Choosing the right accountant is important because shoddy accounting work is costly, painful, and inconvenient. Retaining incompetent accountants increases your risks of being penalized heavily for late, incomplete tax returns and in having to replace one in the middle of a business cycle. A replacement accountant would not only have to reconstruct accounting backlogs, but would also have to be given time to get familiar with the business.
A competent accountant doesn’t simply count beans to prepare and file tax returns, keep accounting books, and generate financial statements; he should also analyze, interpret, and convert the information into useful business intelligence.
This makes him a business adviser, who helps the business succeed by showing the business owner how to achieve the company’s financial goals. He should also give his two cents’ worth on specific business concerns such as internal controls, costing, inventory strategy, pricing, and even marketing. An accountant that can point only to historical financial performance is a poor choice. He should be able to give sound business advice based on it.
A good accountant is also a responsible tax planner who regularly advises you on latest tax regulations and recommends ways on how to bring down tax obligations legally. He should be able to support and defend you in tax audits and investigations.
In small enterprises, a good accountant understands that the owner’s personal finances are usually connected with the business finances. Thus, he must advise you on personal finance matters such as cash flow planning and budgeting. Specific advice may be on a housing loan that could lower monthly amortization at reasonable interest rates.
To get the most suitable accountant for your business, look for someone with an extensive experience in your specific industry. For instance, if you’re in the grocery business, find one who knows the retail industry; if you’re in the restaurant business, get one who knows the food and beverage market. This way, the adjustment is minimal if not altogether non-existent. Get referrals from friends and associates – people who can be trusted to know and give you what you need.
Outsourcing your accounting activity to a third-party provider is also an option. You may choose a freelance accountant, whose rate may be cheaper and whose service may be provided more directly. The downside is the possibility that his work would suffer once his clientele increases over time.