4 Questions to Ask Yourself When Hiring an Accountant

Accountants can alleviate the administrative burden of running a business, leaving owners with more time to focus on doing what they love. Follow our tips for hiring a small business accountant.

Accounting and tax software have made it possible for small businesses to get along without having an in-house accountant. Depending on the business’s complexity and the owner’s appetite for accounting tasks, small businesses can thrive for years with just an occasional phone call with an accounting software’s customer support line.

But, as businesses grow, accounting issues get more complex, and tax filings become too cumbersome for owners to handle. That’s when you hire an accountant -- either a firm or an employee -- to take on the financial tasks that eat up your spare time.

Overview: What does a small business accountant do?

A small business accountant can maintain the books, analyze financial results, file business taxes, and consult with owners to expand the business’s bottom line. You know what they say: Accountants are a business owner’s best friend.

Small business accountants are best known for carrying out day-to-day bookkeeping. They track sales and expenses, keep an eye on cash flow, bill clients, and pay invoices. Some small business accountants also run payroll.

At the end of the accounting period, accountants produce financial statements -- balance sheets, income statements, and cash flow statements -- to give you an overall picture of your company’s financial health. Experienced accountants use the financial data to prepare your business taxes, a task most business owners would be happy to get off the plate.

Aside from rote bookkeeping and tax filing, the most significant value-add from a small business accountant is financial analysis and teaching basic accounting concepts. Through ratio analysis, accountants pinpoint the areas where your business could improve efficiency, boosting your bottom line. Business owners lean on their accountants to suggest changes to the business model that can yield profits.

Budgeting also falls within a small business accountant’s wheelhouse. Integral to creating a realistic growth plan is a financial forecast to reel in your unwieldy dream sequence.

A small business accountant tends to be a jack-of-all-trades able to answer most financial questions you have. However, you can find accountants who specialize in the areas that meet your business needs.

For example, if you need someone to maintain your accounting software, you’ll want to hire an experienced bookkeeper. If you’ve decided you’re never filling out another tax document, find yourself a small business tax accountant to exploit the small business tax credits you’ve been missing.

4 things to consider when looking for a small business accountant

Ask yourself the following questions before starting your search.

1. What accounting services are you looking for?

Make a priority list for the tasks you’d like the accountant to take on. Searching for an accountant is easier when you have a job description for the role.

A small business accountant’s task list could include:

• Audit preparation
• Day-to-day bookkeeping
• Accounts payable
• Accounts receivable
• Tax preparation
• Payroll
• Financial statement drafting
• Financial planning and analysis
• Budgeting

Consider not only your company’s current needs but also those in the near future. For example, don’t search for a bookkeeper when you think you’d eventually like to turn over payroll duties to someone else. You can likely combine these two tasks into an accounting clerk position.

2. Do you want to hire a firm or an employee?

I’m essentially asking if you want an in-house accountant or a firm to manage your business’s accounting workload. Each has benefits and drawbacks, and it comes down to how much accounting help you need.

For example, hiring an in-house accountant, either part-time or full time, ensures a certain dedication of your accountant’s time. However, small businesses that don’t have a constant need for accounting work might find that a firm can bring 360-degree service at a fraction of the cost. Hiring an employee tends to be costly when you add wages, employer payroll taxes, and other benefits.

If you’re unsure which route to take, put your feelers out to firms first. You can test-drive a firm by giving them just a portion of your total accounting workload before deciding whether to continue. Hiring an employee requires commitment.

3. What’s your budget?

Knowing your budget might also help to answer my previous question. As you search for an accountant, consider how much you’d like to spend on accounting services.

Your budget should reflect the services and expertise your business requires, considering the complexity of its accounting issues. Hiring a CPA vs. an accountant and where your business is located also influence the going rate for accounting services.

Research is the best way to build a budget for accounting help. If you’re looking to hire a firm, get some quotes. When looking for an in-house accountant, check out websites such as Glassdoor.com to see what accountants in similar companies earn. The best way to build an accounting budget is to ask a peer -- perhaps a fellow business owner in your area -- how much they’re paying for similar services.

4. How can software lighten your accounting workload?

If your business doesn’t already have accounting, payroll, and tax software, now might be a great time to introduce it. Software can take on most of the automated aspects of accounting, such as simple bookkeeping and filing quarterly payroll tax returns.

Some accounting software solutions offer live bookkeeping at an affordable price. For example, you can tack on live bookkeeping to your Intuit QuickBooks Online software for as little as $200 per month.

With live services, an accounting professional takes care of the tasks you need completed. It’s not a perfect solution: They’ll drop in to fix up your account just once a month, and they might not be as responsive or insightful as an employee or local accounting firm. It might be worth paying extra to have more control over who’s working on your books.

How to find an accountant for your small business

If you wait long enough, you can probably find an accountant at your local office supply store. We can’t stay away from the calculator section for too long without spontaneously combusting.

Alternatively, follow these steps to find the best accountant for your small business.

Ask friends, family, and colleagues

In accounting -- and, arguably, all professions -- reputation is paramount. Ask your trusted family, friends, and colleagues for accounting firm recommendations.

Make sure you’re talking to people who have hired these accountants to do similar work. For example, a great personal tax accountant might not have the specialty or interest in running your S corporation’s payroll.

Use the local society of CPAs directory

If you’re looking for the expertise of a CPA, check out the website of your local society of CPAs. They commonly have directories of local individuals and firms with filters to help you find professionals with a specialization in your industry who can meet your accounting needs.

Search online

Perhaps nobody you know has a recommendation, and you’re not interested in hiring a CPA. You can still find a great accountant for your business with an online search.

If you’re looking to hire an employee, create a recruitment plan and post your job description on a few online job boards.

When searching for an accounting firm, make sure to check out clients’ online reviews before you call for a quote. But take online reviews with a grain of salt: People usually only find time to share glowing and hateful reviews, with little to nothing in between. But if you find a firm with nothing but bad reviews, consider striking it from your list.

3 best practices when hiring a small business accountant

Keep these tips in mind when hiring your accountant.

1. Look for experience that fits your needs now and in the future

Say you need a bookkeeper today, but you know that tax season is coming up. Hire an employee or accounting firm with the skill set to do both.

You want an accountant who can grow with you and help you tackle any accounting needs that may come your way. When you’re interviewing potential accountants, ask them about the type of accounting software they’re comfortable using and what they do to stay up to date with the latest accounting and tax laws.

Business owners who’ve aced Accounting 101 can ask targeted questions during an interview to assess whether the candidate is ready to take on all they’re looking for. Check out our glossary of accounting terms if you need a refresher.

2. Shop around

Interview at least three firms before choosing one. Accounting firms can differ greatly on price, and you don’t want to get into a situation where you realize only years later that you’ve been overpaying for services.

Likewise, interview multiple candidates before hiring an in-house accountant. Make sure you’re making the job posting widely available so people from different backgrounds can apply. A diverse pool of applicants is essential in any hiring process.

3. Conduct background checks and check references

Accountants have access to your business’s most private information, from employee records to bank account information. You’ll want to run a background check and ask for references before turning your books over to someone new.

Get back to business by hiring an accountant

Not everyone is like me and loves talking about, and practicing, accounting. That’s probably for the best. You’ll be able to get back to doing what you love to do when you hire someone passionate about getting your books in order or your taxes filed accurately and on time.