I was working at my “other” office the other day – my local coffeehouse, and noticed a meeting going on at the table next to me. From the conversation I overheard, it was obviously a discussion between an accountant and an entrepreneur. From the body language of the entrepreneur, I could tell the meeting was NOT going well. The accountant was leaning forward, talking quickly and throwing out accounting jargon. Although the accountant was passionate, he was painfully unaware of the glazed look in his client’s eyes.
This encounter got me thinking. The relationship between an accountant and an entrepreneur is an important one. The success of that relationship can mean the difference between a business that thrives and one that just moves along without any measurable success.
In order to work with entrepreneurs, accountants need to have these 5 areas down pat:
Five things to look out before finding an accounting firm
The last thing you want is an accountant who will put the kibosh on your plans due to risk phobia. An entrepreneur’s accountant needs to be able to tolerate risk. While you won’t necessarily find too many who want to take a lot of financial risks themselves, you want your accountant to understand the entrepreneurial spirit, which means willing to be creative in analyzing the risks you want to take with your business.
Accrued liability, amortization of intangible assets, variable expenses. Don’t hire someone who throws around accounting jargon to impress you. How will you be able to follow their advice if you don’t know what they are talking about? You need someone who can explain the numbers and tax laws in a way you understand. More importantly, you need an accountant who can turn financial data into meaningful content to help you run your business.
– Filing taxes and analyzing P&L statements is a necessary thing, but it doesn’t help you reach your strategic goals. Your accounting firm should be a trusted advisor, enabling you to plan your company’s future. They should be able to offer you advice on things like long-term tax planning, business planning, and even introduce you to resources in the community. Your accountant should be a partner who will strategize on your behalf to create the maximum possible benefit for you.
Education and certifications are certainly important, but equally important is that your accountant has worked with a business similar to your business – and you want someone who understands small business and your industry. Having industry experience will give you the extra leg up in understanding your company and thus your finances.
Probably the most important element in choosing an accountant is finding someone you trust. Whether you trust them because of who referred them to you, their reputation, or just because you like them, trust is essential to a good working relationship.
Obviously, there are other things to think about when hiring a firm, but for entrepreneurs, ensuring you have the above combination will make you much happier with your accountant.
Next time I’ll blog about helping you identify your needs in an accounting relationship.