How do you make sure that your business’ accounting is in the right hands? Here are five sure-fire strategies for accounting success as described by an industry leader.
As a private business owner and CPA, I am familiar with the obstacles and challenges inherent in developing a long-term accounting strategy. The truth is that no matter what type of business you run, and no matter how small, having a knowledgeable, well-trained, tax and financial advisor can be beneficial. When considering all of your options, I have found that the best approach is to obtain a qualified CPA, not just a financial advisor. Allow me to explain.
Accountants and CPAs: What’s the Difference?
Technically, an accountant is anyone in the tax or finance profession who follows specific rules and regulations.
CPAs are super-charged accountants. When comparing the two, you could think in terms of going to a medical specialist as opposed to a general practitioner. Why is that? Well for starters, CPAs have passed an infamously difficult licensing examination in a given state. This isn’t required for all accountants. To think of it another way: each and every CPA is an accountant, but not all accountants are CPAs. CPAs can benefit your business because they are licensed by a state and remain current with state and federal tax laws. Also, they must comply with continuing education requirements in order to maintain their licenses. Beyond this, the most important reason to use a CPA for your business taxes is that they are eligible to represent you before the IRS in an audit, while an accountant is not.
What reassurances can you get to make sure you are selecting the right CPA to manage your business accounting? Here are five strategies I’ve developed that will help you to make the right choice.
1. Hire a CPA or firm that’s familiar with your personal needs.
Businesses, no matter what the size, need to have a good line of communication with their CPA. It’s imperative that any external CPA firm understands exactly what your business does before you agree to hire them, even if you are just looking for tax services.
It’s also a good sign when a CPA or firm can walk you through their processes, and give you clear feedback regarding their capabilities. Always seek out a firm that shows an eagerness to work with you and is familiar with your industry. If they are slow to respond at the outset that may be a warning sign that they aren’t the right CPA firm for you.
2. Remember, there’s more to accounting than numbers.
Keep in mind that there’s a lot more to accounting than spreadsheets and figures. Especially when it comes to finding a CPA that can actually work with your business.
With their complex understanding of sometimes arcane financial concepts and tax codes, it takes a special accountant who can effectively break those ideas down into straightforward, layman’s terms. That’s why it’s important to consider other factors beyond facts and figures. Adequate and effective communication is just as important as any other service your CPA can offer. Seek out someone who can adequately guide you through the maze of accounting without trying to dazzle you or your employees with terms.
Also, different types of accounting often come with different personality and communication requirements. Keep in mind precisely what you’re hiring for, and consider whether patients and technical guidance will be required.
3. Determine your business’s needs before hiring.
What are your specific needs? Are you looking for someone to handle sales invoices and accounts payable? Or simply create your budgets and financial statements?
You need to determine all of these details before you even begin the hiring process. I suggest making a list of your specific needs, including what you might require as your business expands. Once you have assembled such a list, then you might be ready to find the right CPA for your business.
4. Look for a CPA who has many skills.
You don’t just want a CPA who crunches the numbers. You also want a CPA who does financial analysis. Reviewing your business’s financial health is just one of the many services a qualified CPA firm can accomplish. A knowledgeable CPA can easily analyze the key health indicators (such as gross profit margin, aging accounts receivable, net profit, etc.) on a regular basis. This will allow you to make smart, informed decisions in real-time, providing your business with the data it needs to react and grow.
5. Just say ‘No’ to DIY accounting.
Believe it or not, there’s a good reason that CPA’s attend college and endure such a grueling examination. Accounting-specifically GOOD accounting-is a highly-specialized profession.
What you get from an experienced, qualified CPA is a full understanding of the process, and technical know-how derived from years of study. Most importantly, when you get the right CPA they can execute your numbers error free, which is vitally important because in accounting even the smallest error can translate into a major negative impact on your bottom line.
I can hear you protesting right now: “If I do the accounting by myself, I can save tons of money in the process by not hiring a professional!” Actually, the opposite is true. You can do a lot of damage and lose a lot of money by making even minor mistakes. Besides, a good CPA can actually make you money under the right conditions. Take it from me, if you have little experience in the field, you owe it to your company and your employees to leave the delicate financial work to the qualified professionals. Meanwhile, you can put your time and your resources where they can do the best: expanding your business! It can seem like an avoidable expense; however, hiring the right CPA might save you a great deal of trouble in the long run.
Ready to move to the next step in protecting your company’s assets, contact Global Investment Strategies today.