Although the average business owner doesn't acknowledge it, taxes and tax returns are critical to long-term small business success. If you think about it, the reasons for that are obvious.
The first reason is that a small business only pays taxes when it's making money. And the second reason is that failure to pay taxes due can become an existential threat to a small business in a hurry.
And that's why, if you're a small business owner, you need to find the right accountant or accounting firm to prepare your company's financial statements and get your taxes right the first time. If you don't find the right accountant for your business — you may not be in business for as long as you'd hoped.
But what makes a prospective accountant suitable for your small business? And how are you supposed to choose the right accountant for your business, anyway?
Well, if you're a small business owner, we're here to help. Here's a guide on how to choose the right accountant or accounting firm for your small business, and an overview of why it's so important.
How To Know When It's Time To Hire an Accountant and/or CPA Firm
Before you can learn how to choose the right accountant, you'll first need to know how to tell that it's time to hire one in the first place. And it may surprise you to find out that only about 30% of small businesses work with an accountant. The reasons for that vary.
For some, it's because they're small and feel comfortable getting by with a bookkeeper and some basic accounting software. For others, it's because they simply don't know the benefits of working with an accountant.
At a minimum, though, every small business should find a qualified tax accountant to help them with their tax planning, tax filings, and tax returns. And it's also a good idea for every small business to find a certified public accountant to prepare its financial statements and annual financial reports.
As an added bonus, a qualified accountant can offer practical business advice and function like a valued business partner.
Understanding the Different Types of Accountants
That said, it's also important for any business owner to understand the different types of accountants they have to choose from. That way you'll have more confidence in choosing the right accountant. The common types of accountants include:
How To Choose the Right Accountant
Now that you're aware of the different types of accountants you'll encounter, you have the right frame of reference to choose the right one for your small business. Here's what you'll want to consider as you do.
When choosing an accountant, you'll want one with small business experience in your relevant industry. That way they'll understand the nature of the business and any industry-specific regulations that pertain to it.
With the right business experience, your accountant can help with business decisions, cash flow, business planning, business growth, industry-specific financial documents, and much more.
Experience With Your Accounting Software
If you're keeping your small business books using a specific type of accounting software, you'll want an accountant with experience using it. That will help to make sure you're speaking the same language as you work together. It will also prevent any potential errors as they transfer data from your accounting software into their own.
The Right Kind of Expertise & Accounting Services
Different small business situations call for different accounting skills, so you'll want to weigh the benefits of each type of accountant discussed above. Of course, you can never go wrong with a certified public accountant, because they have the skills to handle any small business accounting situation you may find yourself dealing with.
Asking the Right Questions
As a business owner, you're going to want to interview your prospective accountant like you would any other employee. When you do, you should be sure to ask them about their qualifications and their industry experience.
But you should also ask if they have other current clients in your industry and how they see themselves working with you. Asking the right questions will help you to make the perfect choice for your small business.
Contact John F. Dennehy CPA for Practical Business Advice and Experienced Accountant Services
At John F. Dennehy, we offer decades of experience helping small businesses, as well as other business owners, optimize their tax and business situation. As a new business partner, we will first get to understand you and your business. Then, we will offer services and solutions that change as your business grows.
Contact John F. Dennehy CPA today for expert solutions and services.