At some point in the journey of building a small business, some important questions around accounting come up. First things first:
When most businesses begin, the founder balances the checkbook, prepares financial reports, and does the business tax returns. As the complexity of these tasks grow and the demands of managing the business increase, it's often obvious that the best use of the owner's time and energy is not in handling the accounting. At this point, many smart small businesses turn to a specialist.
Before hiring an accountant, determine whether the business needs an accountant, a bookkeeper, or maybe even both.
A bookkeeper handles daily chores such as sending invoices, receiving payments, preparing purchase orders, tabulating employee hours, and preparing bank deposits, as well as recording all the data into your system.
A Certified Public Accountant (CPA) is a highly-trained and licensed professional who can help with preparing tax returns and generating financial reports for lenders or regulators. They can also help create income statements, cash flow forecasts, and other planning and management reports. CPAs have special abilities that other financial specialists do not, such as certifying financial documents. They can also be held liable by their state's accounting bodies for their conduct.
Generally speaking, most businesses hire accountants to prepare tax returns to start. Many have both bookkeepers, to handle day-to-day jobs, and accountants to assistant with more complex, technical, critical tasks. Accountants also cost as much as $300 hourly, while bookkeepers generally earn $50 or less.
You'll likely work with an accountant at tax time, and you may decide to extend the relationship year-round. Monthly consultations, for instance, can supply a business decision-maker with valuable advice regarding tax planning, managing cash, and planning for your growth.
If your business needs more than that, hiring a part-time accountant may make sense. A business that's generating several million dollars a year in revenues may need a full-time professional accounting employee. Even bigger businesses have full-fledged accounting departments with several full-time workers.
When it comes to choosing an accountant, small business owners are usually more comfortable working with an individual or small accounting firms, where they can get personal service and attention. Large accounting firms often have the varied expertise needed to match the complex requirements of bigger clients, but smaller businesses often feel overlooked at these firms.
Most accountants are generalists and most small businesses need them, at least at first. However, many CPAs are specialists. The American Institute of CPAs grants accountants several specialist certifications, including specialties in valuing businesses for sale or purchase, handling employee benefits plans, and performing government audits. Depending on your business's needs, it can be worth considering whether a specialist accountant is in order.
When it is time to identify a specific accountant, the U.S. Small Business Administration (SBA) suggests getting a referral from another business owner. To get referrals from peers, business owners can utilize their network and ask around.
After getting a few referrals, SBA suggests visiting candidates for an initial consultation, which is sometimes free. During the interview, be sure to ask about their experience working with small businesses. Also ask about experience in your specific industry. Inquire whether the firm offers services other than tax preparation, and find out who you will be working with. A small accounting firm is more likely to pair you with an experienced senior partner, while a large firm usually assigns small business clients to junior partners.
You can check the credentials of your final candidates at state and national accounting associations, including the AICPA.
Time and effort spent finding and vetting an accountant is usually time well spent, because a long-term relationship with a trusted advisor can be quite valuable and useful.
But remember that at the end of the day, an accountant is a service provider. The final responsibility belongs to the business owner who signs tax returns and all other official accounting documents.
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Should You Hire an Accountant?: https://www.score.org/blog/2015/hal-shelton/should-you-hire-accountant
How to Find an Accountant Who Can Help Your Small Business over the Long Haul: https://www.sba.gov/blogs/how-find-accountant-who-can-help-your-small-business-over-long-haul
Find A CPA: http://www.aicpa.org/ForThePublic/Pages/ForthePublic.aspx
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