As a small business, managing your finances is no small task. Since one of the main reasons businesses fail is due to poor cash flow management, it’s also why you need help.
If you haven’t had a ton of experience working with accountants or bookkeepers, here’s what you need to know:
1. Accountants and Bookkeepers Aren’t the Same Thing.
Although the terms are often used interchangeably — accounting and bookkeeping are two separate professional designations — each of which provides a specific range of financial management services.
Bookkeepers keep track of day-to-day transactions — the money going in and out of your business through sales, purchases, payroll, taxes, and the other things that add to or take away from the bottom line.
Accountants use financial data to help business owners make better financial decisions — they look at the big picture concepts in order to generate reports, forecast trends, and recommend best practices.
This doesn’t mean that accountants and bookkeepers are mutually exclusive. In fact, businesses see the best results when accountants and bookkeepers work together by setting goals and sharing information.
To use a sports metaphor, think of the accountant as the coach and the bookkeeper as the athlete.
2. Find the Right Accountant and The Right Bookkeeper.
Depending on your business’ size and needs, you may or may not need a full-time accountant or bookkeeper. Thankfully, the rise of cloud-based accounting and bookkeeping firms is giving small businesses even more options.
What does cloud-based mean? In the not-so-distant past, most software was housed on a computer’s hard drive. Remember buying CDs or — gasp — floppy disks to install software? With cloud-based software, the application is hosted online and the user’s computer is simply a portal for accessing the tool.
Easy to install and use, cloud-based accounting software and applications make it simple for small businesses, accountants, and bookkeepers to collaborate online (virtually) as well as in person.
Intuit, makers of QuickBooks, one of the leading small business accounting software applications, predicts that 78% of small businesses will rely on cloud technology by 2020. For anyone doing the math, that’s two years from now.
To find a cloud accountant, you can ask fellow small business owners and search online. Several software companies, like FreshBooks, QuickBooks, and Xero, also have referral sites for accountants and bookkeepers.
As the connected accounting market is rapidly changing and growing, another option is hybrid solutions, like Qount, which offers its own software combined with professional accounting and bookkeeping services.
Look around, do your research, then explore your top picks in greater detail.
3. Ask the Right Questions.
Another component of finding the right fit with an accountant or bookkeeper is knowing your needs. In fact, you should do this even before you start reaching out to accountants and bookkeepers.
If you need higher-level analysis, you’ll want to look for an accountant. If you need process support, such as data entry or ways to reduce data entry, you’ll want to look for a bookkeeper.
If you need a little of both, look for a company that has accounting and bookkeeping services or find an accountant and bookkeeper who are willing to collaborate. (If you go for the collaboration option, it also helps to make sure your accountant and bookkeeper are both using the same accounting software.)
Questions to ask as part of the search process include:
- What are their certifications and areas of specialization?
- Accountants with CPA designation have completed a specific certification process.
- Industry organizations for bookkeepers include the American Institute of Professional Bookkeepers and National Association of Certified Public Bookkeepers.
- Do they have experience in your business’ specific field or industry?
- Can they provide you with references?
- What accounting software and applications do they use?
- What’s their billing structure and scope of services?
- What privacy and security processes do they follow?
- How do they prefer to communicate — phone, email, in person?
- Are you willing to collaborate with another independent accountant or bookkeeper?
How valuable can the right accountant and bookkeeper be? Consider this… accountants and bookkeepers helped bring down Al Capone. While his list of crimes was large, he was ultimately prosecuted for tax fraud.
Taking the criminal reference with a grain of salt, you may wonder about the cost benefits of working with an accountant or bookkeeper. The answer would be to consider the cost of do-it-yourself mistakes.
One fine compounded by interest could easily be prevented by hiring a professional. Another perk — professional service fees are also tax-deductible business expenses.
Disclaimer: The advice shared in this piece is intended to be informational. It does not replace the expertise of accredited business professionals.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.