Emotional Investment In An Accountant Practice

Choosing the Best Accountant For Your Business

When starting your company, the last thing you want to do is spend unnecessary money. Thanks to money constraints, many freelancers and startup owners often view accountants as an expensive luxury, believing instead that they themselves have the knowledge to fill out and file the necessary paperwork.

However, not hiring an accountant can often be an expensive mistake.

A good accountant offers much more than filling out and filing forms; they can provide expert advice and information, help you to grow your business, prevent your from running afoul of the IRS, and save you thousands of dollars in taxes.

The benefits of hiring a small business accountant:

An accountant can bring a range of benefits to any startup. There are the obvious ones such as navigating the mountains of paperwork and cutting through the red tape new businesses are faced with, but this isn’t all. A good accountant should do more than just balance the books.

Here are a few of the benefits you and your business will reap:

1. You will save time

You’re not an accountant. As a business owner, your time is your money. Hiring an accountant buys you time to focus on your business. A useful rule of thumb is to compare your hourly rate to the cost of an accountant. If you charge $100 per hour, and your accountant charges a flat fee of $100 per month, that is $100 well spent because it’s unlikely that you can complete your monthly accounting chores in a single hour.

When you are an employee, it’s easy to remember the tax deadline—there is only one, April 15th. If you’re a freelancer, you have to file taxes quarterly: the 15th of April, June, September, and January of the previous tax year.

That’s a lot of deadlines to keep track of, on top of your client deadlines. If you don’t keep track of those dates, the IRS will charge you fines and penalties.

Can you afford all of that time and the penalties and fines if you miss a deadline? If the answer is no, an accountant is a legitimate business expense.

2. You’ll have access to a valuable source of information

The American tax code is not set up to benefit individuals; it’s set up to benefit businesses because businesses are job creators. The tax code is also quite complicated. So while you have created a business entity, you will not reap the tax benefits unless you understand the tax code.

The tax code also changes often so even if you understand something now, in a year, the code may be different. Your accountant knows the tax code and stays up-to-date on changes to it and will ensure that you are getting the maximum benefits.

3. You’ll gain a trusted advisor

It’s difficult enough keeping track of personal expenses. Throw a business into the mix, and it gets even harder.

Your accountant can help you monitor your expenses and help you keep personal and business expenses separate. The IRS does not look kindly on business owners who mix the two. Doing so may trigger an audit, and the burden of proof is on you to show the questionable expenses were indeed business related.

4. You’ll have help growing your business

Growing the business is the priority for all business owners. Your business is your baby, and that can affect your objectivity. Your accountant will take a dispassionate view of your business and can give you objective advice on the best ways to grow it.

If you’re at the point where hiring employees makes sense, your accountant can also walk you through the process.

Where can you find a good accountant?

A good accountant is hard to find if you don’t know where to look. Before exploring outside resources, use your own connections. Ask your colleagues or other business owners for referrals. Make sure you do your due diligence when investigating anyone you are seriously considering hiring.

  • If you want to do a background check on the CPA firm or CPA you’re interested in, check your state’s CPA society on The American Institute of Certified Public Accountants.  The nonprofit organization creates and grades the exams CPA candidates take to be certified. All of the CPAs listed there have been vetted and state-certified.
  • Look for an accountant who is a fiduciary. Accountants who follow a fiduciary standard are required to put the client’s best interests above their own.
  • The National Association of Personal Financial Advisors is also a good place to find trained financial advisors who are dedicated to meeting their clients’ needs.

The basics: the fundamental services they should offer

An accountancy practice should provide a variety of services to you and your business. You may not necessarily need them all straight away (i.e. payroll), but it’s useful to know that they have the capacity to handle your growing needs over time.

Accounting, book keeping, tax returns, payroll

These services ensure you can monitor expenses and make sure you are obeying all HMRC tax requirements (known as “compliance”) and that you know where you stand each month. An accountant can help you get set up on accounting software and bookkeeping systems, saving you time, money and hassle when it comes to producing financial statements and tax returns. They’ll also be able to advise you on any tax relief.

Tax advisory

Tax is always going to be an inevitable outgoing, but if you run a small business, there are plenty of ways that you can save some money on your tax bill legally. An accountant can help you plan effectively to make the most of tax relief schemes and reduce your overall tax burden, while still ensuring you are in line with all tax laws.

Audits

Auditing is the process of reviewing a business in-depth in its entirety, and is usually reserved for more established or larger businesses. This is unlikely to be needed during the early stages, so is not covered in-depth in this guide – however again, depending on what your business aspirations are, it’s good to know that an accountant has the capacity and skill-set to cope if needed.

How to Choose an Accountant for Your Business

Businesses look to be facing very precarious times for at least the next year. The pandemic of 2020 has brought with it serious financial uncertainty and a global recession that it will no doubt take a while to recover from.

Arguably, it is more important now than it has ever been for businesses to ensure that their finances are in order.

An accountant can help take the pressure off these processes for business owners and entrepreneurs.

Some people opt to do it themselves, but as a business grows, it might not be the best use of time and resources; business owners might find their time is better spent on their areas of specific

Here are five simple factors that you can use to select the right accountant for your small business.

1. Look for Qualifications

You can benefit greatly by having an accountant with significant business, tax and accounting knowledge to advise you on ongoing business matters.

In most cases, choosing a qualified accountant with a strong financial background, qualifications, such as an account with a CPA (Chartered Professional Accountant) designation, and experience would be an ideal option for a small business owner looking to grow and succeed.

2. Find Someone You Like

It won’t matter how experienced or skilled a particular accountant is if you don’t immediately feel comfortable with him/her as a person. If you don’t like the accountant on a personal level the relationship will ultimately not be successful.

Before you make a decision to engage a new accountant, make sure you can see yourself working with this individual for many years to come. Changing accountants can be difficult and will result in an unnecessary distraction from your ongoing business activities.

3. Make Sure You’re a Priority

Don’t be shy to ask if your potential accountant has a sufficient amount of time for you. Having your accountant react to your queries in a reasonable amount of time will only be beneficial for your business.

4. Consider It an Investment

We all love to make the most of our budget. However, be very careful about choosing your accountant based on price. The money you spend on good accounting and tax advice is an investment in your business and future success.

5. Don’t Be Afraid to Be Selective

Sometimes, even with proper planning and due diligence, you may choose someone that is simply not a good fit. While it can be uncomfortable to have this discussing with your accountant, the long-term benefits of having the right team for your business is worth the short-term discomfort of having to part ways with an employee.