Successful Entrepreneurs Track Business Finances
Knowledgeable, Creative Accountants Can Maximize Business Profits
Nov 7, 2009
The success and viability of a small business can often hinge on an entrepreneur’s ability to establish a firm financial foundation. Finding a professional accountant who is knowledgeable and able to provide good advice on understanding and tracking financial information is essential, and must be one of the first tasks completed. Changing accountants in mid-stream is difficult and time / cost consuming, so getting it right the first time is important.
Characteristics of a Good Accountant
No concrete formula exists for identifying an accountant who matches well with a specific business. However, there are several things that need to be determined about an accountant before committing to a hiring decision.
- Talk to business colleagues to create a list of local accountants who have good reputations and track records for success. Don’t choose the first referral but compile a list of potential candidates and then take the time to contact each one.
- Ask to meet each accountant at her office to determine the level of support that is available and to make sure she is legitimate. There is no problem asking the candidate about her licensure and business specialties and for examples of how she has helped similar businesses succeed.
- Find out what services are offered by each candidate and the fees that are charged. Service fees can vary considerably among accountants and it is important to find a qualified candidate who is affordable. Big name accounting firms often come with big price tags, and the small business owner can not assume that the impressive accountant who provided the initial contact is the person who will be responsible for the service. Many times, junior staff are assigned to small accounts at the larger firms which can result in significant problems. A small business owner can not expect to obtain the services of the most experienced accountant on staff, but there should be the expectation that the accountant has the skills and credibility to perform the services required.
- Find an accountant who is accessible when needed. Accountants who have large practices may be spread too thin which will become an issue when an entrepreneur needs assistance. Make sure that the accountant is available for consultation within a reasonable length of time so that critical issues can be addressed.
- Determine how techno-savvy each candidates is. There are a wide range of software and other technology tools available for accountants to use in processing and analyzing business data, so make sure she is aware of at least some of them. It is very useful for the accountant to have expertise in Quickbooks or whatever software the entrepreneur chooses to use so that information and data can be exchanged smoothly. It is very reasonable for an accountant to assist an entrepreneur in setting up bookkeeping systems to ensure that expenses and revenues are being tracked accurately, resulting in better forecasting and management.
- Find out if each candidate is a Certified Public Accountant (CPA). There are competent accountants who do not have a CPA but, in general, it is best to use a CPA to help you manage financial resources. CPAs tend to be viewed as more legitimate by the Federal Internal Revenue Service, lawyers, and other professionals who may need to review your accounting information.
- Speak with each candidate about her philosophy for helping business’ succeed. The best match is to find someone who will protect the business from mistakes and miscalculations but also be knowledgeable and willing to help the entrepreneur maximize use of legitimate tax deductions.
- Make sure that the accountant has the skills to service the business as its needs and priorities change through growth or evolving conditions. It may be beneficial to choose an accounting firm that has accountants with varying specialties and experience, so that a change in service provider does not have to be made at a later date.
- Finally, an entrepreneur must ensure that there is a good match with the accountant in terms of personality and expectations. An accountant can have outstanding skills, but if she doesn’t have the personality to match, it could create difficulties. This can be a difficult thing to determine in just one meeting, but using a general feeling of comfort with the accountant as one indicator of a good match is very reasonable.
The Burden is Not Just on the Accountant
It is fair for a small business owner to have high expectations of an accountant. However, it is also important to remember that the accountant can only be as good as the information she is receiving. A business owner must maintain accurate and detailed records to maximize the accountant’s ability to help. Providing a stack of receipts at tax preparation time is not acceptable. Appropriate financial and operations tracking systems need to be implemented and maintained, often with the help of the accountant, to ensure that data are accurate and relevant. This will make the accountant’s job easier and will, ultimately, reduce the cost of her services to the business owner.
Learn about the importance of cost management to the success of a small business and why it takes attitude, focus, and perseverance to be successful. Also, find out why business bankruptcy can lead to personal bankruptcy.
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