Five Factors to Consider When Selecting an Accounting Firm

Whether to start a small business or make adjustments for changes in tax laws, choosing an accounting firm can be an overwhelming task. To prevent important details from slipping through the cracks, make sure to consider the following when selecting a one.

Fees

Having an amazing accounting staff that simultaneously bankrupts the company is nonsensical. Although higher-end firms can come with higher price tags, this isn’t always the case. Fees should be one of the first things to consider when trying to find the right fit. It’s also important to analyze charges. For example, some may charge per task, such as filing a 1040 personal income tax form or preparing a statement of net worth, and others may charge by the minute.

Certification

Some accounting firms may seem attractive on paper, but it’s important that they put their money where their mouth is. A good way to ensure that one is qualified to perform the tasks it offers is to determine whether they have received certifications for said tasks. A company that mostly or exclusively employs CPAs (certified public accountants) will generally be more trustworthy than one who doesn’t.

Availability

Finding the right fit only to discover that their availability is low is an inefficient use of time. Although some bigger agencies can afford to take on more clients, some spread themselves too thin and can’t offer all of their clients the same amount of time and attention. One can generally determine the availability of a firm by trying to schedule an appointment or attempting to reach them by phone. If either of these is difficult at any point in the process, it may be a red flag.

References

There’s a reason why employers ask for references when interviewing potential employees, and the process should be the same when selecting an accounting firm. Even if an option has the right qualifications, hearing from other companies or individuals who have worked with them in the past can clarify whether or not they are as efficient as they appear to be. Contacting business associates who have worked with them can be a good way to see if any strong impressions were made through their clients, whether good or bad.

Personal Connection

Although it may seem like an afterthought, being able to build a personal connection with an accounting firm is especially important, considering they will be handling highly important and often sensitive materials. It’s important to find a business that cares about its clients as more than simply a bottom line. The contact person should be comfortable being candid about their services as well as the finances of the company. Any sense of intimidation or miscommunication that may lead to complications down the line is a sign that a different choice may be a better fit.

Choosing the right accounting firm may be a difficult task, but it’s worth putting in the time and effort to ensure that it will benefit the company in the long run.

How to Start a Tax Accounting and CPA Firm

Having gained considerable experience developing five of my own accounting practices and spending the next two decades individually assisting over 2000 accountants develop their own practices, there are a few basic principles accountants can observe to provide themselves the greatest opportunity for success.

The best way for accountants to succeed in starting their own Accounting and Tax CPA practice is by providing themselves with the greatest opportunity for that success. This can be done by remembering that the basic principles for a successful practice are good clients together with the basic tools to service them. Many accountants seeking to develop their own practice position themselves with large amounts of unnecessary overhead undermining their opportunity for success. Unnecessary costs can be deferred until they become necessary. Obtain only necessary items to service the initial clients. It is important to keep the initial overhead as low as possible to create a positive cash flow quickly to finance the development of the practice.

When starting an Accounting and Tax CPA Firm, it is recommended that accountants start from their home. In today’s technological world, clients are very accepting to accountants working out of their homes. In some respect, it provides the clients with the perception that they are receiving a greater value. They feel if the accountant is incurring less overhead, perhaps part of the savings is being passed on to the clients. By saving the cost of rent and other office expenses, accountants will accelerate their positive cash flow, which may be used for financing the expansion of the practice without going into debt. Once the cash flow is sufficient to support an office, then the accountant can decide if expansion into an office is warranted. Accountants who do work from home may also find they enjoy it so much that they may choose to forgo moving to an outside office.

Another way accountants can maintain a low overhead is by avoiding unnecessary costly software. Numerous accountants procure very expensive unnecessary software to support clients they have yet to develop. There are extremely good software companies that provide an excellent product at a low to medium price range. Drake Tax Software is a very cost-efficient software program that has an excellent reputation. In the September 2011 edition of The Journal of Accountancy, the results of a software survey were published, and Drake Tax Software received an excellent score. Accountants who are starting their own Accounting & Tax CPA Firm are encouraged to pursue good software at affordable prices giving them the basic tools to service clients.

There are many other simple ways accountants starting their own Tax and Accounting Firm can reduce startup costs. Simply the name that accountants decide on for their firms will reduce their initial costs. If accountants would use their first name, middle initial, and last name followed by CPA and/or Certified public Accountant, they may avoid DBA registration costs, bank charges, and filing fees. In addition, active licensed Certified Public Accountants have legal rights to practice public accounting under their own names saving them costs associated with fictitious names. Many times, Certified Public Accountants can choose fictitious names, which would diminish potential clients’ perceptions of them, which in turn would impede a start-up business. For example, a licensed Certified Public Accountant doing business as “Bay City Tax Service” or “Accounting & Tax Service” loses credibility. Prospective clients may perceive this company as uncertified and unlicensed.

Accountants who are considering developing an Accounting/CPA practice and who are currently employed are encouraged not to terminate their employment in pursuit of starting their own Accounting & Tax CPA Firm. Instead, they should develop their practice concurrently while still employed. This can be a time-demanding decision when compared to terminating their employment and devoting full time to their practice; however, the sacrifice is well worth the reward. As the practice grows, accountants can grow with it and transition themselves full-time into their own practice without placing unnecessary financial pressure on themselves or on their families.

With the relief of financial pressure while operating the new practice concurrently with employment, there will be a substantial boost in income without incurring large expenses. Cash reserves will substantially increase as employment income is maintained, and new income will begin to flow in from the new practice as well. This increase in cash reserves will be of great assistance in financing a full-time transition, and this will make the move go more smoothly when the time comes

In making that move to a full-time practice, accountants will find it easiest to transition full-time into their own practice in the month of January. January is the beginning of tax season, and along with it comes the beginning of revenue from income tax preparation. The increase in revenue will come right at the time the accountants need it the very most. It is important that accountants position themselves to begin marketing at the start of tax season to aggressively develop individual tax clients taking full advantage of their first tax season. In addition, January encompasses year-end work for many businesses, such as payroll and financial reporting. This will also add additional revenue to the accountants’ practices in the month of their transition.

January is also the best month of the year to transition full-time into the practice because it may be the best month of the year for developing new businesses as clients. Most business owners resist changing accountants. It takes a very solid reason for a client to leave a predecessor accountant. Once a client makes the decision to change, usually he or she will not invoke the change until the end of the business year not desiring to have two accountants split a fiscal year. Accordingly, year-end is the most opportune time for approaching business owners, and it will make the transition into the full-time practice easier.

Finally, when starting an Accounting and Tax CPA Firm, it is important to avoid marketing services as a commodity or product. This often leads to very low response and low quality of clientele. It also can be extremely expensive. There are volumes of accountants who pursue very expensive marketing programs offered by various companies and who are lured by difficult-to-enforce guarantees. Many of these programs are commodity driven. The accounting industry is not commodity driven; it is driven by trust and loyalty. An accountant’s marketing campaign must be driven by truth, honesty, and professionalism, which will enable a client to be more comfortable knowing that he or she is hiring an accountant who can be trusted.

Accountant or CPAs who are currently employed and seeking to start their own Accounting and Tax CPA firms will find it beneficial to pursue the practice by following some very simple steps:

1) Avoid unnecessary costs and expenses.

2) Consider starting the accounting CPA Practice from home.

3) Develop the practice alongside current employment.

4) Avoid marketing the firm as a commodity or product.

Remember, opportunity starts with action. No action, no opportunity. Accountants who take action provide themselves with the opportunity to succeed. They should start their own CPA and Accounting Firms from home while employed. Their successful experience without jeopardizing their future will provide them the confidence and cash flow they need to enjoy the freedoms in ownership of an Accounting and Tax CPA Firm.

Functions of an Accounting Firm

If you’re starting to be convinced you need to hire an accounting firm for your business but think you still have a lot to learn about how doing so can help you, read on.

An accounting firm can have anywhere from one employee up to a hundred, any of whom can practice with certain specializations or as general practitioners. It all varies on how big the firm is or what the client is asking for. Many business owners and entities that involve money come to an accounting firm for many reasons. These people provide accounting and consultation services. It is also assured that accountants under this firm will be handling their clients’ financial affairs with utmost reliability and trustworthiness. These accountants usually set a timeline and ask for specific documents from their clients so they can perform the basic functions of their job.

There are six major functions of this type of firm. Its most basic responsibility is to provide a just and accurate report of the client’s financial standing. An accountant usually begins with financial record keeping. It is through these documents that an accountant reports the standing of the company. Accounting firms also perform external audits and provide services such as Tax compliance. It is the responsibility of the firm to calculate its client’s liability. The accountant is aware of its clients’ tax compliance requirements. Businesses and people need to pay taxes as part of their responsibilities and accountants can help them with this.

Business consulting is another function that these firms offer. There are expenditures and decisions that businessmen need some help with, especially when the person is a newbie in business. Not all business owners have knowledge about how to expand how to make their businesses grow. Another service an accounting firm offers is Internal Audit & Risk Management which basically handles cases of theft and fraud. The accountant can advise the business owner on how to re-organize his system, his employees and even its electronic data processing department. This is to protect the business from factors that can bring the business down further. Specialty services may also be offered by the firm. These include short to long-term term engagement providing high class support to the international market. This is the service that companies should get when the business growth is so big that there has to be major changes in the current accounting system so it can continue to work.

There are a lot of firms today that offer these services. In order for a business to succeed, it is imperative for owners to get them. But with the many accountants around, it is important for a businessman to be careful in choosing the right firm. It is for the owner to take care of his business by hiring only the best people who will be reliable enough to present the real standing of the business they are handling.