Starting or buying a business is an arduous financial endeavor that many new business owners can not handle on their own. The responsibility of keeping track of business’s financials requires the help of an expert, which is why one of the first moves a new business owner should make is hiring a Certified Public Accountant.
Hiring the proper CPA will put you on the right fiscal track; however, not all CPA’s are treated equal and it is important to find the one that is the best fit for you and your small business. Here are a few things to consider when hiring a CPA.
Speaks the Industry Language
Find a CPA that knows your industry. There are a lot of different accountants out there and most of them have an industry they specialize in. A CPA who mostly works with construction companies may not be the best fit for an owner who purchased a Medical Practice.
Set up meetings with potential firms and make sure they understand what you do. Get referrals from small business networks and see what people in what industry are responding the most. You can even check online reviews; however, you should not just rely on online reviews for such an important position.
It is important to find a CPA that understands your industry because there are many things that can go wrong if your accountant does not know your business.
Press them on their Due Diligence
When speaking with a potential CPA for your new business it is crucial that you thoroughly question them on their processes. A CPA who doesn’t do their due diligence when it comes to your finances is not the person for you.
Does this CPA just log your books and plug in the numbers or do they conduct a thorough investigation of your finances? A diligent accountant will do a financial analysis and review key aspects of a business’s health such as gross profit margin, net profit and accounts receivable on a regular basis.
Additionally, the same principles apply if you hire a CPA to assist in the due diligence process when acquiring a business. It is extremely important they are familiar with the kind of business you are considering and can clearly explain the steps they will take to perform due diligence on that business.
Like residential real estate agents and lawyers, some CPA’s work on larger companies and others don’t. It’s important to identify your prospective CPA’s wheelhouse before making a final decision.
Before you meet with potential accountants write up a list of questions you would like to ask them about their processes and size of companies they have worked on. Even asking them what they consider to be due diligence can go a long way in knowing if a CPA is right for you.
Credentials, Credentials, Credentials
Find out what you want from your CPA and make sure they have the proper credentials to do that work.
If you need a valuation of your new business make sure you hire a CPA that has certification in accredited business valuations.
A great resource for finding or verifying an accountant’s credentials is the American Institute of Certified Public Accountants (AICPA) which has a directory of accountants and their credentials. This directory will even confirm that their CPA certification is still active since they must be renewed periodically.
Understand the Billing Process
How is your CPA going to bill you? Will they want to charge you an hourly rate or a monthly retainer. If you need to set up your QuickBooks would they charge you a flat fee?
Understanding the billing process will allow you to figure out if an hourly payment or a monthly retainer is the right decision for your business.
A tech-savvy CPA or accountant should carry a good knowledge of the latest technologies such as QuickBooks Enterprise Cloud Hosting, which allows multi-user environment using a Hosted Citrix VDI for faster remote bookkeeping services.
Use the information you have to shop around and learn more about what types of services are available to you at a particular price.
It can be difficult to hire someone as important as you CPA, but if you follow these steps and wait for the perfect candidate then your life as a business owner will become a lot easier.
Brian Bond, CBB, is the principal of Strategic Business Brokers Group, a brokerage firm in Scottsdale, Ariz., that has helped companies across all sectors sell their businesses in Arizona. Bond has been named “Broker Of The Year” by the Arizona Business Broker Association and has also received several awards year after year for the highest number of businesses sold. For more?
