| depends. If you require an audited or reviewed financial | | | | Perhaps a smaller firm with four or five accountants |
| statement, then, yes, you need a CPA. In any event, it | | | | who are all seasoned veterans might work better. |
| is always a good idea to maintain a relationship with an | | | | You will also want someone with whom you can |
| accountant no matter how small your business. | | | | relate. The ability to communicate is a crucial factor. |
| Whether your accountant is a CPA is up to you. The | | | | Your accountant may be technically proficient but can |
| real question is: To what extent do you need outside | | | | you understand what he or she is telling you? Does he |
| accounting services? That also depends on you and | | | | or she listen when you ask questions? Don't be afraid |
| the nature of your business. | | | | to ask for someone else if you are having difficulty |
| I always start with the admonition: The Buck Stops | | | | communicating. |
| With You! You cannot afford to dissociate yourself | | | | Another important criterion is "accessibility". Is your |
| from understanding the meaning of your financial | | | | accountant too busy to talk to you? Can you get your |
| statements. If you solely rely on your accounting staff | | | | questions answered within a reasonable period of |
| or accountant for completely accurate financial data, | | | | time? Do you feel important to him or her? Situations |
| then you are asking for trouble. If you are going to | | | | may arise where you need information immediately to |
| own or manage a business, then you have a | | | | make an important business or tax decision, will your |
| responsibility to learn how to speak the language of | | | | accountant respond quickly? |
| business. The language of business is accounting | | | | Last, but not least, are the accountant's billing practices. |
| knowledge. | | | | Billing practices vary from firm to firm. Some firms are |
| How involved you become in the accounting process | | | | very aggressive and put tremendous pressure on |
| will be determined by time schedules, your mental | | | | staff and partners to bill every minute they can. Some |
| pre-disposition, desire for control, cash flow, etc. One | | | | firms require a review process before any work goes |
| scenario, if you can afford it, is to hire an internal | | | | out the door. This means that every person who |
| accounting staff to prepare financial statements on a | | | | performs any work on your account, including the |
| monthly basis and have an external accountant check | | | | person who puts the stamp on your envelope, bills you |
| them over. Another common scenario is to prepare | | | | for it. |
| part of the compilation yourself, such as preparing a | | | | Find out in advance what happens if you call the firm |
| sales journal and a cash disbursements journal, and | | | | to ask a simple question that takes less than five |
| then hire an outside accountant to prepare a bank | | | | minutes to answer. Are you billed for five minutes or |
| reconciliation and the financial statements for you. | | | | are you billed in increments of fifteen minutes even |
| Some do this on a monthly basis, others quarterly. | | | | though you only talked for five? Some firms justify this |
| Some business owners do the books themselves all | | | | increment billing by explaining that you are paying for |
| year and turn them over to the accountant at the end | | | | the accountant's expertise that may have taken years |
| of the year to verify the balances and do the | | | | to acquire, therefore, they say, it's worth it. |
| depreciation entry for tax purposes. | | | | Some accounting practitioners charge a flat rate for |
| There are numerous ways to work with an | | | | services rendered or a combination of flat services |
| accountant. Regardless, you should learn enough about | | | | and hourly charges. For instance, an accountant might |
| accounting to be able to communicate intelligently with | | | | charge $200 a month to prepare a monthly financial |
| your accountant. Since you are intimately involved in | | | | statement but charge $100 an hour for special |
| your business you may recognize danger signals that | | | | projects. Within the monthly fee, the client can call to |
| not even your accountant will see. | | | | ask questions that last fifteen minutes or less for no |
| Selecting an accountant | | | | additional charge. This way the client is not reticent |
| Relying on the yellow pages to find an accountant can | | | | about calling. Getting your question answered may |
| be risky. The best way to find any professional is by a | | | | prevent little problems from later becoming bigger |
| referral. However, you need to interview prospective | | | | more expensive problems. |
| accountants before signing on. One of the first priorities | | | | Very often projects take longer to complete than |
| is to find out what their experience level is. Your | | | | anticipated. Complications arise and the practitioner |
| business may have very specific accounting and tax | | | | should be paid for his or her work. Always insist that, if |
| issues that require a certain amount of expertise. | | | | there are going to be additional charges over and |
| Perhaps you have a manufacturing concern. What | | | | above what has been agreed upon, that the |
| does the accountant know about raw materials, | | | | accountant gets your approval first. Be sure to clarify |
| work-in-process, and finished goods inventory | | | | these procedures before engaging an accountant in an |
| accounting? Does the accountant know how to set up | | | | "engagement letter". This is a document that spells out |
| job-costing and overhead burdens? Ask for | | | | the responsibilities of both parties and how the |
| references from other like-kind businesses. | | | | relationship is going to work. |
| Keep in mind, that you may go to an established firm | | | | Remember, there is absolutely no reason to be |
| with a good reputation, but with whom are you going | | | | intimidated by your accountant. After all, you are |
| to have a relationship? Is your account large enough to | | | | paying for the services, and I promise you, the |
| warrant a relationship with a partner? You need to feel | | | | accountant wants your business. |
| confident with the person assigned to your account. | | | | |