According to the National Association of State Boards of Accountancy, there are only 665,000 CPAs in the United States, compared to 1.5 million regular accountants.
That's because every candidate must pass an extremely long and difficult exam before they can call themselves a certified public accountant. A good CPA is an invaluable asset to any business thanks to their in-depth knowledge of state-specific financial aspects.
The main difference between an accountant and a CPA is that accountants analyze and report on a company's financial data, whereas CPAs offer more in-depth reporting and management services.
Keep reading for information on how to pick the perfect CPA firm for your business.
1. Assess Your Needs
The first step in the hiring process is to figure out whether you need a CPA or a regular accountant. CPAs charge a lot more than their less-qualified associates.
In general, accountants offer the following services:
- Ensure tax compliance
- Record and classify financial transactions
- Review company spending and offer relevant advice
- Prepare financial statements, schedules, and disclosures
- Recommend internal financial best practices and controls
- Offer guidance related to your business's financial goals
- Assist in preparing budgets
- Keep CEOs updated on any changes in industry and government regulations
Certified Public Accountants do all the above, plus:
- Prepare audited and reviewed financial statements
- Represent taxpayers in front of the IRS
- File reports with the SEC
Consider these responsibilities in relation to your business's current and future financial complexities.
Think about where you fall short in your internal tax and financial expertise, consider any global or multi-state tax considerations, and keep your growth plans in mind when comparing CPA firms.
2. Ask About Areas of Expertise
Always ask for more detail about their realm of expertise before you hire a CPA firm. Accounting and taxes are specialized fields, and different but equally complicated rules apply to different types of businesses or industries.
It's vital to work with a CPA firm that brings experience in your particular niche to the table. Top CPA firms may offer services locally, nationally, and internationally.
Some offer a full range of services like taxes, audits, bookkeeping, payroll, and risk assessments. Others focus on only some areas.
A top rated accounting firm will employ experienced professionals with skills and experience across a wide range of specializations. That's one of the reasons you should work with an accounting firm, rather than hire an accountant.
These are some of the areas of specialization common among CPAs:
Tax
Tax accounting is an enormous field with many diverse areas for more in-depth study. CPAs that focus on taxes may direct their efforts toward corporations, non-profits, tax law, ethics, or specific industries.
Assurance
CPAs may also center their efforts on auditing and assurance. These segments of accounting review and investigate accounting practices.
They focus on detecting and combating fraud or spotting irregularities in financial reports. Prevailing regulations, laws, and legal as well as ethical principles pervade this field.
Analytics
The field of analytics centers around business decision-making and financial analysis. These CPAs create decision models, report data accurately, and forecast financial outcomes.
These CPAs play a major role in presenting complex financial data to important stakeholders, including management, consumers, and the government, in a way that makes sense of business objectives and performance.
3. Take Experience into Account
A CPA candidate must accumulate at least 2,000 hours or two years of professional work experience in taxes, accounting, management consulting, and auditing before they can write their examination.
They achieve these requirements under the watchful eye of certified senior accountants and often stay working for the same firm once they've qualified. When you hire a CPA, you know they've already spent a fair amount of time practicing their art.
Experienced CPAs work faster, have accumulated more industry knowledge, and can spot any discrepancies a lot quicker than their newly qualified counterparts.
Accounting firms hire many experienced CPAs, who are all available to assist each other with your business needs. This gives you access to a diverse and highly experienced team to cover all your financial business bases.
It's essential to inquire about the overall years of experience available to you when you hire a CPA firm.
4. Think Beyond Taxes
It's clear from the above that CPAs offer a range of services that extend far beyond getting your taxes done on time. CPAs do taxes on a whole different level.
They can help you unearth special incentives for your industry, discover relevant deductions you didn't know about, and help you pay only as much as you need to.
It's important that your CPA can work with your financial planner to help build your business by taking advantage of tax savings or to make financial decisions that can help you when it comes to tax time.
When working alone, CPAs are often unaware of potential opportunities for growing savings and investing funds for the best tax-related advantages. When they work together, your financial planner and CPA can maximize every cent that comes in or goes out of your business.
In this way, a good CPA acts like a business advisor, helping you navigate many aspects of your business in a financially savvy way.
When interviewing CPA firms, ask whether their services will cover these non-tax-related areas.
5. Plan for Growth
Can the CPA firm scale according to your needs? This ability is vital for an ongoing relationship with the firm.
While choosing between firms, ask if they can handle rapid growth and how they handle it.
Can they manage a startup business from start to finish? Do they take the potential for ups and downs in business into account in their services portfolio?
Many businesses zigzag and pivot along the way. You need a CPA firm that can take this in its stride.
Goal setting is another important consideration for small businesses. A firm that can help you set goals and monitor your financial progress can prove extremely helpful in seeing to it that you achieve these goals.
If they can assist with this facility, ask them if they charge extra for it or if it's considered a part of their duties as CPAs.
Does the CPA firm offer any advice during your interview, or give examples of how they've helped businesses before? Some firms are quick to offer advice on when to buy equipment, how to keep records or the best time to employ new hires.
If you appreciate this kind of guidance, be sure to hire a firm that freely offers advice, insights, and in-depth financial counseling.
6. Seek a Business-Savvy CPA
While most CPAs are well-versed in accounting and finance, look for a firm that employs those who've gone the extra mile.
As a business owner, you want to work with someone who is informed about all business operations, including compliance, technology, and cyber security.
CPAs occupy a senior position in any firm, even if they're hired on a contractual basis. In this regard, you want your CPA to be able to make appropriate split-second decisions on your behalf if needed.
Well-rounded CPAs are an excellent resource for navigating the complexities of modern business and meeting the fast-paced demands of today's market.
A CPA that's too focused on only one area of the financial realm, such as real estate, isn't much use in matters of general business operations.
Ideally, your CPA should be a trusted strategic resource that can find areas for growth in your business and foster and steward them. These abilities aren't something you'll find on a list of services offered, but they're an excellent asset to any business.
In essence, the perfect CPA is someone you would welcome into your boardroom without a moment's hesitation.
If you envision your CPA as an important sounding board for your business decisions, be sure to choose a firm that welcomes frequent interactions without formal appointments. Are you content with meeting only once a year for tax-filing purposes? Then you won't have to search as hard for the ideal CPA firm.
7. Verify Everything
Reading online reviews and browsing CPA firms' websites are good ways to find out more about a firm's ethics, certifications, and service levels.
Look for firms that list their management and key team members' names and educational qualifications. Ideally, CPA firms should have a license to operate in their home state and meet any other business requirements for that area.
Don't believe everything you read on the internet, though. Verify every claim made by each of the CPA firms you're considering before you meet with them.
You can look on the CPAVerify website to check certifications and issues involving non-compliance or disciplinary hearings.
8. Think About Personalities
It's vital that you get along with the person who'll be going through your financial records with a fine-tooth comb. During the interview, ask to meet with the CPA who will handle your account to see if you feel comfortable with them.
Some key characteristics to look for in a personable CPA include:
- Excellent communication skills
- Willingness to share industry knowledge
- Service orientation
- A team mindset
- Good interpersonal skills
Other not-so-obvious talents include high attention to detail, excellent organizational and time management skills, adaptability, and problem-solving abilities.
As a business owner, you don't only need to consider your personality. Think about whether the CPA will get along with the other members of your staff, especially those in senior management positions.
9. Choose a Team of Multitaskers
Ask about any additional services the CPA firm might offer. For instance, if they offer bookkeeping services, it's a lot more cost effective to pay a bookkeeper than a CPA to handle this easy task.
You don't need a CPA to do your taxes, either. It's cheaper to hire a tax preparer to do the basics and then ask a CPA to refine your tax return.
Some firms offer a wide range of business and finance-related services, including audit support, investigative services, endowment management services, and lease management services.
Having a seasoned pro by your side when the IRS comes knocking can help alleviate a lot of undue stress and worry. If the IRS has any questions, your CPA can answer them right away, eliminating a lot of back and forth over the phone or via email.
Value-added services, like cash-flow forecasting and financing advice, go a long way toward helping you make smarter decisions and survive unexpected financial setbacks.
10. Look Beyond Certifications
There's no doubt that a competent, qualified, and experienced CPA is vital to your business's well-being. Yet, as a business owner, you need more than a certification to justify the expense of hiring a CPA firm.
Look for someone who takes an interest in your business and wants to help you succeed. Someone who's willing to put almost as much time and effort into your business as you do is worth every cent you spend hiring them.
A cookie-cutter approach to tax, assurance, or any other service will get you through tax time, but it won't serve you in the long run.
Ask friends and business associates if they're willing to recommend a CPA firm. A word-of-mouth recommendation can help put your mind at ease and allow you to find out more about the firm from a reliable source.
Take Your Business to the Next Level
You don't need to wait for your business to reach lofty heights of performance and earnings before hiring a CPA firm. The sooner you get a well-rounded, expert, and experienced accounting team on your side, the better.
With a team of CPAs in your corner, your business can take advantage of more opportunities for growth, save on tax payments, and grow faster.
Browse our blog for more educational pieces on how to get ahead in business.
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