How to Choose an Accountant for Your Small Business: 5 Things to Ask Yourself First.
When deciding how to choose an accountant for your small business, ask yourself these 5 questions:
- What Kind of Specific Accounting Work Needs to Be Done?
- What Kind of Accountant Does My Business Need?
- Where Can I Find an Accountant?
- What Will I Look for When Interviewing an Accountant?
- How Can I Officially Hire an Accountant?
NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.
What Kind of Specific Accounting Work Needs to Be Done?
Starting the process with an assessment of your company’s accounting needs is crucial. What exactly do you need of an accountant? Be specific and list it out. Maybe you require someone to update the software and processes for vendor payments. Or you need some proper analysis and reporting on problems with Accounts Receivable. Perhaps you’re getting close to year end and you need an accountant to support an external auditor by prepping specific information that will be required of the audit.
Write down exactly what you expect this person to do, and that will help you to create your accountant job description later. The better prepared you are with what you need, the less time you will spend on this process.
2. What Kind of Accountant Does My Business Need?
Once you’ve completed the analysis of your accounting needs, ask yourself this question: Do you need an Accountant or do you need a CPA (Certified Public Accountant)? There’s a difference.
An accountant is responsible for the preparation and analysis of a company’s financial records. Typically, accountants have a degree in accounting from a recognized institution, but there’s no government requirement that they do so in order to get a job in this field. That’s really up to the companies doing the hiring.
A Certified Public Accountant is at a much higher level than an accountant. CPAs earn their designation after completing specific education and work requirements, and passing an exam. The requirements for obtaining a CPA differ from state to state.
A Certified Public Accountant is allowed to perform certain duties that regular accountants are not permitted to do (by law), such as preparing financial statements for audit, or acting as a taxpayer or company representative in discussion with IRS Revenue Officers or Counsel. Depending on your particular situation, you may find it more beneficial for your company to hire a CPA.
If you decide you need the expertise of a CPA, please note the designation is used in the United States only. Other countries have their own public accounting qualification processes, which are regulated separately from the United States, and are named differently. In England it is called ACA, which stands for “Association of Chartered Accountants”. In Australia it is also referred to as a CPA, but the initials stand for “Certified Practicing Accountant”. In Canada, CPA stands for “Chartered Professional Accountant”.
A CPA is typically paid a lot more than a regular accountant, so hiring one will depend on your needs and budget.
3. Where Can I Find an Accountant?
Finding an accountant can be done through referrals, classified ads and social media.
Before you do a full-blown hunt through social media or posting on sites such as indeed.com, start by asking colleagues in your field for a referral. What you really want is a recommendation from a colleague who has hired someone to do the exact type of work you require, and who has done it in your industry. This is vitally important as it will save you time from explaining the details of your industry once you find the right candidate.
Prepare a list of questions for the contacts who do respond – Were tasks completed on time? Were the reports detailed and accurate? Were there any problems? If so, were they made aware of them first or did they find out later? (in other words, how responsible and proactive was the potential candidate?)
If referrals don’t work, consider placing an ad. Do up a one pager that includes the educational requirements and work experience you expect from those applying. Remember to specify whether you want an accountant or CPA. Include the salary and (if this is a full-time position) benefits. Then put it up on a job search site. You can also simply put out a notice to all your FaceBook, Twitter or LinkedIn colleagues that you’re looking for an accountant.
4. What Will I Look for When Interviewing an Accountant?
When interviewing an accountant, there’s a number of things you want to consider:
- What school did the candidate attend? If he’s a CPA, you can check the credentials through your state board.
- Previous work experience. How much and where.
- Continuing Education.
- Does the candidate understand and stay up to date on the best accounting practices, and the latest in government regulation and taxes for your industry?
- Can the candidate provide a list of recommendations from past/current clients? You’ll want to contact them by phone.
- If you’re not hiring this person full time, how many other clients does he have? Does he even have the time to take you on? If he has staff, will he be personally overseeing the work or delegating it to someone else? How involved will he be? You’ll want to get at least a basic understanding of the candidate’s schedule, and if the hiring process proceeds farther, you can work out the details later.
- Agreement to the Terms.
- Are the fees agreeable to you both? Do all your expectations line up with the candidate’s? Are there any concerns that you cannot address, or agree upon?
- Personality and Attitude.
- At the end of the meet, ask yourself how it went and if you feel you will get along with this person. Maybe the candidate knows very well the regulations around your industry and the latest best practices when it comes to managing finances, but doesn’t seem so concerned about privacy issues. Maybe it’s a story he told about another client that didn’t sit well with you. Alternatively, maybe he told you he went the extra mile on something that you feel as a client you would appreciate. Consider these criteria as important as all the others.
5. How Can I Officially Hire an Accountant?
When you find a candidate you like and you’ve negotiated a fee agreeable to both parties, you need to have a contract prepared that both you and the accountant will sign. You may already have a lawyer who handles these details for new employees already. But be clear with the start date and any other factors that are important to you, as you’ll want to get this off to a good start.
Remember that a trial period of 90 days for new hires is often put into place by many companies, and most people are agreeable to it.
If this is a contract with an outside vendor, then the contract will be much more detailed. You’ll want to note the type of work to be done, expected completion dates, and special details.
In both cases, considering that the nature of the work involves financial details, you’ll want to include a confidentiality agreement, signed before work begins.
Don’t assume the deal is done until you have both a signed contract and confidentiality agreement in hand.
Other Questions Related to How to Choose an Accountant for Your Small Business:
How Much Does an Accountant Earn a Year?
According to the Bureau of Labor Statistics, which is a federal agency whose duties include measuring labor market activity, the 2017 median pay for an accountant is $69,350 per year or $33.34 per hour. These figures are based on an annual wage for all workers in the accounting field.
A CPA will typically make more money than a regular accountant, because they are so highly trained in the field. According to the Journal of Accountancy, the average salary of a CPA in the United States in 2017 was $119,000. This figure does not include bonuses or other benefits.
What Are the Duties of an Accountant?
The duties of an accountant can be broken down into four areas:
- Data Management
Overseeing how data is stored, managed and updated.
- Financial Analysis and Consultation
Properly assessing data and advising management.
- Financial Reports
Being able to generate the standard business reports and statements required by businesses and the IRS.
- Regulatory compliance
Being up to date on government regulations and ensuring the company is following industry standards.