Choosing the right accountant for your small business can mean the difference between success and failure. After all, it's your financial numbers that make or break your business.
Choosing an accountant? Be careful. There may be more riding on the decision than you think.
Unfortunately, once you've selected an accountant, it's a pain to switch. Your accountant gains detailed knowledge of you, your business and your data -it makes it very tough to transition to a new accountant. The end result is that many businesses that work with mediocre accountants don't make the change to a better accountant simply because the switching costs are too high.
Given the inertia that settles in after you've selected an accountant, it's important to make a good choice the first go-around. Makes sense, right?
Surprisingly, most business owners don't thoroughly consider their needs when selecting an accountant. That's because many of us who don't have a strong accounting background view all accountants as being equal.
But the reality is that all small business accountants are not created equal.
This article explains how accountants can assist your business and provides useful questions you should use to choose an accountant that truly can help your business grow, not somebody who just crunches the numbers.
What Do Small Business Accountants Do Anyway?
The increasing role of small business in the American business landscape and more powerful and accessible information technology has changed the role and importance of the small business accountant.
Why do you need an accountant? Some small businesses make due with a bookkeeper - someone to perform the tedious task of recording financial information and cranking that data into the necessary formats, like P&L statements and tax forms.
But a good small business accountant does much more than just record transactions and passively generate documents-they actively analyze, interpret and convert that data into actionable business intelligence.
Based on where you want to go with your business, they should be able to tell you how to get there. If your accountant is just showing you the financial tracks of where you have been, you've made a bad choice and you're missing out on a great opportunity to receive good business advice.
To be sure, today's small business accountant offers more than crunched numbers. They can be your primary resource for:
- Tax Planning. Beyond simply preparing tax forms, an accountant should be involved in business planningthroughout the year. They should be able to regularly advise the business so it functions with peak tax efficiency.
- Business Consulting. A good accountant should be able to help your business grow. Talented small business accountants function as a trusted general businessconsultant, assessing business problems and offering specific solutions. They offer advice on internal controls, risk management, lease versus buy decisions, inventory strategy, pricing, and even marketing. In short, an accounting professional who really understands your business from the inside out should be a trusted business advisor who is highly motivated to see you succeed.
- Personal Finance Advice. A good small business accountant understands that your personal finances are integrally linked to your business finances. They view the two holistically and offer advice on both fronts. For example, while serving as your small business accountant, they might offer retirement planning advice and estate planning advice that is ancillary to your small business activities but that will ultimately leave you in a stronger financial position.
- Technology Know-How. Computing technology has dramatically improved small business capabilities as powerful business software is no longer only for corporations and the Internet provides a level of access to knowledge, customers and suppliers hardly dreamed of even ten years ago. A good accountant must -- must! -- absolutely be proficient in applying the fantastic and inexpensive information technology that turns business data into strategic intelligence. They need to be very familiar with leading small business management software packages from leading vendors like MYOB, Intuit and Peachtree.
- Networking. While the strength of an accountant is still what they know, a mark of a successful pro is also who they know. Your accountant should be a good source of referrals as they should now precisely each of their clients' strengths and needs. Need to get a loan for your small business? Your accountant ought to be able to introduce you to the right banker.