Tax

Choosing the perfect accounting firm for your small business?

Every year legislators twist and tweak tax laws, leaving the average citizen scratching his head when faced with financial decisions.These decisions could be selling an investment property or claiming a tax deduction for a home office. Accounting firms stay abreast of the new tax laws, and many offer financial advice and help individuals and small businesses develop budgets and set financial goals. Whether you need someone to handle weekly payroll or you just want reliable tax advice, you’ll be happier with your choice if you ask some preliminary questions.

Choosing the right accountant is one of the most important decisions a small business can make. A good one can save you time and help your business grow; a bad one could cost you much needed money. Yet with thousands to choose from, it can be a daunting call to make. So when it comes to selecting and working with an accountant, what are the things to consider? 

What Is An Accounting Firm? Why is it important for your business?

An accounting firm mainly offers services like accounting and auditing for your business. It produces financial records so that you can easily track your revenues and expenses. Providing consulting on your business’s overall financial health is yet another important service that an accounting firm offers.

It helps you with long-range planning, such as buying property or upgrading your infrastructure. You will be, hence, able to determine how to break even and what your cash-flow needs are.

Accounting firms conduct audits by examining not only financial records, but also the processes and controls in place to ensure records are being properly kept, policies are being adhered to, and your financial practices help support your business goals and are the most efficient way to do so.

Many accounting firms offer a range of tax services. The firm’s accountants can help you figure out a new tax code to help ensure your financial reporting practices comply with current regulations, determine your company’s tax liability, and make sure you meet filing requirements and deadlines.

With these services, you can plan your next moves, figure out whether you are making a profit and make decisions about your company’s growth.

Choosing An Accounting Firm For Your Small Business

Whether you’re a business requiring a complete accountancy service or an individual in need of tax advice, choosing the right firm is important.

Know your business needs

You need first to understand the kind of work or responsibilities you want the accounting firm to handle for your business. If you need monthly financial statements and bookkeeping tasks, a non-certified accountant or bookkeeper can be hired. But to get tax planning advice, tax returns prepared, or audited financial statements, you need a CPA or certified public accountant. Check the type of accountants the firm has.

But before you choose an accountant, you need first to understand the kind of work or responsibilities you want the accountant to handle for your business. If you need monthly financial statements and bookkeeping tasks, a non-certified accountant or bookkeeper can be hired. But to get tax planning advice, tax returns prepared, or audited financial statements, you need a CPA or certified public accountant. 

Ask yourself if location matters

It used to be important to have your company’s accountant located nearby. But today, more companies are collaborating online, using cloud-based technology to manage their business. This means that location is less of an issue. With cloud accounting, you and your accountant can view identical real-time data at the same time – no matter where you are.

The decision about where to find your accountant comes down to what suits your company best. Depending on how you want to handle the finances, your accountant could really be based anywhere in the world. For example, if you’re happy to collaborate via email, phone calls, video-conferences, or secure accounting software, then you could be in Melbourne, and they could be in another country. If your accountant can be anywhere in the world, you don’t need to make compromises based on their location. You can find someone who really understands the specifics of your business or industry.

Buying A Business

On the other hand, you may prefer face-to-face contact and find it useful to have someone who’s able to go to business meetings with you. If this is the case, then you’ll need to limit your search to accountants who work nearby or are willing to travel to your premises from time to time.

Wherever they happen to be based, make sure they’re an expert in the tax laws that apply to your business.

Look for small business experience

Large accounting firms often charge higher fees than small to mid-sized firms. That may not be beneficial if you are a small business and have just started. You need someone who works with small businesses, and it could also be a bonus if the accountant works with businesses in your industry. While working for clients from a specific industry for a long time, some accountants get to know the related challenges very well.

Beware of big accounting firms. You need someone who works with small businesses, and it could also be a bonus if the accountant works with businesses in your industry. While working for clients from a specific industry for a long time, some accountants get to know the related challenges very well. If the accountant has been dealing with several clients like you, he/she can guide you well about making the right financial decisions for the growth of your company.

Look for an accountant with relevant expertise

You’ll need someone with experience preparing tax returns and financial documents for companies of a similar size and revenue to yours. If your company uses cloud-based software for much of its business, you’ll probably want someone who’s savvy with cloud computing.

It’s even better if they’ve worked with companies in similar market sectors to yours, as that will help them understand the unique needs of your business. You might want to check to see if they have larger clients. If they do, it’s a good sign as you’ll know they should be able to handle your growing needs over time.

You could also ask them for a client list that details each company’s gross revenue and some employees. Find out how their clients have grown and developed over the years, to get a sense of whether they’ll be able to handle the evolving needs of your company.

Does your prospective accounting firm have a good reputation?

You want to ensure that previous clients have been happy with the service provided; a good way of doing this is to have a look at Google and Facebook to read reviews about a prospective firm. Read as many reviews as possible and look for things such as how many reviews the firm has received, how long ago they received them, and if previous clients are leaving positive feedback.

Tap into your social networks

When searching for an accountant, the ideal candidate might be right under your nose. Start by asking any friends or family members who own small businesses if they would recommend their accountant. If so, why? And if not, why not? The answers to both questions could prove useful at a later stage when you come to interview candidates.

Bear in mind that choosing an accountant can be a personal decision, so what’s right for your best friend’s PR business might not suit your manufacturing company. Also, take into account differences in business structure. The best accountant for a sole trader might not be the best fit for a company with ten employees.

Do a research

Now that you know what services you require, it’s vital to research any prospective accounting firm. Find out as much information as you can about the firm; what experience the firm has, how long the firm’s been in business, does the firm have the capacity to assist you with the services you need and, importantly, do they have experience with small businesses?

Talk to government and business associations

Small businesses are the lifeblood of many countries’ economies. Because of this, governments like to encourage their growth.

As a small business owner, take advantage of networks of business advisers available to help you make decisions like choosing the right accountant. There are often voluntary organisations and local chambers of commerce willing to advise you too. Make use of these, as they are there to help you and their advice is usually free.

They can also be useful places in which to network and talk to other business owners. Do this a few times, and you may find an accountant is recommended to you by other business owners. If nothing else, this could help you cut down the list of possible people to interview.

Fees

It’s vital to understand how your business is going to be billed by a prospective accounting firm as there are a wide number of billing structures which vary greatly. Some firms charge by the hour, whereas others charge flat rates per service, so it’s crucial that you understand how you are being charged.

Fees are an important consideration – after all, your accounting firm’s fees need to fit in with your business or personal budget.

Most firms calculate their fees in one of two ways – either per hour or at a fixed rate. The way in which fees are calculated and the overall amount charged depends on the firm, so make sure you clarify how much everything is going to cost before agreeing to move forward.

Some accountants charge a monthly fee which includes their fee to complete taxes while others charge monthly for bookkeeping services and then separately for business and personal taxes. You want to know how they bill before making a decision on which vendor to use. Not every accountant or accounting firm charges the same fee for its services. It differs in terms of how many services are provided and the qualifications of the person providing the services. Some accountants charge a flat fee for bookkeeping services or an annual fee for a specific set of services such as taxes. Depending on your cash flow, you may be able to negotiate how you pay. Make sure you analyse your budget before making the final decision.

tax chart

Ask About Accounting Software 

Before you choose an accountant, you’ll want to ask what software they recommend for their small business customers. You may find some accountants who are using the same old desktop accounting software. They do not want to switch to the latest online accounting solutions. You want to invest in an accounting software system that you can grow into in 3-5 years. You also want an accountant who can teach you how to use your software and set up your initial chart of accounts. You should also inquire about whether they could help you get a discount on your accounting software. 

Accountants often have their own preferred accounting software. The chances are they’ll have been in business for many years and may have become used to one particular brand of software.

This can be a problem. If your company uses a different type of software, there are potentially going to be issues sharing data. Although it might be possible to export and import data in a suitable format, it can be time-consuming and easily lead to errors. There’s also the risk of your highly sensitive financial information being read as you send the data back and forth because email is about as secure as a postcard.

So try to find an accountant who’s using the same software as you. Or, failing that, one who’s willing to do so. There’s no reason why they can’t use more than one type of accounting software for different clients. That’s especially true if the software is easy to learn.

It’s best if you can agree to use market-leading accounting software that’s easy to use, and only exchange files that have been suitably encrypted. An even better option is to choose collaborative, cloud-based accounting software with encryption built-in. This will mean you don’t have to worry about the risks involved in exchanging data back and forth.

Check If the Accountant Uses Cloud Technology

More and more accountants are switching to cloud computing. It is because of the number of benefits they can get, such as data security, remote data accessibility, flexibility to do work, and many other features like electronic invoicing. At all times, you want to have access to your accounting data. Plus, you want the accountant to be available to discuss urgent matters any time. This is possible when the accountant has opted for cloud services.

Decide Whether You Need an Accountant or a CPA Firm

Many small business owners start by managing their taxes on their own. Unlike the past, it has become much easier for business owners to do simple bookkeeping tasks with the help of advanced software like ProfitBooks, Xero, Sage, and similar others.

But after a certain point in time, it does make sense to hire a professional or a team of accountants to handle accounting, payroll, and tax responsibilities. Whether you need a CPA or a solo accounting firm depends on the scale of your business and the number of transactions you do per month.

Range of accounting services

For businesses, in particular, you want an accounting firm that offers a range of services – such as financial management, auditing/reporting, cash flow analysis, and succession planning.

This type of firm will do far more than complete your tax return; they’ll be able to provide you with advice regarding your business’s financial situation. It’s also far more efficient to be dealing with one firm for all your financial needs.

Leverage Social Media 

These days most accountants are active on different social media platforms. Having a profile on LinkedIn should be a must for any working accountant or accounting firm. You want to see if they have a profile and if they have any recommendations from customers. That is social proof that they have an active business and are highly recommended for their expertise by at least a few customers.  

Ask for Recommendations 

One way to find an accountant for your business is to ask other business owners about whom they use. Nothing is better than a recommendation from one of your peers. Ask about their experience of working with their accountant or bookkeeper, and get some idea of the budget you’ll need to have to pay for these services.

Ask About Reporting Frequency 

You need to know how often you will get financial statements from your accountant. Frequent communication is vital between you and your accountant, especially when you are growing your business. You want to use your accountant as a business advisor, not just to get help during tax season. So, set expectations about the frequency of reporting and communication in advance, and choose an accountant who meets your requirements. 

You need an accounting professional on your team. Interview at least three candidates before you select your accountant. You need to choose an accountant that is a fit for your small business. If you hired an accountant that does not feel like they are on your team, move on. While you might feel some short-term discomfort while doing this, you will get long-term benefits for your business. You need up-to-date financial information to make the best business decisions. This starts with professional accounting services. 

If all of this sounds more like a marriage than a business relationship, there’s a good reason for that! Your accountant will become intimately involved with the operation of your company, so it’s not a decision to be taken lightly. You will need one you can trust, who has the necessary experience and who will be there when you need them.

Good accountants help companies grow by managing complex financial work and offering advice on practical business issues. This will be guaranteed to save you money in the short and long term. The best ones will be your partner in all but name – and as long as you choose wisely, you can’t go wrong.

Scroll to Top

Learn how we've helped businesses just like yours