provide a copy of your previous year’s tax returns so the accountant can familiarize himself with your business before giving a quote, Labant says.
6. How do you handle working with multiple entities?
If you have more than one entity under your name, be sure the person you hire can manage them simultaneously-a skill not all accountants possess. If you own rental property as an individual and a retail store as a company, for example, you’ll need an accountant who can coordinate and track money moving between those entities, Kerstetter says.
7. What tax program do you use?
You shouldn’t choose accountants based on the tax program they use, but it’s a good detail to ask about. Xero is commonly used for small businesses, which means your information would likely be easily transferred between different accountants, Kerstetter says. Hiring an accountant who uses more obscure tax software won’t affect the quality of the work, but it might make it tricky to switch accountants.
8. How often will we communicate about tax issues?
Every accountant will be different when it comes to frequency of communication for tax planning purposes. Ask about a prospective accountant’s approach and be sure you’re satisfied with the degree of communication, Labant says. “You want to feel comfortable calling them with issues relating to your taxes.”