Handling the financial health of your business is no small task. While you may excel at your company's offerings, managing the day-to-day accounting, taxes, payroll, and compliance issues requires specialized expertise. That's why hiring the right accountant can make or break your organization's financial success.
In this article, I'll explain everything you need to know about hiring an accountant for your organization. Let's dig in!
What Does an Accountant's Typical Day Look Like?
Accountants handle various financial responsibilities, spanning bookkeeping, payroll, taxes, reporting, auditing, and advising. Their typical daily tasks include:
- Recording all financial transactions, from accounts receivable and payable to expenses and sales
- Preparing financial statements like income statements, balance sheets, and cash flow reports
- Completing payroll processing, including calculating wages and tax withholdings
- Filing and paying quarterly estimated taxes on the company's behalf
- Performing reconciliations to ensure accounts are accurate
- Conducting audits to verify financial records comply with regulations
- Providing business insights and recommendations based on financial analysis
- Helping develop budgets, projections, and internal controls
- Managing invoices, bills, and cash flow
- Preparing and filing annual tax returns for the business
Beyond number crunching, accountants act as vital strategic advisors. They identify ways to reduce costs, minimize tax burdens, and improve operational efficiency. For small businesses, outsourced accountants provide invaluable expertise without needing an in-house hire.
When To Hire An Accountant For Your Business?
Most businesses can benefit from bringing on an accountant as soon as they start generating revenue and have financial complexities like inventory, payroll, depreciation, and expenses. Hiring an accountant lessens the substantial learning curve for business finance and ensures you have an expert keeping your books. Key times when it becomes essential to have accounting help include:
- You have employees who need help with payroll, benefits, and HR compliance.
- Your business reaches a certain revenue threshold or number of transactions.
- You start an LLC or incorporate and need formally reviewed financial statements.
- You plan to seek financing like a business loan or line of credit.
- You expand into new markets, and your tax liabilities grow more complicated.
- Mergers, acquisitions, or company restructuring alter finances.
- You lack the time, interest, or ability to handle taxes and reporting yourself.
Put simply - anytime your finances escalate beyond very basic bookkeeping, it's wise to partner with a qualified accountant or accounting firm. Their financial oversight and guidance only become more invaluable as your company evolves.
How to Hire An Accountant for Your Company
As an organization, it's crucial to find an accountant who understands your business model, evolving needs, and limited resources. A specialist in small business accounting and taxes can guide you through the formative early stages of your company's growth.
Here are some tips on how you can hire an accountant for your company:
Identify Your Needs
Take time to carefully evaluate your specific financial requirements so you can determine the precise expertise needed. Common business accounting needs include:
- Setting up proper bookkeeping and accounting systems
- Assisting with business formation, licenses, and regulations
- Preparing and filing new business tax registrations
- Understanding business tax deductions and credits
- Creating budgets and forecasts
- Managing payroll, 1099 contractors, and W-2 employees
- Filing quarterly estimated taxes
- Compiling financial statements
- Providing general business finance advice
Pinpointing your top concerns and pain points right away will help you assess candidate qualifications.
Determine if You Require a Full-Time or Part-Time Accountant
Generally, lean organizations will only require part-time or outsourced accounting services.
Assess factors like:
- Average monthly transactions and workload
- Peak seasons or billing cycles
- Stage of business - just launching or growing rapidly?
- Complexity of your finances and operations
- Compliance needs and filing schedule
- Budget - can you afford a full salary and benefits?
This helps determine whether partnering with an outsourced accounting firm or hiring an individual part-time bookkeeper best suits your needs and budget.
Ask the Right Interview Questions
The interview process is key for evaluating an accountant's experience and fit. Some questions to ask prospective candidates:
- How familiar are you with accounting and tax regulations for businesses in our industry?
- Which accounting software and tools do you have expertise using?
- What is your experience helping businesses set up their accounting systems and controls?
- How do you handle creating financial projections and forecasts with limited historical data?
- How do you prefer to communicate with clients?
- How do you stay current on the latest accounting standards and best practices?
- What differentiates you from other accountants?
Pro-tip: Listen for detailed answers that instill confidence in their capabilities. Assess their communication skills and passion for the work.
Post a Job or Research Accounting Firms
You can hire an individual accountant or contract with an established accounting firm. Posting an accounting job opening online or networking in your community may uncover some strong candidates. However, working with a firm provides the support of an entire expert team without having to hire a full-time employee.
Firms also offer more seamless coverage for absences and vacations. Just be sure to understand their rates and guarantees for dedicated service.
Some questions to consider when vetting firms:
- Who specifically would be handling my company's accounting?
- How does your firm stay up to date on current accounting standards and best practices?
- What is your experience working with organizations in my particular industry?
- What are your fees for my anticipated volume of monthly transactions and projects?
- How can I expect to interact and communicate with my accounting team?
Take time to thoroughly evaluate multiple qualified candidates or firms to find the best fit.
Ensure a Smooth Accountant Onboarding Process
Once you've selected the perfect accountant, invest time upfront in a thoughtful onboarding process. Make sure they have all the information and access needed to dive into supporting your financial needs, such as:
- Background on your business operations, systems, processes, and team.
- Prior year financial statements, tax returns, budgets, and projections.
- Login credentials to your bank, accounting software, payroll system, etc.
- Introductions to key internal contacts like your bookkeeper, COO, or HR manager.
Clarification of their responsibilities, your expectations, communication preferences, and metrics of success. This might entail weekly calls, monthly reporting, approvals for expenditures above a threshold, etc.
Ensure you ask the right questions and set clear guidelines, as this provides ample context and helps your accountant hit the ground running. Be sure to also gather their contact information, availability, billing rates, and processes. Establish a relationship built on trust and transparency from day one.
How to Critically Evaluate an Accountant's Performance
As with any key hire, you'll want to continually assess your accountant's performance and value to your organization. Gauge:
Technical Expertise and Quality of Work
- Do they display a solid grasp of accounting principles and standards?
- Is their work accurate, thorough, and filed/completed on time?
- Are they proactive about research when unfamiliar with new regulations or scenarios?
- Do they leverage technology to optimize efficiency?
- Do they respond promptly and clearly to your inquiries and requests?
- Are they able to explain financial details in understandable terms?
- Do they provide thoughtful, tailored advice and recommendations?
- Do they take the initiative to improve flawed processes or pinpoint cost savings opportunities?
- Can they adapt as your business evolves and new needs emerge?
- Do they flag potential tax savings you may be missing out on?
- Do you feel comfortable asking questions and sharing information openly?
- Does their expertise instill confidence in your financial oversight?
- Do they take an active interest in your business's growth and success?
Regular check-ins ensure your accountant continues to deliver value and align with your business goals over time. Don't hesitate to provide constructive feedback or make a switch if the relationship isn't proving fruitful.
Affordable Accounting Options for Cash-Strapped Startups
For many early-stage ventures, hiring an accountant full-time is simply not doable. Luckily, there are more affordable options to meet basic accounting and tax needs if your budget is limited. Potential money-saving routes include:
Doing Your Own Accounting
With ample time and dedication, it's feasible for business owners to educate themselves on accounting fundamentals. Your local community college or online learning platforms like Udemy offer introductory accounting courses and training.
Invest in a basic bookkeeping software like Quickbooks Online or Xero to simplify tracking income, expenses, payroll, and taxes.
Set reminders for key filings and payments. Just recognize your limitations - complex tasks like taxes and auditing still warrant professional guidance.
Leveraging Automation Tools
Automate accounting processes like invoicing, payroll, expense reporting, billing, and invoicing. This helps to quickly compile and categorize all your financial information. Beyond Quickbooks and Xero, tools like Freshbooks, Sage, Fyle, and Spendesk are affordable options.
Automating invoices, expense tracking, inventory management, and transaction categorization saves tons of time. Just be sure to reconcile accounts regularly.
Outsourcing to a Bookkeeper
For basic tasks like data entry and transaction coding, bookkeepers charge much lower hourly rates than accountants. Outsourcing routine bookkeeping provides compiled records an accountant can then review and leverage for high-level tasks like reporting and tax prep. This divided responsibility model maximizes resources.
Daily bookkeeping rates range from $11 to $25 per hour, saving significantly over a full accountant's fees.
Hire An Accountant for Taxes
Come tax season, you can always partner with an accountant or CPA solely for tax preparation. They can ensure proper filing of annual returns. Just be sure to supply them with well-organized financial records from the year. Invest the time to maintain orderly books upfront so taxes go smoothly.
By getting creative, fledgling businesses can secure needed accounting expertise at little to no cost. Don't let accounting woes thwart your entrepreneurial dreams.
Which route you choose for accounting support, ensure the professionals or tools you leverage instill confidence in your financial oversight. Accurate books and reporting form the foundation of a thriving business. Take the steps needed early on to set your new venture up for success.