Solely relying on free or inexpensive online small-business accounting tools instead of investing in the services of a trained professional accountant can be a costly mistake that entrepreneurs make all too often. Don’t be one of them.
Springing for a licensed accountant can be worth every extra penny you spend. A qualified, certified public accountant (CPA) can tip you off to potentially irreversible financial missteps that you might not know exist. And we doubt most bare bones digital accounting solutions could bring red flags like these to your attention as effectively as an accountant.
When you do invest in the services of a reputable accountant, it’s important to know what to ask and when — not only to be sure you’re getting your money’s worth, but also to ensure they help you do what’s best for your business and your bottom line.
- What’s the best way to contact you and how often should we be in touch?
This might seem like too simple a question, but clear, effective and frequent communication is the key to a healthy, beneficial relationship with your accountant. Establish early on how often you’ll connect, either in person, on the phone or online (via a video chat app like Skype, Google Hangouts or Facetime). Decide together if you’ll meet weekly, monthly or bimonthly.
- What are some considerations I should consult with you about on an ongoing basis?
A skilled accountant should get to know you and your business well enough to regularly keep you aware of — and swiftly and appropriately reacting to – an array of factors that could effect your bottom line, for better or for worse.
He or she should also be open to assisting you in weighing the financial ramifications of certain decisions, like whether or not to hire an independent contractor or a full-time employee, buy or rent an office space, or rent or lease a company car and much more.
Your accountant should also work collaboratively with you in a way that makes it easy for you to consider and understand which actions you need to take now and in the future, ideally without the usual confusing accounting jargon.
- How can you help me grow my business?
A qualified accountant absolutely can help small-business owners expand over time, that is if have the right groundwork in place with you.
To grow, you must start with a financial model that is honest and built on a granular basis from the ground up. Remember to update your plan on a monthly basis (or ask your accountant to) with actual results. Doing so can help you hone in on opportunities for growth in your market.
- How can you help me clamp down on my cash flow?
Properly projecting your business’s cash flow is as essential as creating an effective mission statement and living up to it. Tedious, detailed flow projections aren’t easy to wrangle, but that’s what you have an accountant for.
Your accountant should be able to help you develop an organized, effective cash flow model that allows you to adjust your operations in ways that help you survive shortfalls, as well as improve receivables and manage payables.
- What is my break-even point?
Your account should be able to analyze a number of metrics to calculate whether your business is making a profit or a loss. Knowing your break-even point is crucial to determining your business’s pricing structure and profitability. Once your accountant helps you identify yours, you should have a strong estimate of how many products or hours of service you have to sell to cover your costs.
- Can you assess the overall value of my business?
Your accountant should be up to the task of estimating your company’s fair market value in excess of your tangible assets. He or she should start by examining your financial plan and then execute a discounted cash flow (DCF) analysis, a common but effective valuation method.
Another way your accountant can help nail down your business’s value is by deeply understanding what you do and the industry in which you operate.
- Can you help me review and negotiate business contracts before I sign them?
This is a common question for accountants, one that’s probably better to ask your attorney.
- What are some special considerations for my particular industry?
Businesses in different industries come with their own unique accounting issues. Your accountant should be knowledgeable about the various ones that specifically apply to yours.
- What are some common mistakes that I should avoid when working with you?
Not being 100 percent honest with your accountant is the worst mistake you could make,
Failing to follow the advice of your accountant is another common mistake. The whole point of hiring an accountant is for their expert advice. Thoughtfully consider it, then use it to make reasoned, balanced judgments.