How to choose the right accountant
Choosing an accountant is like choosing a new business partner. The right accountant will become a trusted colleague you can depend on, who offers advice and guidance as your small business grows. So what are the top things you need to look out for?
Top tips for choosing an accountant
Once you’ve decided it’s time to hire an accountant, the next step is to choose which accountant to hire.
It’s essential to take the time to do this carefully, and there are a few things you’ll want to consider first. You’ll need to think about issues such as the accountant’s location, the division of workload and the type of accounting software you’ll use. Consider how much you’ll have to pay the accountant and whether they can help to reduce your business taxes.
It’s in your company’s best interests to have an experienced, capable person handling one of the most critical areas of your business – your finances. The right person will save you time and money year after year. So here are some things you should consider when you’re choosing an accountant.
Ask yourself if location matters.
It used to be essential to have your company’s accountant located nearby. But today, more companies are collaborating online, using cloud-based technology to manage their business. This means that location is less of an issue. With cloud accounting, you and your accountant can view comparable real-time data simultaneously – no matter where you are.
The decision about where to find your accountant comes down to what suits your company best. Depending on how you want to handle the finances, your accountant could be based anywhere in the world. For example, if you’re happy to collaborate via email, phone calls, video conferences, or secure accounting software, then you could be in New York, and they could be in London. If your accountant can be anywhere globally, you don’t need to make compromises based on their location. You can find someone who understands the specifics of your business or industry.
On the other hand, you may prefer face-to-face contact and find it helpful to have someone who can go to business meetings with you. If this is the case, then you’ll need to limit your search to accountants who work nearby or are willing to travel to your premises from time to time.
Wherever they happen to be based, make sure they’re an expert in the tax laws applicable to your business.
Choose a certified or chartered accountant.
In many countries, accountants are regulated by professional bodies that look after accounting qualifications and maintain high professional standards. Depending on the country you’re in, professional accountants may be called Certified Public Accountants or Chartered Accountants. Chartered Accountants (CAs) are highly qualified professionals who have completed the degree-level study and work experience and a professional competence program.
Given the more fantastic experience and knowledge that a certified or chartered accountant has, they’ll be able to add value to your business right from the start. And if you expect your company to grow, it’s a good idea to hire a professional accountant at the beginning rather than later on.
Of course, it is possible to use accountants who aren’t certified, chartered or registered, but it might an unwise business move. Tasks such as bookkeeping, tax preparation and general financial management might not require a certified or chartered accountant. But you will almost certainly need one if your company grows to the point when you need a loan or if you’re ever audited.
Look for an accountant with relevant expertise.
You’ll need someone with experience preparing tax returns and financial documents for companies of a similar size and revenue to yours. If your company uses cloud-based software for much of its business, you’ll probably want someone savvy with cloud computing.
It’s even better if they’ve worked with companies in similar market sectors to yours, as that will help them understand the unique needs of your business. You might want to check to see if they have larger clients. If they do, it’s a good sign as you’ll know they should be able to handle your growing needs over time.
You could also ask them for a client list that details each company’s gross revenue and several employees. Find out how their clients have grown and developed over the years to get a sense of whether they’ll be able to handle the evolving needs of your company.
Talk to government and business associations.
Small businesses are the lifeblood of many countries economies. Because of this, governments like to encourage their growth.
As a small business owner, take advantage of business advisors’ networks available to help you choose the right accountant. There are often voluntary organisations and local chambers of commerce willing to advise you too. Make use of these, as they are there to help you and their advice is usually free.
They can also be good places in which to network and talk to other business owners. Do this a few times, and you may find an accountant is recommended to you by other business owners. If nothing else, this could help you cut down the list of possible people to interview.
Tap into your social networks
When searching for an accountant, the ideal candidate might be right under your nose. Start by asking any friends or family members who own small businesses if they would recommend their accountant. If so, why? And if not, why not? The answers to both questions could be helpful at a later stage when you come to interview candidates.
Bear in mind that choosing an accountant can be a personal decision, so what’s right for your best friend’s PR business might not suit your manufacturing company. Also, take into account differences in business structure. The best accountant for a sole trader might not be the best fit for a company with ten employees.
Make use of your connections online.
Although Facebook might not be the best place to post a request for accountant recommendations (though it’s not the worst, either), more business-oriented networks could help. LinkedIn is one of the largest globally, and if you already have a profile there, you could use it to search for accountants who others have recommended.
Five ways to use your social network for more information
Use LinkedIn or other online networks to delve a little deeper into each candidate’s background and find out things like:
Who are they connected to?
Do they have a strong network of professional people?
How do they talk about their services?
Are they enthusiastic and interested in their work?
Have they received any recommendations from their clients?
What do those recommendations say?
What is their experience?
How long have they been in business, and what were they doing before?
What are their qualifications?
Are they a chartered or certified accountant, a bookkeeper, a financial advisor or something else?
Decide how the accounting work will be divided.
Accountants can handle every aspect of bookkeeping and small business accounting. In most cases, you can bundle up your bills and invoices, hand them all over, and they can do the rest. But this might not always be the best approach.
Accountants often charge by the hour, so making them do simple data-entry tasks is not the best use of their time – time that you’re paying for. So take charge and get more involved in the accounting process (if you can). This will give you a better grasp of expenses and revenues in real-time and a heads-up on potential problems.
For example, you might choose to enter the basic accounts data in-house, then hand the work over to your accountant. Then they can handle the more complicated tasks such as bank account reconciliation, filling out tax return forms, payroll and capital depreciation calculations.
Good quality accounting software will make it easy for you to take part in your accounting process. It will simplify tasks like invoicing, automatically sending the invoice and recording its contents simultaneously. And if the accounting software is cloud-based, you can then give your accountant secure access to your accounts with the click of a button.
Get someone proactive about saving you money.
Some accountants will do little more than manage your accounts and complete your tax return forms, but the best accountants are more aggressive. So before choosing an accountant, ask what they could suggest saving your business money.
For example, what proportion of your operating costs do they think you can offset against tax? If you’re a sole trader or consultant, can you cancel a percentage of your phone bill, car costs, maybe even rent or mortgage payments? What are the implications of doing so? The accountant should warn you of any pitfalls. For example, using your home as business premises could result in a tax charge levied on the house when you sell it!
Always bear in mind that in most countries, there is a big difference between tax avoidance (usually legal) and tax evasion (usually illegal). You need an accountant who knows the details of tax law so well that they’ll save you money in legal ways, but not one who takes things too far and risks causing your business to operate illegally.
Be very careful about this, because ultimately it’s you, the business owner, who’ll pay the penalty if the law is broken.
Find out what software the accountant uses.
Accountants often have their preferred accounting software. The chances are they’ll have been in business for many years and may have become used to one particular brand of software.
This can be a problem. If your company uses a different type of software, there will be issues sharing data. Although it might be possible to export and import data in a suitable format, it can be time-consuming and easily lead to errors. There’s also the risk of your sensitive financial information being read as you send the data back and forth because email is about as secure as a postcard.
So try to find an accountant who’s using the same software as you—or failing that, one who’s willing to do so. There’s no reason why they can’t use more than one accounting software type for different clients. That’s especially true if the software is easy to learn.
It’s best if you can agree to use market-leading accounting software that’s easy to use and only exchange files that have been suitably encrypted. An even better option is to choose collaborative, cloud-based accounting software with encryption built-in. This will mean you don’t have to worry about the risks involved in exchanging data back and forth.
Interview several candidates before you decide
As with anything else in life, don’t automatically accept the first offer you receive. Arrange things in such a way that you can compare a selection of accountants with each other. Then it will be easier to determine which one is best for your business.
An interview can be a powerful way to see how well you’re likely to be able to work with a person. And a series of interviews will not only help you better define the type of accountant you need but also gain you valuable free advice. This may even help you determine your business requirements more clearly.
Always negotiate fees
There’s no single, universal method that accountants use to charge by. Some will charge by the hour; some might charge a monthly retainer; others could charge a percentage of your turnover. As a small business owner, negotiation should already be part of your skill-set. If it’s not, learn it and apply it here.
Make sure you get written quotations from all the accountants you interview, then go away and compare them carefully. Consider a range of scenarios – one fee structure may make sense while your business is small but could become less attractive as it grows.
Nothing is set in stone. You could ask for a combined method of charging or a sliding scale based on turnover, or any other of a wide variety of possibilities. The accountant might not agree to your proposed fee structure, but if you don’t ask, you’ll never know.
Do background checks
It’s important to talk to some of your prospective accountant’s clients before you sign on the dotted line. You can use professional services to help you with this, but if the accountant is genuine, they’ll likely be willing to give you a selection of contacts for references.
This will help confirm some of the information the accountant has provided to you. It will also enable you to hear first-hand about the relationship the accountant has with their other clients.
Be sensible when you contact referees. Don’t weigh them down with dozens of written questions to answer. A ten-minute telephone call is likely to tell you far more about your prospective accountant than a three-page form full of bland written answers.
Learn to use and trust your intuition
You’re running your own company, you have experienced, and you’ve got a pretty good idea of what you’re doing. It’s also likely that you get along well with people since that’s an essential part of business success.
So make use of those skills. Intuition is just another word for the unconscious processing that goes on in our minds. It’s not magic – it’s thought that takes place below our conscious level of awareness. Used in the right way, it’s a powerful business tool in itself.
When you meet an accountant for the first time, consider your intuition. Alongside logical evaluations such as location, pricing, experience and references, ask yourself if you could trust this person with the intimate details of your business. If you think you could work with them for the foreseeable future, then that’s great.
But if your gut feeling is saying no, you should probably walk away. Your unconscious mind may have picked up all sorts of cues (such as verbal stresses and body language) that it doesn’t like. Intuition isn’t always correct, but when it comes to choosing something as important as a business accountant, don’t ignore it.
Good accountants will help your company grow.
If all of this sounds more like a marriage than a business relationship, there’s a good reason for that! Your accountant will become intimately involved with your company’s operation, so it’s not a decision to be taken lightly. You will need one you can trust, who has the necessary experience and who will be there when you need them.
Good accountants help companies grow by managing complex financial work and offering advice on practical business issues. This will be guaranteed to save you money in the short and long term. The best ones will be your partner in all but name – and as long as you choose wisely, you can’t go wrong.
Choosing an accountant
Help with your tax
An accountant can help you prepare and lodge your tax return.
If you’re an employee
An accountant can be helpful if you have multiple jobs or income from investments. They can also help you claim all the tax deductions you’re entitled to and make sure your tax return is correct.
If your income is from one employer, your tax return will be less complicated.
You can do your tax return yourself online for free using myTax.
If you work for yourself
If you work for yourself as a sole trader, contractor or freelancer, an accountant can help.
They can help with your BAS (business activity statements) and PAYG (Pay as you go) instalments. They can also tell you what deductions you can claim and give advice on super contributions and tax.
Help with your business.
If you run your own business, an accountant can help you set up and maintain your financial records. They can also help you meet your tax obligations.
The right accountant can also offer advice and guidance on your accounts as your business grows.
They can help with:
- setting up accounting and bookkeeping software
- setting up the legal structure of your business — for example, as a company, corporation, partnership or sole trader
- applying for an ABN or ACN
- dealing with the ATO on your behalf
- profit, loss and forecasting
- paying staff or contractors
Finding the right accountant
An excellent place to start looking for an accountant is recommendations from people you know.
Make sure the accountant is a member of a professional body. Members of these bodies have an accredited tertiary qualification and must comply with professional standards.
Only registered tax agents can prepare and lodge tax returns. Check if your accountant is registered on the Tax Practitioners Board Register.
To provide advice about investing or planning for retirement, an accountant must have an Australian financial services (AFS) licence. Check your accountant is licensed to provide investment advice.
Questions to ask an accountant
When you first meet or call an accountant, ask them about:
- their qualifications and registration
- which professional bodies they belong to
- their services and speciality areas
- their main client base
- their fees — for example, how much they charge and whether they will take their payment from your tax return
- how you will submit your paperwork — for example, in a template or using specific software
- who will look after your account
- where they are located
- how they deal with complaints