The 4 Step Checklist to Finding the Best Business Accountant for You

Georgia McIntyre

Georgia McIntyre

Finance Writer at Fundera
Georgia McIntyre is the resident Finance Writer at Fundera. She specializes in all things small business finance, from lending to accounting. Questions for Georgia? Comment below!
Georgia McIntyre

Do you need a business accountant?

You might answer, “No way.” You can use an app or just do it yourself, so why spend the money?

We get it—whether you’re a seasoned vet or just starting up, every small business owner wants to cut down on costs. So you only spend on what’s absolutely necessary for your business.

Well, we’re here to tell you that hiring a business accountant is absolutely necessary for your small business—and well worth the cost. When it comes down to it, a business accountant can save your business thousands and make your life as a small business owner that much easier.

With that in mind, when should you hire a business accountant? And how can you find the best one for your small business?

Don’t worry—we’ve got answers for you. Follow this 4 step checklist to find the best business accountant for you.

Step 1: Know when you need a business accountant.

Half the effort of hiring a business accountant is knowing when you need one.

Unfortunately, there’s no distinct point in time when every small business owner needs to hire an accountant… But there are a few warning signs that you need one.

If you find yourself in these scenarios, it might be time to start the search for a business accountant.

1. You’re just starting up and don’t know anything about accounting.

When you’re just starting your business or you’re getting into the weeds of running it, you’ll need to know a little bit about accounting.

If financial statements are confusing, creating reports is impossible, or accounting terms are downright jibberish, you should hire a business accountant from the get-go.

An accountant can help you formulate your financial strategy when you’re drafting your business plan and teach you how to manage your business’s finances right off the bat. You don’t want to make any mistakes or miss any key information early on—those slip-ups can cost you down the road.

So if you’re unfamiliar with accounting basics, a business accountant can help you start off on the right foot.

2. You’re deciding on your company’s legal structure.

There are a few different ways to structure your business. And whether you go for a sole proprietorship, LLC, partnership, or corporation, your choice will matter for your finances.

Deciding your small business’s legal structure is an important decision—one that should be considered closely.

For instance, if you choose to go with a sole proprietorship, you’ll be working on a self-employed basis and invoicing under your name. If you go this route, you might be able to save on your taxes by deducting your living expenses.

Each legal structure has its own complications. You might not be an expert on the topic, but a business accountant is. An accountant can explain all the legal structures out there and help you choose the one that’s right for your business.

3. You don’t know anything about taxes.

Just because you’re a small business owner doesn’t mean you know the best practices for filing your taxes. Or, more likely, you don’t have the time to do it right.

This is a great (and probably the best!) reason to hire a business accountant. An accountant can make sure you’re paying the right taxes for your business type and industry, so you’re not hit with penalties and fines.

A business accountant probably provides the most value during tax season by informing you of your business’s tax credits and deductions you can take. You don’t have time to crunch your numbers and save on your taxes, but that’s literally your accountant’s job. And when a business accountant helps you with tax credits and deductions, you can end up saving hundreds (if not thousands) on your yearly taxes.

4. Your business is growing fast—really fast.

So you’ve experienced some rapid growth and all this money is coming into your small business.

Congrats! Now, how do you manage it?

Small business accounting is complex, but it gets even more overwhelming when you serve more customers, take on more vendors, hire more employees… It just adds up. A business accountant can keep track of who you owe and who owes you, making sure your cash flow is smooth and steady.

On top of that, a business accountant can help you manage your money smartly so your business makes it in the long-haul. Maybe you’re great at bringing in the dough, but that means nothing if you can’t manage it.

So if you’re bringing in a lot of revenue but having a hard time holding onto that as profit for your business, an accountant can help. By taking an objective look at your costs, a business accountant can highlight areas where you can cut expenses and better manage your money.

5. The IRS is knocking on your door.

It’s pretty unlikely you’ll be audited—there are just so many small businesses and not that many official government auditors. But if you do happen to get audited, hiring an accountant will save you time, money, and stress.

A business accountant can tell you how to work within the auditing process and give you best practices afterwards. The government will definitely be watching when the audit is over, so you don’t want to violate any other tax laws.

It’s best to have an accountant before you’re audited because they’ll be well equipped to guide you through the process. But if you don’t have an accountant and the IRS comes knocking, it’s absolutely time to hire one.

6. You need a small business loan.

Okay, you don’t need a business accountant to successfully apply for a business loan. But an accountant can really help you through your business loan application.

Any lender you work with for small business financing will need detailed and organized financial documents. They’ll use this information to decide whether you’re eligible for a loan.

A good business accountant can help you stay on top of your financials when it comes time to apply for a small business loan.  

As added perks, a business accountant can…

  • Answer lenders’ questions about the current state of your financials and your revenue projections.
  • Show your lender that you’re serious about your small business and that you’ll have the financial capacity to make your loan repayments.
  • Advise you on interest rates, terms, and conditions that come attached to your loan offer.

7. You’re about to buy a business… Or sell yours.

Acquiring or selling a business is a big deal. Both processes require a significant amount of financial planning.

Say you’re acquiring a business. An accountant can help you dig into that company’s account in detail—finding any red flags before you buy. You’ll want to know the value and ownership of the company’s assets and whether or not the company has any outstanding debt on their books. A business accountant can help you look closely at this.

And if you’re selling your business, a business accountant can make sure your financial records are on track. They can set up statements of your business’s accountants that show how valuable you are to potential buyers. But most importantly, an accountant can help you get all that you’re owed in the selling process. You’ve worked hard to establish your business, so you wouldn’t want to lose any value in the acquisition process.

Step 2: Find your business accountant.

As you can tell, there are a lot of situations where a business accountant can really help out. When it comes down to it, having an accountant is useful every step of the way.

If you’re in one of those 7 situations and you think you need a business accountant, here’s the next step: actually finding one.

Here’s how you go about doing that.

Avoid the Internet

If you do a quick Google search for “business accountant,” you’ll probably find ads splashed all over the page.

While you can find an accountant online, you should probably avoid hiring someone you find on Google or through an online directory.

If you hire the right business accountant, he or she can be a trusted advisor throughout the entire lifespan of your business. They have a good grasp over how your business manages its money, after all, so you’ll want to put time and effort into finding the right business accountant for you.

A great way to find an accountant who you can trust is through referrals. Ask a business advisor, a lawyer, your banker, or tap into your industry’s network to get a recommendation for a good accountant.

You can also get referrals by attending small business events hosted by your local Chamber of Commerce or Small Business Development Center.

Find a Certified Business Accountant

Not every business accountant is a Certified Public Accountant (CPA). But when it comes to getting advice on your business financials, you should probably work with a CPA.

Qualifying as a CPA is the only form of licensed accounting qualification in the U.S. To become a CPA, accountants need to pass a specific exam.

If you work with a CPA, you can be confident that your accountant has been pre-screened and is probably well-trained and experienced. Plus, they need to renew their certification periodically—so you can be sure that their knowledge is up-to-date and they can handle any responsibility.

To find a CPA, you can go straight to the American Institute of Certified Public Accountants (AICPA). The AICPA has a directory of CPAs, accounting companies, and local accounting organizations.

Step 3: Evaluate your business accountant with these 6 questions.

You’re not hiring your business accountant as an employee, but you shouldn’t treat the hiring process any differently:

You wouldn’t take on a new employee without careful consideration and interviewing. You’ll need to do the same due diligence when choosing your business accountant.

Right off the bat, do some research on their experience and ask for client references.

Then, sit down with the candidate face-to-face and get a sense of how he or she will work with your business.

Don’t know what to ask a business accountant? We have you covered with these 6 questions you should ask every potential business accountant.

1. How many small businesses have you worked with?

First, get a feel for how many small businesses they’ve has worked with.

As a small business owner, you know first-hand how complex running a small business can be. Your financial needs will be unique and different compared to those of a medium- or large-sized business.

It’s important that you work with a business accountant who understands the complications of managing a small business and has some experience doing so under their belt.

A qualified business accountant should be ready to offer client references, so give those customers a call, too. Ask how the accountant served their business, and whether or not they’d recommend the accountant for your small business.

2. How much experience do you have in my industry?

Before you sign up for just any business accountant, ask whether the candidate has any experience in your given industry. Many accountants specialize in certain industries, so if you run a very specific business with certain accounting needs, you’ll want an advisor who has experience in your industry.

It’s also worthwhile to ask about his or her experience working with businesses structured like yours. Whether you’re a sole proprietor, LLC, partnership, or corporation, you’ll have different accounting needs—especially during tax season.

3. What are all your services?

Most accounting firms have tax and auditing assistance—those are the most basic services that business accountants have to offer.

But you should also consider anything else they offer. Do they do bookkeeping, business valuation, budgeting, or risk assessments?

The most qualified business accountants will have more than just tax and auditing services to offer, so get a sense of what else the candidate can do for your business.

4. How can you help me grow my business?

In the best cases, an accountant can be a valued adviser for your business. A great business accountant can help you grow over time by giving you the financial capacity to do so.

If you start with an accountant who truly understands your small business from the beginning, they can structure your financial model from the ground up—helping you expand your business down the line.

5. Who will I be working with and how will we communicate?

This is more important than you might think.

If your business accountant is to become a trusted partner, you’ll want to know just who you’re working with. If you choose to work with an accounting firm, make sure you meet face-to-face with the actual accountant that will work with your business. If you’re a very small business, it’s probably best to work with a similarly small accounting firm—your business will just get more attention. If you’re a small business working with a big firm, you might be handed off to a more junior-level accountant.

You’ll also want to know how and when you’ll be in touch with your business accountant. Clear and frequent communication is a very important part of your relationship. Set expectations on how often you’ll connect, whether that will be in person, on the phone, or online. Will that happen weekly, monthly, or just during tax season?

The right amount of communication depends on how much assistance you need, but you’ll want to know what you’re both getting into before you agree to take on your accountant.

6. How do you bill for your services?

You’ll need to know how much the candidate will bill you for their services. Most business accountants charge fees by the hour—usually ranging anywhere from $100 to $275. Some accountants, on the other hand, work on a monthly retainer.

Just as you would with any major decision or purchase for your small business, shop around your accountant options. If you get quotes from multiple firms, you’ll get a sense of what kind of offers you can go with.

The most expensive advisor isn’t always the best option for your business. But in general, the more an accountant charges… The more he or she has to offer your business.

Step 4: Lock it in.

So you’ve met with a few business accountants and you’re ready to move forward with one.

What’s next?

Well, before you make any agreements, negotiate fees. If you’ve shopped around your options, you’ll have a good sense of what accountants are charging. Without driving the candidate away, try to negotiate and get the best deal for your business. Nothing is set in stone, so you might find that the accountant has some wiggle room in how he charges you. The accountant might not agree to exactly what you want, but you’ll never know if you don’t ask!

Once you have a good grasp on what the accountant will cost and how they’ll serve for business, draft out the terms of the agreement in writing. Specifically, put together an engagement letter. The exact services, duration, and fees of the relationship with your accountant should be spelled out in writing. This way, both parties know what to expect.

Once an agreement is in place, you’re ready to start growing your business with your accountant. To make the most of the relationship, communicate often. It’s a good idea to meet or speak with your accountant every month.

***

Just 4 simple steps to getting the advice you need to save valuable money for your small business.

Why not take them?

If it’s costs that still makes you hesitant, think of it this way:

The hours you spend filing your taxes and managing your business’s financials are valuable hours that you’re not spending growing your business. If you could hand your accounting off to a professional, they’ll not only manage your finances more efficiently, they’ll do so without error. And when an accountant takes that number crunching and financial management out of your immediate responsibilities, you can invest your time in growing and improving your business.

When it comes down to it, an accountant can be an invaluable advisor for your small business.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Georgia McIntyre

Georgia McIntyre

Finance Writer at Fundera
Georgia McIntyre is the resident Finance Writer at Fundera. She specializes in all things small business finance, from lending to accounting. Questions for Georgia? Comment below!
Georgia McIntyre

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