There are several reasons why businesses fail. A primary one is a lack of financial understanding. In other words, company owners and employees only have a vague sense of their revenue and expenses.
The group of businesses that fold due to money management isn’t small. In fact, over 80% of these entities close before completing their first year of operations. Some of them do so because they go without a simple individual: the accountant.
This person is there to regularly examine a company’s finances and deliver the bottom line to them. This gives an organization the power to focus on the next steps toward growth. If you don’t have an accountant yet, then it’s time to get one.
However, before this happens, they must be vetted. So, here are a few things to ask when consulting an accountant for your business.
There are accountants for personal finances and those for businesses. The former doesn’t work for the latter. The requirements for personal finances tend to be simpler than those for a business.
So, you need to know what their specialty is. The answer they give determines if you move forward with them. If they prioritize businesses and dabble in some personal finances, then they should be safe. If it’s the opposite, then look to the next candidate.
A Certified Public Accountant (CPA) is a higher level of the position. First, they received the title through additional hours of study. Second, they take a test to be certified by the state.
Once an accountant gains this status they have added responsibilities. For instance, they tend to be an income tax expert. Thus, if you’re vetting a CPA, they should have subject matter knowledge of everything related to regional and federal tax infrastructures.
The reason you bring on an accountant is to staunch the loss of your company’s income. So, they need to have a quick answer on what means they’ll use to manage your cash flow.
They could provide you with a basic answer on their procedures. However, if you’re consulting to hire them, an accountant should already have your financial information. Thus, the answer they provide would contain the necessary steps to lower your expenses and increase your revenue.
You could feel that the way you handled your finances was okay. However, your investors believed differently. Hence, the reason why you’re interviewing accountants.
This is why you need to ask how they’ll help do a better job than you. Honesty and transparency is the best answer to this question. Although it might hurt your ego, an accountant’s brutal truth helps shine a light on items you may have missed. If they give a canned response, then look elsewhere.
A proper accountant doesn’t simply rely on boxed financial applications and spreadsheets. They utilize tools that compile every line item and produce comprehensive reports. Additionally, they may incorporate applications to forecast your financial future.
Overall, you need as much monetary information as possible when you run a business. This gives you a firm hold on where you’re organization is now and what’s needed to jump to the next level. The accountant needs to have all this data ready for you. Plus, it should be simple enough to understand.
Regardless if they’re an independent contractor or work for a firm, you want to understand their current workload. They should be available when called upon to help with various financial operations. If they have a hard time fitting you in with their other clients it means they don’t respect your time.
The examples listed above are just a handful of items to ask when consulting an accountant for your business. Most likely, others will come up through the interview process. Don’t be afraid to ask them, even the hard ones. The more the accountant answers with honesty and facts the stronger a candidate they are.
Whatever you do, don’t bring them on without getting data on their rates. You don’t want to lose more money due to an accountant’s exorbitant fees.