The 2017 Tax Cuts and Jobs Act made significant changes to the income tax laws for 2018 and beyond. The IRS website offers detailed information about how the new legislation will impact small businesses. However, this year it’s a good idea to consult a licensed CPA or other tax professional to discuss your tax liability, rather than trying to interpret the new tax codes on your own.
When it comes to tax preparation, a good accountant will make sure your business is in compliance with tax laws, your return is accurate, and help save you time and money in the short and long term. The right accountant will also become a trusted colleague you can rely on to offer advice and guidance as your small business grows.
Hiring an Outside Accountant
Many small businesses don’t have the volume of financial transactions or complex tax issues that necessitate hiring a full-time or part-time accountant. Hiring an outside accountant or accounting firm often costs less than the salary and benefits of a full-time employee and you may have access to a higher level of expertise.
Once you decide to hire an accountant, it’s important to choose one carefully. It is in your company’s best interests to have an experienced, capable professional handling one of the most important areas of your business: your finances. Consider the following factors to help you choose the right accountant for your small business:
Define Your Business Needs
Your decision on what qualifications to look for in an accountant is dependent on what services your business needs. Accountants can handle every aspect of bookkeeping, payroll, and small business accounting. While the range of services can be diverse, not all accountants provide every service.
Ask yourself what tasks you want your accountant to perform. Do you want someone to prepare your tax return and compile end-of-year financial statements, or are you looking for a partner to help you grow your business? Do you need a tax specialist to handle your complicated tax situation or a business specialist who understands your complex ownership structure?
Many small business owners consider their accountants as outsourced chief financial officers. They can analyze your financial data and provide information for forecasts, business trends, managing cash flow, and identifying opportunities for potential growth. They can advise you on financial strategies such as whether or not to secure working capital financing to cover cash flow gaps or purchase a new product line. If you apply for a business loan, they can help pull together the necessary paperwork.
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Look for Relevant Expertise
It’s critical that you choose a financial professional who has experience working with companies that are similar in size and revenue to yours. If the accountant has other clients in your market sector, they will be more likely to understand the unique needs of your business and provide valuable insights. You might also want to be sure you hire someone who is familiar with the accounting or business software you use.
Some small business owners feel more comfortable employing a large, name-brand firm, while others prefer to work with smaller accounting firms. A smaller firm knows first-hand what it’s like to be a business owner, and working with a small team or single practitioner may allow you to build a solid relationship and feel like a valued client. If your company is in growth mode, consider asking how the accountant’s clients have evolved over the years or if they handle larger firms as well. This will give you a sense of whether or not they will be able to scale along with the needs of your business.
Tap Available Resources
Once you’ve identified your priorities, look for an individual or firm that can provide those services. Use every available resource and connection at your disposal. Check out company websites including partner profiles, services offered, and industries served. Organizations like The American Institute of CPAs and the National Society of Accountants also have links to directories and state accounting associations.
Other avenues to consider include referrals from your professional networks, business-centric online sites like LinkedIn, and social networks. Ask friends or family members who own small businesses if they would recommend their accountant and, if so, why. While someone who is right for a friend’s recruiting firm may not be ideal for your manufacturing business, you may get valuable leads to financial professionals who can help you in your search.
Interview Multiple Candidates
Comparing a number of candidates can help you further clarify your business requirements and define the type of accountant you really need, as well as make it easier to determine which individual or firm is best for your business. Interview each accountant just as you would any potential hire, focusing equally on their expertise and how well you will be able to work with them.
Make it a priority to find out how long they have been in business and if they have the knowledge and expertise to handle your specific tax situation. In addition to asking about fees, be sure to determine whether or not they will perform the work personally. If not, request a meeting with the staff members who will be servicing your account, and ask about their review process and who signs the returns.
Once you have narrowed down your choices, do your due diligence. Get references and ask for names of current clients that are similar to your business. While you can expect any reference to give an enthusiastic endorsement, dig deeper to gain an understanding of why they are happy with the accountant’s work.
Trust Your Intuition
If you’ve been running your business successfully, chances are you are no stranger to making decisions based on gut instinct. Intuition can be a powerful business tool when combined with experience and confidence in your skills and ability.
In addition to logically evaluating key factors such as experience, pricing, and references, ask yourself if you feel you can trust the person with the intimate details of your business. If you key in on cues that do not feel right, it is probably a good idea to walk away. Gut feelings are not always accurate, but it would be unwise to ignore them.
Smart small business owners consider tax planning a year-round activity, not a once-a-year event. The right accountant can be a valuable resource not only at tax time, but by handling complex financial work and offering practical advice on day-to-day and big-picture issues.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.