General
How to Choose a CPA for Your Business
Many small business owners believe they can get by without the need to hire an outside Certified Public Accountant (CPA).
And at first, when most businesses are in their earliest stages, they’re right. Business owners can often get by in the beginning by tracking financials such as expenditures, sales and collections on their own, either using free or inexpensive software programs.
As time goes on and the business grows, the next natural step is for the business to hire an inside bookkeeper or to assign the financial reporting and tracking tasks to an on-staff employee. At the end of the year, paying for an outside tax preparation service is all they may need.
If the business continues to grow and do well, though, there will naturally come a time when even a full-time employee assigned to bookkeeping won’t suffice. This is when it’s time to hire an outside CPA.
What CPAs Do
Savvy small business owners will scrutinize all decisions that require expenditures. So, naturally, many will question the return on investment they’ll be getting when they hire an outside CPA.
First and foremost, a quality outside CPA will be providing the business expertise they’ve gained through years of schooling, certification and experience in the field. CPAs have a vast knowledge of all aspects of business bookkeeping.
But perhaps the biggest benefit a quality outside CPA can provide your business is strategic direction as it relates to taxes and finances. An everyday bookkeeper may be able to track expenses, but they often don’t have the foresight or knowledge to point out areas of opportunity.
Same goes for a tax preparer. While they can make sure you pay the right amount of taxes in a given year, they can’t help you create a strategy for how to put yourself in the best possible tax situation.
CPAs can even do an internal audit of all your financials, from how you track everything to your reporting to what you may need to do to be compliant in your industry.
Qualities to Look for in a CPA
There are many generic qualities you should look for when you are seeking a CPA for your small business, and potentially some specific ones as well. In general, the CPA you choose should:
- Be certified: In addition to a degree and a CPA certification, this person could have other designations, too. These include ABV (Accredited in Business Valuation), CVA (Certified Valuation Analyst) and PFS (Personal Financial Specialist). You may not need all these additional certifications, but you should make sure your accountant is at least an official CPA.
- Have experience: The CPA you hire should ideally be experienced and be able to prove this. It would also be beneficial if the CPA has worked with other businesses in your industry, or at least other businesses of your size.
- Have connections: In addition to experience as a CPA, it’s always a nice bonus if they have a nice network of other professionals in case you need additional help. For example, if you’re looking to get a loan to purchase equipment, it’d be nice if the CPA had a business banker to refer you to, if you don’t already have one.
- Match your size and goals: You will have a large choice in CPAs, from single-person operations to large firms. It’s important that the CPA you choose matches not only the size of your business, but also your personal goals. Smaller businesses often require a CPA who can help them grow, while larger businesses often need the services only a large firm with multiple CPAs can provide.
How to Find a CPA
Once you’ve determined the type of CPA you want, and the qualities they should possess, then you can begin the official search. There are three main sources you should check for potential candidates:
- Business listings: You can easily find a list of potential CPAs through a simple internet search. If your business is on the smaller size, though, it may be challenging to find a good fit this way. Internet searches often only give you results for CPA firms that have done a good job of optimizing their websites — and this is often done well by larger firms.
- Local business organizations: In addition, you can go to a local Chamber of Commerce or other business organization to see local members who are CPAs. Depending on the location of your business — and the business organization you go to — this may net you only large firms as well. But if you’re not in a city and you can find a smaller business organization, you could end up with some fruitful results.
- Referrals: One of the best sources of information for any small business are referrals. Relying on another business owner you trust can be a great way to get the name of a reputable CPA who has done good work for them, or others they know, in the past.
What to Do After Your Search
The goal of your search for a CPA should be to compile a list of up to five finalists. Now, it’s time to treat this stage of your search as a recruitment for a staff position at your business.
Bring the CPAs who have made the final cut into your office for a job interview of sorts and/or travel to their place of work to see what it’s like there. You should grill the candidates on not only their past experience, but also their style, their approach and what general steps they would take to serve your business.
The first step to getting your growing small business on a solid track financially is to choose a CPA that can help you reach the heights you desire.
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