Hiring the Right CPA When Starting Your Business

Pople working on a startup with white board-type images in the background.If you’re thinking of starting up a business, or have recently started one, hopefully you’ve considered hiring a CPA.  Not only will a CPA provide valuable accounting and tax services, they can help you start the business the right way, and navigate the complex laws and regulations many aren’t even aware exist.  Hiring the right CPA, though, has its challenges.  Below are some tips to making sure you hire the right CPA for your business.

Are they really a CPA firm?

There are many “bookkeeping services” firms out there that provide just that – bookkeeping services.  This may be plenty for some, but be aware that they typically focus on entering data into an accounting system, and usually provide little to no strategic advice or guidance.  A good CPA firm will look at your short and long term goals and help formulate a strategy to accomplish them.  Also, a CPA is licensed by their state, and must keep current with tax laws and continuing education in order to maintain that license.  If you live in Texas you can use this link to lookup the individual CPA, Individual Licensee Lookup.  If you are dealing with someone that claims to be a CPA in Texas and they are not listed in this database, you should ask additional questions.  Anyone in Texas claiming to be a CPA or offering accounting services to the public, must be licensed by the State of Texas.  This goes for CPAs practicing in other states as well.  If a person claims to be a CPA in Minnesota, or New Jersey, or Montana, or…, they better be licensed in those states.

Will you have access to your accounting system?

Surprisingly, there are firms out there that will essentially lock you out of your own accounting system.  While it can be prudent to put limitations on the modification of data in some areas of the system, not being able to access your system at all raises questions.  After all, if you don’t have access to your financial data, how do you know the firm is providing the services they claim?  Be wary of firms that don’t allow you at least full read-only access to your accounting information.

Are they familiar with your field?

Certain industries require specialized accounting knowledge.  For example, businesses in construction or oil & gas with multiple jobs typically need project-based accounting, so they can see their profitability on a job-by-job basis.  Manufacturing and retail sales businesses often need advanced inventory accounting.  Make sure the CPA firm you hire knows your field, and that that they don’t have a “one size fits all” approach – after all, a construction firm will have different accounting needs than a car wash business.

Do their services match your needs?

CPA firms vary in the services they provide their clients.  Are you looking for a full-time, “outsourced CFO” type partner?  Or are you planning on doing most of the actual data entry, and just want a firm to keep an eye on it to ensure everything is correct?  Also, do you want the firm to handle your payroll?  It’s helpful to determine what services you need prior to interviewing CPA firms.  This ensures you can best evaluate how their services match your needs.

How do they charge their clients?

Many CPA firms charge by the hour, but some charge flat monthly fees.  If they charge by the hour, are they willing to provide a detailed estimate of what you would be charged?  Is their pricing transparent?  If a firm is unwilling to let you know what they think you may be charged, you could be in for a rude awakening when the first invoice arrives!  If they’re charging a flat monthly fee…

Does their pricing sound too good to be true?

There are many firms out there that will quote you a per month (or quarter, etc.) flat fee.  Does their rate sound reasonable?  For example, let’s say you are quoted $100 per month for full-service accounting and payroll services.  Even if they had a minimum-wage employee handling your account (hopefully that’s not the case), that allows for less than 14 hours per month for them to work on your account and break even.  If it takes them more than 3.5 hours per week to adequately handle your accounting, do you think you’ll be getting the best service possible?  Accounting services are like any other specialized industry – if you go looking only for the lowest price, you’re likely to wind up with the lowest quality.  Focus more on the overall value the firm will bring and not the price.  Price is important, but you could end up spending a little and getting nothing.

What other services do they offer?

Most CPA firms will offer tax services, as well as other financial planning services.  Using the same firm to do your accounting and taxes can potentially save time and money, since they already have access to and knowledge of your financials.

Other questions to ask:

What certifications do they have?

Are they licensed to practice in your state?

When and where did they receive their license?

In what area do they specialize?

How big or small are their clients?

How accessible are they?

This should give you a good idea of what to look for in a CPA firm.  Keep in mind that you should only hire a CPA firm you feel comfortable with, one that you won’t mind working with in the future as your business grows.