Small Business Accountant: When You Need One and How to Find OneBusiness Taxes
We may receive a commission if you sign up or purchase through links on this page. Here's more information.
According to the TSheets 2019 Tax Season Debrief, 89% of business owners who hired a small business accountant said it was worth the expense.
It’s no surprise that the right accountant working with your business can save you both time and money.
That said, it can be difficult for business owners to know if they really need to shell out much-needed funds to hire an accounting professional.
And it can be even more difficult to know when you’ve found the right one.
When Do You Need an Accountant?
If you’re just starting out with a side hustle, you may not need an accountant.
But as your business grows, the need for a true tax and accounting professional becomes more apparent.
So how do you know it’s time to hire help from a bookkeeper, accountant, or CPA? What are the signs?
You’re Spending Too Much Time on Accounting-Related Tasks
You spend a lot of time working on your business, and you wear a lot of different hats.
A lot of business owners get caught in a cycle of falling behind with the bookkeeping, only getting caught up by letting other responsibilities slip.
So if you find you find yourself wearing the accountant hat too much, it may be time to seek help.
You’re Not Sure of Some Concepts
If you don’t know the difference between revenue and a capital contribution, or if you must Google the definition of depreciation, it’s time for assistance.
Your Business Is Complex
Payroll and sales tax are some of the most burdensome aspects of any business, which is why big companies have whole departments dedicated to them.
If you have employees or you make sales in different states, it may be wise to hire a professional to make sure you’re doing everything correctly. If you’re not sure if you’re running your business correctly from a tax and revenue perspective, you are risking large penalties from state taxing authorities.
Questions to Ask Prospective Accountants
When you have your first meeting or phone conversation with a potential accountant for your small business, you should ask them the questions below to help you determine if he or she is a good fit.
Do you have experience with similar clients as me? If so, are you willing to use them as a reference?
Look, anybody can lie when speaking with you about their experience.
The only way you can truly verify what they’re telling you is by speaking with other clients — so ask for references from past and current clients.
By the way, many professionals will try to dismiss your request for references by saying they can’t share any current clients’ contact information for confidentiality purposes.
While it may be true that for a small minority of clients the accountant may not be able to disclose their accountant-client relationship, certainly this cannot be true for all of their clients. An exception, of course, would be for forensic accounting firms, but this should not be the case for most accounting practices.
Are you generally aggressive or conservative in practice?
While accounting principles and tax codes are robust, there are still areas left to interpretation.
You want to find an accountant who has a similar appetite for risk as you do, or you will be constantly butting heads.
Who will be doing the work, and can I meet with them as well?
This is a great question to understand who you will be dealing with on a regular basis.
Typically, in big accounting firms, the top partners spend most of their time doing sales while the newbies do the actual work.
That’s to be expected, but nevertheless it’s important for you to have a strong relationship with your entire client engagement team.
Accountant Red Flags
If any of the issues below come up as you’re interviewing accountants, move on.
If potential accountants are slow to respond to your inquiries, this can be a major red flag that you won’t receive adequate service in the long term.
Lack of Technology
If you accountant doesn’t offer ways to share information digitally, it may be a red flag that getting things done in a timely matter will be difficult.
You don’t want to work with a firm that’s “stuck in the past,” so to speak.
Good accountants work as an advisor and offer ideas to better run your business.
If your prospective accountant begins looking for other services to sell you, it’s probably time to find someone else.
Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.