This month, my goal is to blog every day except Sundays and have a new post for every letter of the alphabet. You'll notice I'm already in catch-up mode after two days- not surprising!
In this post, I'd like to talk about accountants, even though it might not be your favorite topic in the world. There is so much confusion for small business owners who try to hire an accountant. It can be very difficult to compare accountants when some have designations behind their names and some do not. Some accountants work from their spare bedroom and some work in tall glass skyscrapers. How do you know who to hire and what you need them for?
The term "accountant" is actually meaningless. It is not a protected term and anyone can call themselves an accountant- unlike a lawyer who must have passed the bar to be called such. In most countries, there are professional designations that accountants can train in that gives them a set body of training and requires ongoing professional learning and skills upgrading. The most important one in the United States is a Certified Public Accountant (CPA). A CPA is trained in accounting rules, auditing, and taxation and is the best choice for complicated accounting or tax issues. In Canada, the two major designations are Chartered Accountant (CA) and Certified Management Accountant (CMA). A CA often works as a public accountant and a CMA in treasurer and CFO roles, but there are both types of accountants in all industries.
An accountant is different than a bookkeeper. A bookkeeper's main role is to keep your company's transactions organized and recorded. If you have a bookkeeper working in-house, he or she will also invoice clients, pay bills, and handle all of the other daily financial tasks. An accountant prepares financial statements and tax returns, and helps you interpret what they mean and what it means about the future of your business. An experienced accountant can help you with strategic planning and forecasting.
There are two main criteria to ponder when choosing a professional accountant: are they experienced with businesses like yours and do they talk your language? It's always wise to ask your potential new accountant what types of businesses they work with and how many. For example, you don't want an accountant that specializes in corporate tax shelters help you with your small retail store.
The rapport you have with your accountant is more important than you might guess. An accountant that cannot translate tax law and generally accepted accounting principles into basic English for you is not going to be able to communicate what you really need to know. You should feel comfortable talking with your accountant and not afraid to ask questions. If you hesitate to pick up the phone to ask your accountant a quick question about a transaction, you have the wrong accountant and need to seek a new one.
The last issue with finding and working with an accountant is expectations. Be very clear with your accountant about what you want him or her to do for you both during the year and at year end. Don't just assume that your accountant will "tell me anything I need to know". You are hiring specific services so understand what you are paying for and discuss other services with the accountant. They are talented but not necessarily mind-readers!
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