What Questions Should I Ask a Business Accountant?

The majority of small businesses in the U.S. utilizes an in-house accountant. However, there is a high turnover rate in accounting, with around 30% of SMEs leveraging outside help. The point is you want to have a primary and backup plan to ensure your accounting is completed as diligently as possible.

Your business relies on profit margins where the increased risk of taxes, employee wages, and other financial obligations can cause a hiccup in your operations. Matching up with a qualified and expert guide is the best way to move forward. In that spirit, here is some information on what questions to ask a business accountant for your unique needs.

Let’s approach this task using a question-and-answer format instead of a typical blog article. That will give you a much easier layout to find the types of concerns, red flags, and notes you should make to build confidence with your search.

General Questions to Evaluate Their Expertise

What Are Your Qualifications and Certifications?

You wouldn’t want to hire a heart surgeon without the training, education, and experience to fix a murmur successfully. The same rule applies to finding a business accountant. You want to verify any qualifications and certifications.

A good starting point is to inquire if the person is a CPA (Certified Public Accountant) or a Chartered Accountant (CA). These two certifications indicate a rigorous education and system of ethics that people must adhere to in order to remain qualified.

Unlike a bookkeeper who manages the day-to-day activities of a coffee shop or after-school program, a CPA has way more education and can help maintain financial reports, prepare taxes, complete audits, and advise on any number of goals.

The owner of a car dealership looking for an account would be better served with a CPA who can keep the books and prepare for taxes. A car dealership with international clients or sourcing cars from across borders would be better served with a CA.

How Long Have You Been Working with Businesses Like Mine?

Every business is unique. Your at-home Etsy store focused on customized cat clothing is a far cry from an internationally focused supplier of specialized car parts for Lamborghinis. When looking for an accountant, always ensure they have worked with your business and find out how long that relationship occurred.

For example, an accountant in manufacturing will have way more experience finding tax incentives or government programs (incentives) that will help your industry, but may not be the best fit for a private charter school.

A good rule of thumb is at least 3 years. Look for an accountant with at least three years navigating bookkeeping and tax codes with your niche. So if you’re running a fish market, that accountant demonstrates they’ve understood the ebb and flow of your annual revenue and expense schedule.

Are You Familiar with My Industry?

Industry familiarity is more than general experience. Every CPA follows the same basic outline of education, but knowing how to best manage cash flow for an eCommerce business during peak seasons like Christmas, when $15.8 million online transactions every minute, is something you only learn when working in the industry.

A quality business accountant simply cannot get the familiarity you need without having some experience in your specific industry. Ask them for a list of clients in your industry so you can ensure they have the knowledge to help you out.

If you are running a sales organization, you would want an accountant familiar with an understanding of working with numerous clients, the fluctuations in cashflow from sales, and how to manage commissions.

Questions About Their Services

What Services Do You Offer for Small Businesses?

Similar to the industry of your business, you want a business accountant who can tailor services to your needs. A massive accounting firm in Boston or Chicago would not be a good fit for a small business in Mississippi.

Most accountants offer a wide range of services, including tax preparations, bookkeeping, payroll management, and financial consulting. You want to find the small business services that scale the best for your daily operations. A seasonal touring business would want accounting services focusing on cash flow for the entire year and not just two months out.

Your accountant must offer the services your small business needs. If you’re operating a drive-in theater, you want an accountant that knows how to log COGS (Cost of Goods Sold) for all your popcorn containers and movie candy.

Can You Handle Both Bookkeeping and Tax Preparation?

It is imperative to know the difference between business accountants offering bookkeeping and those offering tax preparation. In a golden choice, you’d want someone doing both.

• Bookkeeping: Focused on your daily financial transactions like payroll or reconciling your credit card statements.

• Tax Preparation: Organize all documentation, deductions, and expenses to prepare your annual or quarterly tax filing.

When you have a “blended” business accounting, they offer such services under a single roof, finding new insights and tax savings based on both services.

Look for accountants that can do both. A small marketing agency targeting nonprofits will save more money and time by working with an accountant that offers comprehensive services. Plus, you lower the risk of things “slipping” through the cracks as its all housed with one service provider.

Do You Provide Strategic Financial Planning or Forecasting?

Strategic planning is crucial to a small business. Knowing how your future is forecasted based on the previous year's financial reporting helps you discover new efficiencies and opportunities. A fully qualified CPA can create unique financial modeling that helps explain your future revenue, expenses, and cash flow.

Consider a nonprofit organization working with older adults for end-of-life care. Without an accountant to provide financial modeling, the goal of purchasing two new transportation buses may not be feasible. That expertise is critical to decision-making.

For example, a private run school should look for an accountant offering strategic financial planning. This will help with donor funds, grants, and tuition allocation. However, it may not need forecasting as much as other businesses.

Specific Questions About Tax Expertise

How Do You Help Clients Minimize Their Tax Liability?

The average small business tax liability is 19.8%, but can range from 13.3% up to 26.9%. That is around a quarter of all the revenue that must be dedicated to paying taxes. You need a qualified business accountant to minimize this tax liability legally and effectively. They should offer strategic outlines about making deductions, leveraging incentives, and other financial instruments that help boost profits.

As a small retail shop focused on baby clothing, you want to minimize your taxes as much as possible to maximize useable cash. Find an accountant that can help you write off more deductions and lower your overall tax liability.

Are You Familiar with State and Federal Tax Laws Relevant to My Business?

A business using an EV (electric vehicle) can claim a credit of up to $7,500 annually. So if you’re running a company with an EV purchase on the horizon, you want an accountant knowledgeable in local, state, and federal tax laws.

The legal mistakes of making an error in your books could cause a massive financial ripple effect in your operations. Something that applies to a Nevada casino won’t be the same for a Florida gator show.

For instance, if you’re running a side hustle selling special breeds of cats, you want a tax accountant familiar with any local or state laws where you can save money on the care and maintenance of those pets when it comes to filing your taxes.

Can You Assist with Tax Audits or Resolving Tax Issues?

The U.S. tax code is wildly confusing. Every year, a new tax code is issued based on the role of Congress and other governing bodies. A qualified business accountant can help your business by conducting internal audits, responding to external tax audits, or resolving any other tax issues like an over or underpayment.

A real estate investment firm dealing with capital gains tax and large transactions should always hire an accountant that understands audits. This will help you uncover any potential risk before you file for the year or end up owing a significant amount.

Specific Questions About Financial Reporting

What Financial Reports Will You Provide?

The idea of a financial report is to provide you with an overview of the function of your business as it relates to the cash flow, assets, and obligations you have in place. The more accurate and comprehensive these reports, the better you can make decisions.

Always ask the business accountant you’re considering what reports they provide (balance sheets, cash flow statements, income statements, etc.) and how frequently. That second part is crucial. You want regular updates so you can compare something like departmental profits in a hospice business against forecasting for strategic planning.

Any small business, from retail or medical services, benefits from hiring an accountant with financial reporting. It makes decisions about buying a new x-ray machine or marketing display if you have the relevant information readily available.

How Often Will You Share Financial Updates?

That frequency component cannot be understated. Small coffee shop owners put out thousands of cups of coffee, lattes, and tea every single day. There are so many factors and products going into a single cup that must be accounted for to ensure proper inventory management and resource allocation.

You may not have the right accountant if you only receive a financial update once per year. You should get financial reports based on the needs of your business. Always discuss what that period is so you are all on the same page.

A great example of how often your accountant should share updates is a farm or agricultural business. Knowing how your investments are doing or if you have any upcoming expenses is crucial to maintaining profit when seed or fuel prices fluctuate.

Can You Help Me Understand My Business’s Financial Health?

Knowing 2 + 2 = 4 is much different than two apples, plus two pies equals a full stomach. A quality business accountant will know how to interpret your numbers instead of just endlessly spouting off data. They can offer “context” to your financial health, identifying potential red flags, or celebrating impressive performance goals.

That “context” is a serious issue if you’re selling a business like an old home restoration/construction team. Knowing the health of your business allows you to set a better price that the market will positively respond to. 

Specific Questions About Technology and Tools

What Accounting Software Do You Use or Recommend?

These questions get into the nitty gritty of how a business accountant operates. Most businesses use QuickBooks for accounting (roughly 29 million in the U.S.). However, there are plenty of other options, like Xero or Excel.

The trick is to find an advisor who suggests accounting software that provides automation, efficiency, and accuracy. If the software is “cloud-based,” meaning it can be accessed anywhere in the world with the right credentials and helps you avoid backup disasters, all the better!

Work with an accountant that offers software you will understand. You don’t want to be running a glass repair company with 20 different technicians and still have to spend two hours a day figuring out a new piece of software.

Can You Integrate Your Tools with My Existing Systems?

Not every technological tool will work with your legacy system. Something as simple as adding an Amazon Alexa so your dental guests can select the music they love isn’t the same as integrating a system-wide accounting service.

Be sure your accountant knows how to integrate whatever tool they are recommending with your existing systems. It may help to have your CTO or IT manager at the meeting.

A pop up farm stand that operate on the weekend benefits more from an accountant with cloud-based, mobile ready tools that help the business when it moves from farmer’s market to farmer’s market.

Do You Offer Cloud-Based Services for Easy Access?

Let’s circle back to cloud-based services again. Ever since the global pandemic, more and more businesses have moved to a hybrid or remote work model. That requires team members to have access to critical information (including financials) from a wide range of locations.

Cloud-based systems house your data on servers spread out around the globe. It allows you to avoid worrying about disasters ruining hard drives, but does mean you’ll need heavy security and encryption for any cloud-based services.

If you’re running a digital marketing agency with team members spread out in Ukraine, Japan, Switzerland, Canada, and the USA, you want an accountant offering cloud based tools that automatically update with crucial information everyone needs – preferably in real-time.

Specific Questions About Communication and Support

How Will We Communicate, and How Often?

Communication is key to success. Think about a pool at a Disney World resort. If a lifeguard doesn’t blow that whistle when someone is injured, the company risks a financial downfall from a lawsuit due to drowning or death.

Your business accountant should offer clear guidelines on how often they’ll communicate and in what method. Are you using Zoom, in-person, or some other form of tool to conduct business?

Running an IT MSP (managed service provider) company is the perfect example of this need. You have to define how often you communicate to clients needing software updates or virus protection. The same is true for getting updates from your accountant.

Will I Have a Dedicated Point of Contact?

Speaking of communication, who will be your point of contact? It can be confusing to deal with different people every time you have a question, receive a report, or complete an annual audit/review of operations.

Try to find a business accountant with direct experience in your “size” of business. They should have a team that can deploy a single point or at least a smaller group of people you’ll deal with on a regular basis.

Imaging trying to run a law firm with numerous high paying clients and every time you contact your accountant, you speak with a new team member. It is must easier and quicker to have the same point of contact each time you call.

How Quickly Do You Respond to Questions or Issues?

A grocery store chain dealing with a sudden lettuce recall due to a listeria breakout needs immediate financial support. The Cost of Goods Sold and financial write-offs will be significant, and there is reporting to be made to the corresponding regulatory body.

Plenty of other businesses do not need such an immediate response. Ensure you clearly understand how quickly your business accountant will respond to any questions or issues you raise.

Any business dealing with stocks, bonds, or other commodities cannot wait for an accountant to get back in a day or two. Market valuations change rapidly and having an immediate response could make all the difference when it comes to cashing in.

Specific Questions About Costs and Billing

What Are Your Fees, and How Are They Structured?

You 100% must know the fees associated with the business accountant you select. Paying a percentage of your assets compared to an hourly rate is going to make a significant difference in your billing.

Discuss these fee structures upfront before you sign any agreement. You should look for:

• A flat rate

• Percentage of your assets

• Monthly retainer

• Hourly rate

These are the most common things you’re likely to come across. Also, ask about any hidden fees in your contract that weren’t explained – this may be a future red flag.

A boat storage facility will have different needs in the summer than in the winter when more customers want to wrap and store their vessels. Hiring an accountant offering flat rates or a monthly retainer you only use when services are rendered could make a big difference to the final bill.

Are There Additional Charges for Specialized Services?

Most accountants will offer some specialized work. They could conduct an internal audit to prepare you for the real thing or a comprehensive business valuation for a competitor about to be on sale in the marketplace.

Any of these services are likely to come with a fee. These are known as a la carte options, and you want to know the value before you agree to the work.

When you’re running a mom-and-pop antique store, paying a high fee for your accountant filing taxes wouldn’t make sense. You must know the service cost long before you agree to the service.

Can You Provide a Breakdown of Costs Before We Start?

Again, be upfront with the breakdown of costs from your selected business accountant. What would happen if you agreed to a monthly tax reconciliation for your freestanding birth center only to find out the fees are well over 15% of the value of your monthly revenue?

A detailed quote is necessary for your proper budget. It gives you insight into comparing to other accountants and ensures clear communication is established from the beginning.

When you hire a wedding planner, they provide a “menu” of services with a price for each item. The same is true when you’re on the lookout for a qualified business accountant.

Red Flags to Watch for During the Interview

We’ve gone through many of the questions you’ll need to ask a potential business accountant. We need to review what “red flags” to watch out for during your interactions. Any one of these may be enough to dissuade you from working with that accountant in the future.

Vague Answers or Lack of Transparency

Think of your accountant interview as going on a date. If you feel like the person on the other side of that dinner table is trying to hide the truth, you should consider someone else. Being dodgy with answers or avoiding crucial information clearly indicates that accountant doesn’t have an open, honest, and expertise-based professionalism. You only want to work with accountants with transparent responses and a commitment to integrity.

If you’re asking where they went to college and they list a school that sounds entirely made up like College of Barbados or something similar, and they don’t have a degree on the wall you can verify, you may be dealing with someone trying to fleece you.

Inexperience with Businesses in Your Industry

We cannot emphasize this enough: always work with a business accountant familiar with your industry. That being said, if you find a financial rockstar who is upfront about not working in your field before, you might reconsider. Otherwise, stick to accountants who know your specific niche more than generalized bookkeepers offering only a few services.

An accountant focused solely on inheritance and wills simply does not have the relevant experience to help your aerospace engineering firm succeed. You want someone that is at least familiar with the subtilties of your industry.

Unclear or Excessive Fee Structures

You must know what you’re paying for. There are over 32 million different businesses in the U.S. That much demand means there will be “bad actors” out there in the accounting world trying to fleece money out of your good-intentioned needs. Watch out for any fee structures that seem high without justification. Transparency is your friend when it comes to pricing and agreements.

For example, if they advertise tax preparation for “Only $200” but the estimate is upwards of $1,000, they are being cagey about their fee structures instead of offering upfront pricing.

Final Thoughts

With the correct business accounting on your side, you can make all kinds of beneficial decisions about your company's future. Finding that firm means asking the right questions. This list should give you a solid start so you end up with a quality fit.

Our team at AdvisorMatchup offers the perfect platform for finding your next financial accounting. We make it much easier to ask questions, find those with knowledge in your industry, and provide the specific services you need to grow and scale.

Whether you need help with tax planning, bookkeeping, or business financials, a trusted professional can provide the guidance you need. Click here to connect with a qualified accountant and take the first step toward financial clarity today.

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