Finance

Your accountant is a valuable partner in your entrepreneurial journey. Beyond crunching numbers and filing taxes, they can offer strategic advice to fuel your business growth. Here are 10 key questions every new business owner in the US should ask their accountant:

What business structure is right for me? (Sole proprietorship, LLC, C Corp, S Corp) – Understanding the legal and tax implications of each structure helps you choose the one that best suits your ownership goals and financial situation.
How can I set up a solid bookkeeping system? – A well-organized bookkeeping system saves time, simplifies tax preparation, and provides valuable financial insights for decision-making.
What are my tax filing obligations? – Knowing your federal, state, and local tax requirements ensures you stay compliant and avoid penalties.
How can I manage my cash flow effectively? – Cash flow is the lifeblood of any business. Your accountant can help you forecast cash flow, identify potential shortfalls, and develop strategies to maintain a healthy financial cushion.
What are my options for financing my business? – Whether you need a loan, line of credit, or are considering attracting investors, your accountant can guide you through the financing landscape and help you choose the most suitable option.
What tax deductions and credits can I take advantage of? – Many tax breaks exist for small businesses. Your accountant can ensure you’re maximizing deductions and credits to minimize your tax burden.
How can I track my business performance? – Key performance indicators (KPIs) are crucial for measuring your progress and identifying areas for improvement. Your accountant can help you establish relevant KPIs and track them over time.
Am I adequately insured? – Having the right insurance protects your business from unforeseen events. Your accountant can work with you to assess your insurance needs and recommend appropriate coverage.
What are my options for retirement planning? – Business owners often overlook their own retirement needs. Your accountant can advise you on setting up a retirement plan that aligns with your financial goals.
What are some financial projections I should consider? – Financial projections help you forecast future revenue, expenses, and profitability. Your accountant can guide you through the process of creating realistic projections to inform your business decisions.

Benefits of Asking These Questions:

By asking these key questions, you gain valuable insights that can contribute to your business’s success in several ways:

Save Money: Understanding tax regulations and maximizing deductions can significantly reduce your tax burden.
Make Informed Decisions: Strategic financial planning based on accurate data empowers you to make well-informed decisions about your business.
Minimize Risk: Identifying and mitigating potential financial risks protects your business from unforeseen challenges.
Maximize Growth: Effective cash flow management, tax optimization, and access to financing can fuel your business growth.
Peace of Mind: Knowing you have a qualified professional managing your finances allows you to focus on running your business with confidence.

Remember, your accountant is there to be a trusted advisor. Asking questions demonstrates your commitment to financial responsibility and positions you for long-term entrepreneurial success.

Accountants can help your business in more ways than just filing your tax returns or doing your payroll.

Accountants can also provide help you with tax minimization and staying apprised of the latest tax laws. They can help with filing compliance documents, creating inventory strategies, organizing stock allocation, making lease-or-buy decisions, responding to audits, preparing annual statements, and optimizing key business metrics. One little known fact is that accountants may even be able to help connect you to a buyer if you’re ready to exit your business. But most of all, accountants help manage the finances of your business so that you can focus on running it!

Maybe you have been doing the business’s financials and taxes yourself and just need to start outsourcing the tax preparation once a year. Or maybe you want to bring some financial functions in-house, and are seeking an accountant to be an employee of your business.

Either way, we have 5 crucial things you need to know as a small business owner before you hire your first accountant.

1. Find an accountant who is familiar with your industry and your type of business.

The accountant you hire should be knowledgeable about and have experience working with clients in your industry. Your accountant should know the unique tax laws, financial regulations, and business trends of your industry so that they can provide you with the best advice. For example, if your small business is a dentist’s office, the accountant should be competent at valuing and depreciating expensive medical equipment. If you run a real estate rental business, the accountant should be very familiar with all things real estate.

The best way to find an accountant experienced in your industry is to ask fellow business owners for a referral or ask your prospective accountant to provide references of industry peers that are current clients. A great accountant will help you bring together your tax situation and financial situation each year, quarter, or even week, so that you can execute on a coherent and financially informed business plan.
Dental Practice Financing | Biz2Credit
2. Be sure to ask about the services the accountant offers. And does not offer!

Most accountants offer tax services, which usually include tax return preparation, auditing, and responding to audits. Be sure to ask if the accountant is qualified to represent you to the IRS (much like a lawyer) if you are audited – all CPAs are qualified but not all accountants are. The accountants qualified to represent you to the IRS are called Enrolled Agents, and they can be a valuable partner in a tough situation.

Some accountants offer additional services like bookkeeping, business valuations, due diligence, overseeing or explaining financial transactions, managing business investments, and compiling investor reports or annual statements. You might want to find an accountant who offers more of the services you need, so as to streamline your business’s financial processes. This can help you avoid having to go out and find additional vendors for other components of your business’s needs.
3. Don’t let accountant fees catch you by surprise!

When selecting your accountant, be sure to shop around. Don’t base your choice exclusively on cost – the cheapest accountant is probably not the best. However, do take care to understand the accountant’s fees.

Most accountants charge by the hour – typically around $150 – $400 per hour – but some may offer you a flat, project-based fee for something like compiling your company’s financial statements. You might even ask to see some sample client invoices to understand how the accountant charges for their time.

Be sure to clearly define any limits you may wish to put in place up front, and make sure that you and the accountant are on the same page before letting them run the meter. Ask your accountant how long they think a project will take, and ask them to commit to a certain number of hours before starting the work.

4. Learn how to use accounting software – it will help you work with your accountant.

Accounting software can alleviate the administrative financial burden on your business, and can also eliminate some of the work that you might pay an accountant to do, such as bookkeeping. Most accountants are happy to work with your accounting software’s outputs, which are usually spreadsheets (your “books”) that they can then use to prepare your tax returns or projections. According to Business Insider, 69% of small businesses use or are planning to use cloud based accounting software.

5. Ask the right questions to make sure you are hiring a strategic financial partner.

Your accountant stands at a powerful vantage point, watching the financial wheels of your business turn from the inside. The best accountants will provide you with candid and useful insights about your business that they have gleaned from these observations.

Your accountant should be monitoring and making recommendations about your business’ key performance metrics, giving you suggestions that help you make important decisions, and making sure you are always in compliance with laws and regulations.

When selecting an accountant, try to figure out how proactive and strategic they are by asking them open-ended questions. You can try:

What kinds of suggestions have you made for other clients who have found themselves in this situation?
What kinds of challenging business situations have you helped turn around?

If these sound like job interview questions, well, they are. You are interviewing this person to see if they are the right fit for the work you have to offer

You may just want an accountant to take care of routine financial tasks and prepare your taxes. But recognize that accountants can provide many more functions to your business, and can really help propel its financial success. Thus, it’s important to be thoughtful when hiring your first accountant. Use these tips and you’re sure to find a great accounting partner for your business.

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