Teammates Critical to Entrepreneurial Success
Part of becoming a successful entrepreneur is knowing when and how to choose professionals to assist in the starting and running of a business. This month’s column will discuss issues related to choosing an accountant. The November column will examine the process of working with an attorney.
Every business is required by the IRS to keep accurate records of revenues and expenses for proper annual tax filings. Some entrepreneurs start by doing their own accounting. The availability of user-friendly software programs like QuickBooks, Quicken, and Microsoft Office Small Business Accounting makes it possible for business owners to do some work on their own—assuming they understand enough about accounting and taxes. Entrepreneurs then take the results to a tax preparer to have their returns completed.
Many business owners either do not know enough or do not want to spend the time to learn enough to do their own accounting. Even those that can successfully be their own accountants at the start of a business often want to hire someone as the business grows. Owners tend to become immersed in other aspects of making the business a success.
What to Look For
The range of options for hiring an accounting firm can be overwhelming. There is everything from new sole practitioners to large international firms. While bigger firms may provide more services, be aware that large firms sometimes contract out work to smaller accounting firms. It is important to ask who will be handling an account.
According to Robert Gray, owner of Robert H. Gray, CPA, Inc., in Westlake, one of the first things an entrepreneur should ask about is the accountant’s philosophy. “Entrepreneurs need ongoing services. They need to find someone with whom they are comfortable. We want you to call us with your questions, so we can act as a trusted advisor.”
A non-certified accountant may be what is needed to handle financial statements, analysis, and bookkeeping. However, when it comes to tax advice and return preparation, business owners usually look to accountants who are certified and licensed. A Certified Public Accountant (CPA) has an undergraduate degree and has met the exam and experience requirements for state certification. CPAs must take continuing education courses to remain certified and licensed.
Entrepreneurs should ask what types of services an accounting firm offers and who is actually doing the work. Gray stated that it's also worth knowing how long the accountant has been certified and in business. Gray has been in the business for 30 years. He also said it is important to ask, “How proactive is the accountant in providing planning services and explaining the financial statements?”
Entrepreneurs should also ask what types of clients the accountant has. For example, how many start-ups does the accounting firm work with. Accounting for newer entities can be somewhat different than that for established businesses. Other business owners, local chambers of commerce, the Internet, and the local chapter of the Association of CPAs in Columbus can all help in locating potential accountants for a new business.
It is imperative that business owners take the time to interview firms and individual candidates. Check experience in your industry, your size of company, and software sophistication. While working with an accountant with clients in your industry might seem like the ideal, Gray says that it is not mandatory. “There are enough similarities in businesses that most CPAs can work in a variety of industries.” The important thing is that the entrepreneur feels comfortable with the accountant.
Gray said that he does not get asked about his backup plan for his customers. “If I cannot return to work for some reason, what is the plan for taking care of my clients?” This is a crucial but often overlooked query.
Off the Hook?
Of course, the business owner should also check references. Hiring an accountant is a critical decision and adequate due diligence must be done beforehand.
An accountant, however, does not get the business owner off the hook in terms of accounting knowledge. Entrepreneurs need to be able to input day-to-day information into the chart of accounts in the accounting software. The accountant will use this data to prepare financial statements and tax returns. Many firms such as Gray’s provide training in this area.
More important, the entrepreneur must understand the reports generated by the accountant. The accountant provides information to help the entrepreneur make decisions—but is not responsible for the owner's decisions.
Dr. Perry Haan is Professor of Marketing and Entrepreneurship and former Dean of the Business School at Tiffin University. He resides in Rocky River and can be reached at 419-618-2867 or email@example.com.