5 Common Mistakes to Keep away from When Employing an Accountant for Your Small Enterprise
While most business owners are experts on their business operations, few are able to cover the needs of a good accountant or accounting firm that will ensure your financials are handled by a professional.
Here are five common mistakes for small businesses to avoid when hiring an accountant:
1. Selecting an Accountant Based on the Wrong Qualifications Accounting is a lot more complex than just tracking transactions and expenses. A good accountant needs to have a very deep familiarity with your business, so they can assess and manage your finances in a way that best serves your type of business. There are even times where the accountant you hire will need to work with one or more of your employees to get more information, or to work through specific financial questions. For this reason, an accountant with excellent communication skills is absolutely essential, and is a key question to inquire about when considering hiring an accountant or accounting firm.
2. Hiring an Accountant Before You Know What Your Business Needs Do you know what your business’ needs are right now? How about six months or a year from now? Do you just need someone to help you oversee basic accounting functions, or does your business also need help with accounts payable, payroll, budget forecasting, quarterly and annual financial statements, and other needs? Before you start interviewing accountants, you need to create a detailed list of what you require to begin, and what your expectations are for the future. Depending on your type of business, you may need either more regular help or less frequent review from your accountant.
3. Hiring an Accounting Firm That Doesn’t Understand Your Business Your business needs and deserves an accountant that is willing to dive into your business and understand all aspects of what’s important to its success. Along with understanding your business, clear and open communication is a key component of finding a good CPA that you can trust for the long-term. You also want to use your best judgment in finding an accountant or accounting firm that shows enthusiasm to work with you and your business.
4. Choosing an Accountant That Doesn’t Excel at Financial Analysis A quality accountant or accounting firm understands that keeping tabs on your business’ financial health should be a primary focus. These financial health indicators including gross profit margins, net profits, active and aging accounts payable and receivable, etc. You need an accounting professional that is able to dig into the financial and sales data to determine which products or services are selling well, and which need to be reviewed for profitability potential for less popular products or services. Detailed sales analysis by a competent accounting professional is essential to understanding and growing your business.
5. Do-It-Yourself Accounting Rarely Works As a business owner, you are likely good at all aspects of your business, except for the financial ones. Sure, you probably take pride in the top line numbers, but in addition to payroll and IRS tax requirements, an experienced accounting professional can help you streamline your business and to help you plan to ensure there is a defined financial future. Besides, it’s not worth your time to be figuring out accounting software and databases while you should be focused on managing and growing your business.