10 Questions to ask your Small Business Accountant

As published on Out the Blocks Resource Center

A small business accountant can be a tremendous asset to your business. For this new found relationship to work however, two-way communication is paramount. Ask your small business accountant these 10 questions to better understand your new business partner.

In today’s business world, the relationship between accountants and their clients has changed so dramatically. Accountants play a bigger part in your business success than ever before in history. If you let them, Accountants can become an indispensable resource and partner to your business, advising on a whole range of headaches such as the overall health of your business, HR issues, taking on a new partner or better managing your cash flow. But only if you let them! We are all in search of this new generation accountant to become a perfect fit for our business…

The only way this new found relationship will reach its full potential is when you realize that you have to accept a certain level of responsibility and that you communicate your expectations in advance but also understand fully what will be expected from your business and by when.

We regularly encounter clients that expect ALL communication to come from their accountants. As with all strong and healthy relationships however communication is key and this one-way communicating relationship is doomed from the start unless the other party comes to the table. Many other clients realize the importance of this but don’t really have a frame of reference of what accounting comprises to ask the “right” questions.

So when I came across this article by KIM LACHANCE SHANDROW, it seemed like the exact type of information I had to share with our audience. In the below mentioned excerpt from the original article, Kim discusses the 10 questions every client simply has to ask when working with their small business accountant.

10 Questions to ask your Small Business Accountant

1. What’s the best way to contact you and how often should we be in touch?

This might seem like too simple a question, but clear, effective and frequent communication is the key to a healthy, beneficial relationship with your accountant. Establish early on how often you’ll connect, either in person, on the phone or online (via a video chat app like Skype, Google Hangouts or Facetime). Decide together if you’ll meet weekly, monthly or bimonthly.

2. How can you help me prepare for (and survive) tax season?

Untangling the time-sucking tedium of tax prep is often the number-one reason small businesses hire an accountant in the first place. You’ll want to ask yours which tax credits and deductions you should claim. Also ask him or her if there are any new tax laws you should take advantage of to maximize write-offs.

“Tax opportunities, such as the R&D credit, accelerated depreciation, including tax forgiveness and outright grants or refundable credits, can even be applied for as part of the tax return process,” Katz says.

He suggests that you get answers to all of your tax questions long before the tax submission deadline. To avoid the year-end rush, get your small business accountant involved in helping you gather all of the necessary accounting documents and data all throughout year. 

3. What are some topics I should consult with you about on an ongoing basis?

A skilled accountant should get to know you and your business well enough to regularly keep you aware of – and swiftly and appropriately react to – an array of factors that could affect your bottom line, for better or for worse. 

Your accountant should be well-versed in several disciplines, “including but not limited to GAAP [ generally accepted accounting principles], corporate and individual tax, retirement planning and financial planning,” Katz says.

He or she should also be open to assisting you in weighing the financial ramifications of certain decisions, like whether or not to hire an independent contractor or a full-time employee, buy or rent an office space, or rent or lease a company car and much more.

Your accountant should also work collaboratively with you in a way that makes it easy for you to consider and understand which actions you need to take now and in the future, ideally without the usual confusing accounting jargon. “If an entrepreneur in unable to develop that type of relationship with her small business accountant, it may be time to look for a new one,” Katz warns. 

4. How can you help me grow my business?  

A qualified accountant absolutely can help small-business owners expand over time, that is if they have the right groundwork in place with you, Katz says.

To grow, you must start with a financial model that is “honest and built on a granular basis from the ground up.” Remember to update your plan on a monthly basis (or ask your accountant to) with actual results. Doing so can help you hone in on opportunities for growth in your market.

5. How can you help me better manage my cash flow?

Properly projecting your business’s  cash flow is as essential as creating an effective mission statement and living up to it. Tedious, detailed flow projections aren’t easy to wrangle, but that’s what you have an accountant for.

Your small business accountant should be able to help you develop an organized, effective cash flow model that allows you to adjust your operations in ways that help you survive shortfalls, as well as improve receivables and manage payables.

6. What is my break-even point? 

Your small business accountant should be able to analyze a number of metrics to calculate whether your business is making a profit or a loss. Knowing your break-even point is crucial to determining your business’s pricing structure and profitability. Once your accountant helps you identify yours, you should have a strong estimate of how many products or hours of service you have to sell to cover your costs.

7. Can you assess the overall value of my business?

Your accountant should be up to the task of estimating your company’s fair market value in excess of your tangible assets. He or she should start by examining your financial plan and then execute a discounted cash flow (DCF) analysis, a common but effective valuation method. 

Another way your small business accountant can help nail down your business’s value is by deeply understanding what you do and the industry in which you operate, Katz says. “In so doing, an accountant can help the entrepreneur understand which aspects of the comparable companies drive their value, and can work with the entrepreneur to steer the company toward maximizing those aspects of their business.”

8. Can you help me review and negotiate business contracts before I sign them? 

This is a common question for small business accountants, one that’s probably better to ask your attorney.

“An accountant should not practice law without a license,” Katz says. “They can work collaboratively with your attorney to add color and tax to commercial issues with which the attorney may not be experienced.”

9. What are some special considerations for my particular industry?

Businesses in different industries come with their own unique accounting issues. Your accountant should be knowledgeable about the various ones that specifically apply to yours.

For instance, if you own a startup that builds wearable tech, your accountant should be well-versed at identifying tax opportunities specific to the emerging technology industry, like potential R&D, facilities and training tax credits, as well as applicable manufacturing and sales tax exemptions, etc. 

10. What are some common mistakes that I should avoid when working with you?

Not being 100 percent honest with your accountant is the worst mistake you could make, Katz says. “The truth will come out, either in the planning stage or in front of the SARS auditor.”