Many small business owners use free and inexpensive accounting tools to help them handle the daily expenses of their enterprise. It would be a vital mistake for you to rely upon free or inexpensive tools accounting tools for small businesses. They are not designed to offer the premium services you need to run an efficient business.
Katz, of Port Coquitlam accounting expert, encourages small business owners to hire a licensed accountant. According to Katz, an experienced certified public accountant (CPA) is worth every penny. The CPA can help you avoid financial mistakes that can ruin your small business, and introduce you to new tax savings opportunities that can help you save a tremendous amount of money. Katz also pointed out that most free and cheap accounting solutions are not able to offer these invaluable incentives.
There are a few things you should keep in mind when you decide to invest in the services of a reputable accountant. It is imperative for you to ask the prospective account some issues before hiring them. This will help ensure you are getting your money’s worth.
Here are several questions you should ask every prospective certified public accountant:
1. What’s your best contact number and how often should we speak?
This may seem like a simple question, but it is important for you to find an accountant that will be accessible during regular business hours. An open line of communication is the key to having a solid relationship with this special professional. Establish early on how often you will communicate with each other. Will it be by telephone, in person, or online (via a video chat app like Google Hangouts, Facetime, or Skype)? You and the prospective accountant should decide on weekly, monthly, or bimonthly meetings.
2. How can you help me get ready for the tax season?
Dealing with tax preparation issues is the main reason why many small businesses hire an accountant. Ask your CPA about your eligibility for tax credits and deductions. You should also ask about new tax laws and write-offs. Covering your bases is the best way to lower your taxes and maximize your savings.
Katz stated the following, “Tax opportunities such as the R&D credit, accelerated depreciation or state and local tax opportunities can be applied to your tax return.” He also pointed out that you may also be able to take advantage of refundable credits, outright grants, and tax forgiveness.
Katz also encourages small business owners to get their tax questions answered before the filing deadline (April 15). It is important for you and your accountant to organize accounting documents and data throughout the entire year.
3. What type of matters should I consult with you about?
An experienced accountant should make an earnest effort to get thoroughly acquainted with you and your business operation. This will help them prepare for various factors that could have an impact on your bottom line.
According to Katz, “Your accountant should have experience in several disciplines, “including but not limited to GAAP [generally accepted accounting principles], retirement planning, financial planning, corporate tax, and income tax.”
Your accountant should also be willing to help you in evaluating the financial ramifications of certain decisions. For example, should you hire a full-time employer or an independent contractor, buy or rent office space for your business.
You should have a smooth relationship with your accountant. This will make it easy for you to have a better understanding of your options. According to Katz, “You should look for another accountant if you cannot have this type of relationship.”
4. How can you help my business expand?
An experienced accountant can help small-business owners expand their business over a reasonable period. You need the right groundwork if you expect your business to blossom as time progresses.
Find a financial model that is built on honesty and sound principles. You should update your plan monthly to get actual results. This will help you recognize the opportunities for growth in your industry.
5. How can you help me conserve my cash flow?
Managing the cash flow from your business is critical if you want to succeed. It is tedious and challenging, but it can be handled by your accountant. Your accountant should be in a position to help you create an organized cash flow model that allows you to make changes to your operations in ways that will protect you from shortfalls. An organized cash flow model will also help you deal with receivables and manage payables with ease.
6. Can you point out my break-even point?
Your accountant should be competent enough to analyze many metrics to determine whether your business is generating a profit or a loss. Knowing your break-even point is critical to determining the pricing structure and profitability of your business. After your accountant helps you determine your break-even point, you will be able to estimate how many products or hours of service you have to sell to cover your overall costs.
7. Can you determine the full value of my business?
The prospective accountant should be able to estimate the fair market value of your company over your tangible assets. This begins with the accountant taking a close look at your financial plan and executing a discounted cash flow analysis. This method is used by many of the top accountants around the world.
8. Can you review and negotiate business contracts?
This is the perfect question to ask prospective accountants. Please remember that it is illegal for an accountant to practice law without a license. Your legal affairs should be handled by a licensed attorney.
9. What are some special considerations for my industry?
Small businesses in different industries are associated with their unique accounting challenges. Your accountant should be able to handle the challenges that come with your business industry.
10. What should I try to avoid while working with you?
You should be upfront and honest with your accountant. Being deceptive with your accountant will only lead to serious problems. For example, your deception could land you in hot water with the Internal Revenue Service. You should always follow the advice of your accountant.