Top 5 Questions You Need to Ask Your Accountant
November 28, 2018
Does the idea of walking into an accountant’s office and dumping your books on their desk make you nervous?
I know that’s how I felt during my first consultation. If you’re like me, meeting with an accountant can seem a bit intimidating. Thankfully, after a bit of experience and relationship building, I learned what questions to ask.
Now, I consider my accountant a vital part of my company’s success. She’s more than just a barrier to keeping the IRS at bay. She’s an advisor, a friend, and a partner in business.
I’ve found having a knowledgeable accountant on my advisory team brings three things:
- An unbiased perspective
- Professional education
- Knowledge and experience
According to the Professional Association of Small Business Accountants (PASBA), a professional accountant who streamlines a business is a priceless asset. This person helps keep my business in line financially, which frees up time for me to concentrate on running the company.
In today’s article, I’d like to share some questions for you to ask – that way you can go in a lot more prepared than I was during my first consultation. When you’re prepared, you’re not only saving time and money, but you’re laying a foundation for a highly valuable business relationship.
1. “How is My Business Really Doing?”
One of the biggest challenges with finances is gathering useful data from all the numbers. Enough money to keep the lights on means you’re on a good track, right?
Well, yeah. But there’s more to it than that. (Or so my accountant tells me…)
A finance professional can help you make sense of all the data. And, perhaps most importantly, by properly analyzing your figures, you can get a strong sense of your business’ health.
Some of the questions your finances can answer include:
Do I Have Enough Money?
It’s important to understand exactly how cash flows in and out of you business. I like to follow the old adage that money should come in quickly and go out slowly.
Am I Making Money?
After personal fulfillment, making money is the number one reason why most entrepreneurs start a business. Yes, I want to be fulfilled, but I also want to be rewarded for my efforts.
Can I Make More Money?
My accountant often sees changes I can make to improve profitability. I don’t always take every recommendation, but I’m sure happy to get those valuable insights.
Is the Tax Man Happy?
I want my accountant to keep my business in line. Tell me how to maintain the proper documentation, file required reports on time, and pay the necessary taxes. Then if my business does get audited, I’ll be less concerned because I know my paperwork will be in order.
Always having answers to these four questions will answer the bigger one – how is my business really doing?
2. “What Type of Growth Strategy Should I Use?”
Growth is what keeps your business afloat – especially in the services industry. You need to constantly be nurturing high-qualified leads and landing new contracts. Because, as every freelancer and service provider knows, the second you land a client is the moment you start losing them.
But did you know there is such a thing as good growth and bad growth? Bad growth can actually drag a business down faster than client loss…
Here are some ways I use my accountant to help determine when and how to grow:
Understand the True Cost of Employees:
Before hiring someone, it’s a good idea to know the true cost of hiring that person. What will it cost for salary, taxes, insurances, hiring and training costs? This helps determine whether the benefits my company receives from a new person will outweigh the costs.
Evaluate the Quality of Your Equipment:
Working with old equipment can actually slow a business down.
A good accountant can help you know when to purchase, as well as identify any potential tax benefits. And, of course, find out whether you actually have enough money to afford it.
3. “Should I Eliminate Anything?”
They say breaking up is hard to do. But becoming too attached to buildings, equipment, and even people can result in not getting a good value for the money.
And that’s not good for any business.
Having your accountant look over your expenses on a quarterly basis can dramatically decrease the amount you’re spending each month. I just did this and it was remarkable how many things I paid for without actually using them.
When you run an online business, especially, it’s easy to subscribe to recurring monthly software and then forget about it months later.
4. “Will I Be Able to Meet My Goals?”
Part of setting SMART goals is making things measurable. That’s why I’m often setting business milestones from a financial perspective. It’s very easy to see if I’m on track to reach a target of $90,000 a month by the end of 2016.
And setting goals like this reinforces my accountant’s ability to inform me of these first three questions (i.e. how my business is really doing, what growth strategy I should use and where I should eliminate expenses).
The clearer my goals, the easier it is for my accountant to assist me.
And once she knows my goals, I can go in and get solid business advice for helping reach them. Plus, having someone see the depth of your finances and the goals you have makes for a great accountability partner!
5. “What Else Can I Do to Improve My Business?”
Sometimes it takes a fresh pair of eyes to really identify areas of improvement. Sure, I know about creating and implementing stellar content strategies, but that doesn’t make me an expert in every area of business.
In fact, I’d argue that if you’re an “expert” in everything, you’re really an expert in nothing.
Have your accountant review your financial processes – from invoicing to tracking contractor workflows. She can often give suggestions about programs or systems to make your business even more profitable.
Listen to The Suggestions of Your Accountant
If you want valuable support and advice to take your business to the next level this year, invest in an accountant. And make sure that with each visit you’re asking informative questions that lead to real business insight.
This is an optimized post and was originally published on the FreshBooks blog in March 2016.
about the author
Chelsei Henderson is a content marketing consultant helping freelancers and entrepreneurs build successful companies in the digital world.