Pro Tip: Before you spend a dime on your business, you need to identify a few key players on your business team: accountant and business lawyer. You may not need legal services right away (unless you want help establishing your company as an LLC or setting up contracts), but you will need an accountant from the very beginning.
An accountant can get your bookkeeping system set up, show you on how to use it, educate you on financial terms you didn’t learn in high school, and most importantly, keep you out of trouble with the Internal Revenue Service. There are plenty of aspects of your business you can DIY in the beginning, but this is not one of them. Find a professional accountant you can trust and you will rest easy at night.
Here are the Five Questions to Ask before hiring an accountant for your business:
- What are your fees and how do you bill for your services?
- Finding out whether their fees are too high, too low, or just right will take some investigation. I recommend writing down the following information for each accountant you interview (yes, interview):
- What is their hourly rate?
- What are their billing terms (pay immediately, net 30 = pay within 30 days, etc.)?
- What are their policies on communication (are <5-minute phone calls free? What about short emails?)
- Do they have a varying rate, depending on service (is data entry billed the same as advising)?
- Do they bill by the hour, by 15 minutes?
- Do you have experience working with my type of business?
- This is incredibly important. Just think — if you have a photography business, offering services and products, but the accountant you’re talking to has only worked with large manufacturing corporations, he or she may not know the tax code for your industry. That codebook is heavier than an elephant.
- What types of services do you offer?
- Some accountants only file taxes! You want to make sure if the IRS wants to hang out with you through an audit, your accountant is there to represent you.
- If you want your accountant to look at big picture details and file taxes, then have a bookkeeper (or yourself) enter your expenses and sales, you will want to make sure the two professionals have good communication with each other. Everyone needs to be on the same team in your business.
- What is your preferred method of communication and how often should we “meet?”
- When I launched my first business almost five years ago, I met with my accountant in person at a nearby Starbucks and paid her to teach me everything I didn’t know. At that time, she had to train me to keep my receipts!
- If phone calls (or video calls) make sense for you, then go ahead and put some dates on the yearly calendar to review business progress. Regular check-ins, even quarterly, will keep you on top of your tax obligations and make you more in tune with your financial health.
- What is your tax philosophy?
- Okay, this one seems a little goofy, eh? But here’s the thing: not all accountants see eye-to-eye on the interpretation of tax law. One accountant may say, “Go ahead – throw your receipts in a box and we’ll reconcile everything off your bank statements.” Others may say, “If there isn’t a receipt in my hand, the purchase doesn’t get deducted.” Only YOU can decide who’s risk level matches yours.
By no means am I a financial professional — that’s why I hired one of the best around! I know when I get her bill in the mail, it is always money well invested. I hope you enjoyed the five (plus) questions to ask before hiring an accountant!
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