If an accountant is the most important professional to a small business--followed by an attorney, banker, and insurance agent--then why are most small business owners calling their accountant only once a year?
Think about it this way: when you have a good, healthy relationship with anyone, you will be on the "inside scoop" of whatever it is they know. When you cultivate those relationships, you'll be the first to hear about new opportunities and trends. Seventy-one percent of small business owners outsource their tax preparation, according to a small business accounting report by Wasp Barcode Technologies, and most are satisfied with their accountant.
But how much do small business owners know about their accountant? Would they switch accountants if they weren't the right fit? Since accountants are so vital to the success of your business, it's a smart business move to check in often--at least month to month.
"The best thing you can do [for your small business] is work with your CPA on a proactive basis,"states Robert Gambardella, a Conn.-based CPA and co-author of the book Secrets of a Tax Free Life, told Leslie Ayers at Intuit. "Find someone who is more than just your tax preparer. You really need a year-round trusted adviser."
In short, seeking out accountants once a year during the busy tax season isn't the smartest strategy. Below are the top reasons why you should be regularly cultivating your relationship with your accountant.
1. Be sure your accountant is the right person for the job.
Everyone has a different work style and approach. Does your accountant's preferences match your own? This might not seem important, but if you're paying someone to handle one of the most important tasks of your business, then you better be getting your value's worth. You wouldn't hire an executive without vetting them first, so don't hire the first accountant you meet because you think they'll be able to do the job. If their communication style is different than your own, you might find working together to be unproductive.
When you're shopping around for an accountant, make sure you understand their exact charges and services. Don't equate value with the lowest price. And always get recommendations from other small business owners and those in your industry. Furthermore, make sure your accountant is a Certified Public Accountant (CPA), which requires them to pass certification exams and attend continuing education courses.
2. Be sure your accountant is aware of your goals.
It's important to have a close relationship with your accountant so that they are fully aware of the expectations, issues, and operations of your business. If any of those things change, your accountant needs to know immediately. An accountant is not just someone that files your taxes at the end of the year; they are also there to advise you about your business. If they're unaware of your goals, they can't help you think strategically about the future. An experienced accountant can offer business advice from projecting costs on upcoming deals to investments that you should be looking into to add value to your business when the time is right.
3. Be sure your accountant is aware of any transitional times in your business.
If you're ready to grow your company, your CPA needs to know. If you're thinking about selling your company, your accountant should be one of the first people you call. The more they understand what is happening with your business, the better they can advise you on next steps.
An experienced accountant can help you control costs to meet benchmarks in your business. They can analyze your financial statements and give you an accurate picture of your company's health.
4. Be sure everything is in order.
Any business owner knows how crucial it is to always have accurate records, even in the beginning stages of your business. Checking in with your accountant once a year doesn't make sense if your want to be proactive instead of reactive. It's often too late if you wait this long because errors need to be caught early to prevent future errors from happening during the year.
5. Be sure you're up-to-date on changing laws and regulations.
Many of the laws about expenses and deductibles change frequently and differ from state to state. Always use a local accountant because these laws can be complicated when you cross state lines. An experienced accountant will keep you up-to-date on any changes in the law and tell you exactly how the new regulations affect your business.
Remember, your accountant is more than someone who crunches numbers for you once a year. They're your strategic business partner who knows the law and can advise you on how to reach your goals while reducing costs. Why wouldn't you want to meet with them often if these are the benefits that they can add to your business? The bottom line: be proactive in running your business and cultivate your relationship with your accountant. It is important to re-evaluate your relationship with your accountant every three to five years to see if they are still the right fit for your business.