How To Find an Accountant for Small Business: A Guide
Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.
Danielle is a writer for the Finance division of Fit Small Business. She has owned a bookkeeping and payroll service that specializes in small business, for over twenty years.
Accountants can provide the financial guidance and expertise required to run your business successfully while also helping you strategize for future goals. Determining where to find an accountant for your small business depends a lot on what you want to be done and the type of accountant you’re looking for. You can opt to work with an accountant virtually or locally or hire a full- or part-time internal accountant.
Step 1: Decide What Tasks You Want Your Accountant to Perform
You may prefer for your accountant to be involved in day-to-day financial duties, or you may want someone who specializes in filing tax returns. Depending on the types of tasks involved, the time requirement can be anywhere from a few hours a month to a full-time commitment. Here are a few examples of tasks that your accountant can assist with:
- Account setup: If you have just purchased accounting software and need someone to help set it up, you can work with an accountant to customize it for your industry. They can also assist with setting up your chart of accounts, customizing forms, and optimizing the software to help save you time and money.
- Basic bookkeeping: These types of tasks include classifying transactions and reconciling accounts. You may opt to connect your bank account to your accounting software, in which case the accountant would ensure that the categories for imported transactions are classified correctly. You may also want someone to input your transactions and reconcile your bank and credit card accounts manually.
- Payroll: Although you may decide to work with an outside payroll service such as Gusto, your accountant can also help you to process payroll for your employees, including generating direct deposits, filing payroll taxes, and submitting quarterly and annual payroll forms. See our recommendations for the best payroll services for small businesses for more information about the types of services available.
- Back-office tasks: Your accountant can also help with back-office tasks like paying bills and issuing invoices. Depending on the number of invoices and bills you receive, this could be time-consuming and you may ultimately decide to hire an internal bookkeeper in the interest of saving money. For A/P tasks, another option is to use an application like Bill.com, which we ranked as the best overall accounts payable software.
- Sales tax returns: If you have a retail business that files quarterly sales tax returns, it would be in your best interest to hire an accountant with expertise in this area who can help you stay compliant to avoid a potential audit.
- Income tax returns: An accountant will prove to be most valuable during tax season by assisting with tax credits and deductions and filing your personal and business income tax returns. However, they should also be able to provide guidance year-round. They can assist with tax advice and planning, helping you to plan for future tax situations.
Tip:
Not all of the tasks need to be performed by the same person. For instance, we recommend having a CPA prepare your income taxes. However, a CPA is probably too expensive to perform basic bookkeeping tasks, in which case you may want to hire a bookkeeper.
Step 2: Decide If You Want an In-house or Independent Accountant
Consider the scope of work that you want your accountant to perform, and whether you have enough work to keep an in-house or internal accountant busy. While it might be nice to have exclusive access to their knowledge when needed, you may only want someone on a part-time basis. Also, keep in mind that back-office tasks like invoicing and paying bills are more difficult to outsource than other activities like classifying transactions and reconciling accounts.
While you may decide to hire an in-house accountant or bookkeeper, it’s common to have an external CPA prepare your tax return. For this reason, hiring an independent accountant or accounting firm on a consulting basis is a good first step for a growing business. The outside firm can often cost less than the salary and benefits of a full-time employee, and you may also receive a higher level of advice from a CPA or tax accountant.
In-house Accountant | Independent Accountant |
|---|---|
Will be able to provide answers to questions as needed; streamlines communication | Often costs less than an internal accountant in terms of salary and benefits |
Can help with back-office tasks like invoicing and paying bills | May be sufficient for small businesses |
May require you to find an external CPA to prepare your tax return | Will likely have other clients; you may not have as much access |
Step 3: Choose Between an Online or In-person Accounting Service
Once you have determined what you want from an accountant, you’ll then need to decide whether you want to work virtually or in person. If you’re comfortable with technology, an online accountant may be a good option. This type of relationship will often require sharing files and documents online as well as communication via video chat or phone.
If you would prefer to work in person with your accountant—whether that’s at your office or their location—it’s important to ask about their communication style and how the tasks will be performed. Another consideration is their availability—can they work on their own time or would you prefer someone to be available for specific hours each day? Also, some accountants may bill you for mileage or phone calls, so you should be sure to determine this ahead of time.
Online Accounting Service | In-person Accounting Service |
|---|---|
Provides more flexibility with work that doesn’t need to be performed in-person | Communication is more streamlined since they will be able to work in-person |
May require more familiarity with technology | Accountants will usually work specific hours each day |
Reduces infrastructure costs like office space, supplies, and utilities for an in-person accountant | You’re free to set the tasks they will perform whereas online accountants may come with a package that doesn’t always fit your needs |
Allows you to work remotely and go paperless if desired | Provides the benefit of proximity which can be easier and faster than a phone call or email |
Step 4: Find Out Whether They Support Your Accounting Software
More than likely, unless you hire an in-house accountant, you’ll need to be doing some of the work in your small business accounting software. This may include entering and paying bills, invoicing clients, and reconciling your bank accounts. It’s important to make sure your external accountant is an expert in your chosen accounting software so they can answer questions and provide training if there’s a steep learning curve.
Accounting software like QuickBooks Online, which received the top spot in our list of best small business accounting software, is a user-friendly option that scales to your business. It also comes with the support of QuickBooks Live, which we selected as one of the best online bookkeeping services for companies that want assistance with QuickBooks Online. If you’re a Xero user, Bookkeeper360 is a Xero Platinum Partner and provides both accounting and cloud-based bookkeeping and business advisory services.
Step 5: Look for Expertise in Your Niche Industry
If your business belongs to a very specialized industry, you should find an accountant that specializes in that area. Niche industries include:
- Oil and gas properties: Oil and gas accounting delves into the acquisition, exploration, development, and production activities. No matter their area of operation, all oil and gas companies will perform the same core activities: capital expenditure, operating expenses, and revenue recognition.
- Restaurants: Restaurant accounting includes a combination of management and back-office operations, such as taking inventory, employee scheduling, and cost management. If you’re looking for comprehensive specialty software, check out Restaurant365, which we ranked as the overall best restaurant accounting software.
- Trucking: An accountant that specializes in the trucking industry should have expertise in managing loads, dispatches, expenses, and orders. Trucking businesses must file International Fuel Tax Agreement (IFTA) reports, so a qualified accountant should be able to assist with that as well. If you’re an owner-operator or a small trucking business, check out our article on the best trucking accounting software.
- Nonprofits and churches: Nonprofit organizations must abide by stringent requirements for budgeting, financial planning, reporting, and auditing. Churches must also have strong accounting systems to provide reports to key stakeholders like the board of directors and donors. We recommend Aplos as the best overall accounting software for both nonprofits and churches.
- Farm and ranch: Accountants with expertise in farm and ranch accounting should be able to create cost centers to track profit and loss by specific farm units and manage inventory items like feed and grain. It’s also useful for your accountant to be able to track activities related to fixed assets. Our article about the best farm accounting software recommends different options for farmers and ranchers.
Step 6: Evaluate Their Credentials
When searching for an accountant, you want to be sure that they have the proper credentials. If they claim to be a CPA, this means that they have passed the exam and are licensed by your state. CPAs also fulfill continuing education requirements to keep their licenses active, and they stay up to date on all federal, state, and local tax laws. There are additional certifications that some CPAs have, such as Accredited in Business Valuation (ABV), Certified Valuation Analyst (CVA), and Personal Finance Specialist (PFS), among others.
If you received the recommendation from the IRS, your state board of accountancy, or a state CPA society, those credentials are most likely legitimate. However, if you received a referral or searched online, you might want to verify their status by searching CPA Verify, which is an online central database that contains information about licensed CPAs and public accounting firms. Be sure to ask for references and speak with some of your prospective accountant’s clients before making a decision.
Questions To Ask a Prospective Accountant
If you’re not sure what to ask a prospective accountant during your meeting, it’s a good idea to focus on their experience and availability, the size of their team, and whether they have any specialties. Here are a few sample questions:
1. How long have you been an accountant?
It’s important to find out specifics, including how much experience they have working with small businesses. If you have a complicated accounting situation, you probably don’t want someone who just graduated from accounting school. Look for an accountant with at least two years of experience under their belt, if not more.
2. Who will I be working with, and how will we communicate?
It isn’t uncommon for an accountant to have a staff that provides support. Find out the size of their firm and their team members’ qualifications before deciding if this is a fit for you. If you’re a very small business, it’s probably best to work with an accounting firm that’s also small and can provide more personalized attention. You’ll also want to establish expectations regarding communication—how often you’ll connect and in what way.
3. Are you available year-round?
If you’re looking for an accountant to perform a one-time audit or to file a tax return, you may not need someone available year-round. But, if something comes up, you want to make sure they’re available for assistance in other months besides tax time.
4. Are you able to represent me in case of an audit?
CPAs can represent you at hearings and speak for your business if you’re audited by the IRS. They can also ensure that you have the required documentation and can prepare you with what to expect during the audit process.
5. How much do you charge, and how do you bill?
It’s appropriate to ask about the accountant’s fees and how they bill for their services. Some services may be a straight fee charged by the job, while others may be billed on an hourly basis. Other accountants may request a monthly retainer. In each case, you can ask for an estimate to provide clarity and set expectations.
6. Do you have any experience in my industry?
Many accountants specialize in certain industries, so it’s best to look for someone who has that expertise so that they understand the unique needs of your business. You can also ask about their experience working with businesses with the same structure as yours, whether that’s a sole proprietorship, limited liability company (LLC), partnership, or corporation. Find out how their current clients have grown and developed over the years to get a sense of whether they’ll be able to handle your company’s evolving needs.
How to Find an Accountant for Small Business Frequently Asked Questions (FAQs)
An accountant is essentially the financial backbone of your business. They prepare taxes, examine financial records for accuracy, prepare financial reports for individuals and businesses, ensure that their clients comply with tax laws and regulations, and provide advice when needed. Accountants may be involved with creating business processes, which include controls to ensure that assets are managed properly. There are many specialties within accounting, such as tax accountants, cost accountants, and inventory accountants.
A small business accountant specializes in all of the aspects of financial management that impact a small business. You may work with your small business accountant on any level, depending on the needs of your business. It can range from monthly account reconciliations to annual tax compliance and quarterly statements. You may also have a more integrated relationship that includes support with payroll and employee tax withholding.
A small business accountant can be valuable at any stage of your company’s growth. This includes the formation of your company and creation of a business plan to assist with loan applications or a tax audit. An accountant can provide advice about your company’s legal structure, measure key business metrics, and manage your payroll. They can use your accounting software to analyze your cash flow, pricing, and inventory management. They can also provide guidance if you’re looking to buy or sell a business, or if your company is growing.
The cost of an accountant depends on what you’re looking for and the expertise you require. It can often be determined by the size of your business, the services required, and the length of time you plan to work with them. Rates may also vary—from hourly, per project, or fixed fees. According to Salary.com, the average hourly rate for an accountant is $28 while the average annual salary is $58,940.
Bottom Line
There are many things to consider when it comes to hiring an accountant for your small business. After you have decided what tasks you need help with, you have the option of hiring an in-house accountant, or one that performs work virtually. Many accountants have expertise in your niche industry, but it’s important that they have valid credentials. You can ask potential accountants the questions we have provided.
