Defined, accounting is an organized way in which you can keep track of all of your exchanges. While something like this may sound simple at first, being as precise as possible is critical in keeping your small business alive and healthy. If you’re accurate in your accounting, you will have data that you can use to make wise financial decisions, while inaccurate data will result in the opposite.
Regardless of whether you plan to hire a full-time accountant or outsource everything to a CPA firm, it’s essential to ensure that all of your accounting needs are in the right hands. Here are five of the most common mistakes that a small business can make whenever they hire a CPA.
Focusing on All of the Wrong Qualifications
Accounting involves more than just crunching a lot of numbers – an accountant should also have an excellent understanding of how your business works since they are involved with many of its components either directly or indirectly. For instance, accountants may have to spend some time working with your employees to obtain information that has to do with their records. It’s also vital to hire the right accountant who has all of the necessary backgrounds to perform the job correctly.
Beginning the Hiring Process
Before You Determine What You Need
Before you even think about hiring a CPA, it’s important that you take the time to figure out exactly what you need. For example, always hire a CPA based on whether you need them to perform specific jobs related to sales invoices, accounts payable, payroll, taxes, etc. Think of it as a form of shopping list regarding the services that your business will require from a CPA, as well as what it may need as time goes on. From there, search for a reputable accountant and CPA to handle the tasks.
However, it’s important to remember that revenue alone doesn’t determine the type of accounting needs that your business will require. For instance, if you own a high-end business and are making a lot of money, yet not selling a lot of items, you still may not need a full-time accountant. On the other hand, businesses such as auto repair shops that are smaller and selling a lot of items may require this kind of help.
Hiring a Firm That Doesn’t Understand You
The key to anything involving accounting is understanding. It’s also important to communicate with your CPA as often as you can. If you plan to hire an outside CPA firm, give it time to learn everything about your business before it actually gets started with its work, even if the firm is doing something as simple as taxes, because there are all sorts of things that can go wrong if they don’t understand how your business works. Furthermore, it’s also important to choose a CPA that not only appreciates your business, but one that’s also eager to work with you. However, you will also need to keep an eye out for potential warning signs, such as slow communication times from them, as this could be an indication that they may have too many clients. If this is the case, treat this as a sign that they may not have the ability to give you the attention that you need.
Choosing a Firm That Doesn’t Perform a Financial Analysis
Any reputable accounting service should be willing to review your company’s overall financial health, as well as providing you with all sorts of key indicators every single day. The more information that you’re provided with, the more you’ll be able to make better-informed decisions.
When we asked Ribeyre Chang Haylock Chartered Professional Accountants of their opinion on DIY accounting they told us: “There’s an actual reason why people go to college specifically for accounting. It’s because when an accountant is experienced, it means they know how the process itself works and how they can perform it without worrying about any errors, especially since errors can create all sorts of havoc on your business regarding money. Unless you have some accounting experience, the best thing that you can do is leave everything to a professional before you end up doing more damage.”
Accounting is an important part of any small business and how successful it can become. Using the practices mentioned above, you will be able to hire the best help possible, leaving you to focus on actually building your business even more.