How to Choose an Accountant

Choosing an Accountant For Your Small Business

Choosing the right accountant for your small business can mean the difference between success and failure. After all, it's your financial numbers that make or break your business.

Choosing an accountant? Be careful. There may be more riding on the decision than you think.

Unfortunately, once you've selected an accountant, it's a pain to switch. Your accountant gains detailed knowledge of you, your business and your data -it makes it very tough to transition to a new accountant. The end result is that many businesses that work with mediocre accountants don't make the change to a better accountant simply because the switching costs are too high.

Given the inertia that settles in after you've selected an accountant, it's important to make a good choice the first go-around. Makes sense, right?

Surprisingly, most business owners don't thoroughly consider their needs when selecting an accountant. That's because many of us who don't have a strong accounting background view all accountants as being equal.

But the reality is that all small business accountants are not created equal.

This article explains how accountants can assist your business and provides useful questions you should use to choose an accountant that truly can help your business grow, not somebody who just crunches the numbers.

What Do Small Business Accountants Do Anyway?

The increasing role of small business in the American business landscape and more powerful and accessible information technology has changed the role and importance of the small business accountant.

Why do you need an accountant? Some small businesses make due with a bookkeeper - someone to perform the tedious task of recording financial information and cranking that data into the necessary formats, like P&L statements and tax forms.

But a good small business accountant does much more than just record transactions and passively generate documents-they actively analyze, interpret and convert that data into actionable business intelligence.

Based on where you want to go with your business, they should be able to tell you how to get there. If your accountant is just showing you the financial tracks of where you have been, you've made a bad choice and you're missing out on a great opportunity to receive good business advice.

To be sure, today's small business accountant offers more than crunched numbers. They can be your primary resource for:

  • Tax Planning. Beyond simply preparing tax forms, an accountant should be involved in business planning throughout the year. They should be able to regularly advise the business so it functions with peak tax efficiency.
  • Business Consulting. A good accountant should be able to help your business grow. Talented small business accountants function as a trusted general business consultant, assessing business problems and offering specific solutions. They offer advice on internal controls, risk management, lease versus buy decisions, inventory strategy, pricing, and even marketing. In short, an accounting professional who really understands your business from the inside out should be a trusted business advisor who is highly motivated to see you succeed.
  • Personal Finance Advice. A good small business accountant understands that your personal finances are integrally linked to your business finances. They view the two holistically and offer advice on both fronts. For example, while serving as your small business accountant, they might offer retirement planning advice and estate planning advice that is ancillary to your small business activities but that will ultimately leave you in a stronger financial position.
  • Technology Know-How. Computing technology has dramatically improved small business capabilities as powerful business software is no longer only for corporations and the Internet provides a level of access to knowledge, customers and suppliers hardly dreamed of even ten years ago. A good accountant must -- must! -- absolutely be proficient in applying the fantastic and inexpensive information technology that turns business data into strategic intelligence. They need to be very familiar with leading small business management software packages from leading vendors like MYOB, Intuit and Peachtree.
  • Networking. While the strength of an accountant is still what they know, a mark of a successful pro is also who they know. Your accountant should be a good source of referrals as they should now precisely each of their clients' strengths and needs. Need to get a loan for your small business? Your accountant ought to be able to introduce you to the right banker.

Questions to Ask Your Prospective Accountant

The bottomline is that you should expect today's accountant to be much more than a bookkeeper. Most do add considerable value. The trick is to separate the wheat from the chaff.

So, with your raised expectations, how do you choose the right accountant for your small business? Like any relationship, it boils down to a compatibility of interests, experience and outlooks. Seek recommendations from your peers and ask prospective accountants the following questions:

  • Do you have your CPA? Business owners are often confused as to the certified public accountant (CPA) designation. A CPA has a surpassed accepted financial education levels, passed state-administered tests to prove competency and periodic re-certification exams. Certain situations, such as audits and many loan applications, require CPA involvement. Not surprisingly, CPAs can charge higher fees than a non-CPAs. But there are a great many non-CPAs who excel at small business accounting and financial and technology consulting. Again, getting to know them and your needs is the necessary first step.
  • What kind of creative business advice will you offer me? A good accountant can deftly handle data and numbers but should also be able to demonstrate quick and creative business acumen. Ask the candidate to offer three quick ideas on how your firm might be able to save money right now. Ask them for three examples in which they offered useful business advice to other clients that went beyond just tracking the numbers. While "creative accounting" is usually a negative, having a creative business mind can be a huge asset towards helping your company to grow.
  • Do you consider yourself to be tech-savvy? Small business accounting software has made powerful accounting tools available to everyone. But these accounting packages, most notably MYOB and QuickBooks, are only as useful as the person who installs them and runs the applications. Even if you are not a "tecchie," do your homework to be able to determine whether the candidate understands the role computer technology plays in turning business information into business intelligence. For example, ask them how they will integrate your computer files with the technology in their office. What role will the Internet play in keeping in touch and interchanging financial information?
  • Who are your other clients? Imagine this scenario. You hire an accountant based on the assumption that he understands the basics of your business. Then, you find out that he's never had a client like you before. Instead, he's only prepared tax forms for wealthy individuals that don't own businesses. Avoid that possible disaster by asking who the accountant works with. If they are businesses that are similar to yours, that's a good sign. In asking about their clients, you will also want to understand how busy they are and whether they have the time and resources to support you adequately.
  • How do you calculate your fees? Ask the accountant what you can expect fees to be and will he guarantee that you will not exceed certain amounts that you agree upon up front. In a time-based fee structure, make sure to find out the hourly rate, as well as all fees for expense reimbursement. Find out now whether a simple two-minute phone call or a one page fax means an hour of billable time. If that's the case, run for the door.
  • Are you active in the local business community? Who do you know that can help me? Find out whether your prospective accountant can introduce you to people who might be useful to you, including prospective customers, suppliers, bankers, and investors. Since talk is cheap, take it one step further. Ask the accountant for examples of introductions they've made in the past for other clients and how those introductions played out.
  • Why should I use you? As a final question, it's always good to let the accountant make the case for why you should engage them. Find out whether your prospective accountant can introduce you to people who might be useful to you, including prospective customers, suppliers, bankers, and investors. Since talk is cheap, take it one step further. Ask the accountant for examples of introductions they've made in the past for other clients and how those introductions played out.

Share this article

Additional Resources for Entrepreneurs

Lists of Venture Capital and Private Equity Firms

Franchise Opportunities


Business Glossary


Conversation Board

What's your take on choosing accountants? Have any advice for business owners on this topic?

  • diana posted on 3/16/2007
    This article came in very handy. Just today I called an accountant and made an appointment to see if I need an accountant. That's what a novice I am. My brother and I inherited an 8-family apt. bldg, and we've been running it OK, but now we need cash to split it in two for tax purposes. But, we don't want to use our cash. So we need some ideas of getting cash out of the bldg. So after reading your article, when I meet with this guy, I'll know what to ask (hopefully).
  • Michael posted on 5/15/2007
    This is a great article that really opened my eyes as to what I should ask and expect from a good accountant. Every business owner should read this if they don't already know it! READ IT!
  • Tiffany posted on 6/19/2007
    Very informative. Straight forward and speaks with small business owners' interests in mind. Thanks!
  • eman posted on 10/13/2007
    I have some additional recommendations regarding choosing an accountant. Find out the firm's size, their experience in your industry and educational background. Ask them to send information on their approach to billing. Find out if the senior person you talk to will work directly on your account or if it is handled by an employee. Will they advise you on an audit, your ownership structure, and provide assistance with analysis of your financial statements? Base your selection on the best answers to your questions and the fact that they have other services to support growth in your business or meet upcoming challenges. Also, are they approachable and professional enough for you? An accountant should be more than a simple tax preparer. You need their advice and guidance in steering your business now and in the upcoming year.
  • KMC posted on 11/25/2007
    Great advice! I just fired my CPA, and now I know what to look for.
  • Christine Jones posted on 11/28/2007
    Christine Jones
    Hello, I just wanted to say that I found this article to be very helpful. Thank you. Working on a small business, like mine, it is always helpful to have many advisors. Your site has been very helpful to me. Thanks for all the input. Sincerely, Christine.
  • Yoav posted on 12/20/2007
    Great advice. I've had terrible experience with accountants - it is really hard to find one who is willing to explain matters. I got the feeling that most of them want to keep you in the dark so that you will be completely dependent on them forever. I'll be printing this post and using it in the future, I'm sure!
  • joe posted on 1/30/2008
    Thank you for the information. I'm in the start-up process of my business and finding an outstanding accountant is very crucial. Especially when numbers are not my gift. God Bless.
  • Kay posted on 4/3/2008
    Since 2004, I have jumped from accountant to accountant. I am currently searching for my fourth accountant. From the start, I let them know my business needs and expectations. I pay for services on-time or up-front to establish an honest relationship -- however, this method seems ineffective. It is truly sad that this generation of accountants is unreliable and untrustworthy. I totally agree with Yoav, they are easily frustrated when you have inquiries about your business even though they are paid to answer your questions.
  • David Penc posted on 4/7/2008
    David Penc
    I was just wondering if anyone has had any experience with I am an accountant and have been approached to advertise with their services and pay a nominal fee of $1,500 to do so and I could have a profile set up for six months. Just wondering if they are reputable and if anyone has any suggesstions. Thanks. David
  • Ken Gaebler posted on 4/8/2008
    Ken Gaebler
    David, I don't know Maybe others will have feedback. My advice is to negotiate a lower fee and a shorter initial time period so you can pilot the service without putting much money at risk. Track the leads that come in and whether they convert to new business. Google Adwords may perform better for you. We have many articles on the site to help you with lead generation. Good luck to you.
  • chaitanya posted on 5/9/2008
    I would like to add that you must also look for the personality of the accountant. Does she understand you, your business goals and your long-term objectives? Is she the kind of accountant who will be proactive in looking out for newer opportunities for you? Are you more important to her than her fee? Is she transparent with you about her work? Will she add value to your business? And finally do you trust his/her judgment?
  • Andrew A posted on 6/17/2008
    Andrew A
    As a fairly successful small business owner, this is good advice. Accounting is the Achilles heal of many business owners, and advice on finding better ones is appreciated. Thanks.
  • Maria Perez posted on 7/2/2008
    Maria Perez
    This was really some great information. I am just starting my business and can use all the help I can get. Thank you.
  • Kevin D. posted on 8/18/2008
    Kevin D.
    Consider this my "thumbs up" on a great read here. I'm starting a home based e-commerce business and just formed my LLC. I'm curious if anyone has suggestions for CPA's who specialize in my type of small business?
  • Sid L posted on 10/2/2008
    Sid L
    I thought this was helpful. I'm heading out the door now to go interview a prospective accountant and feel armed with a good set of questions to ask and ascertain the potential value of the relationship. Thanks!
  • Bill C posted on 10/16/2008
    Bill C
    For most small businesses, it doesn't matter what industry the business is in when selecting an accountant. I am a controller of an accomplished e-commerce business with a side accounting practice. It was very easy for me to come into this position even though I had no prior e-commerce experience.
  • Kim D posted on 1/21/2009
    Kim D
    Fantastic articel! I consider myself a glorified bookkeeper, but essentially I am an accountant without credentials. I charge really low rates and provide all the services you mentioned and then some. The problem I am having, is getting clients to pay me for all I provide. I have been told numerous times that I'm a rare find and have companies trying to hire me full-time quite a bit. My question is, how does someone like myself who works day and night 7 days a week for the better of my clients, get them to pay me what I'm worth, within reason of course? Thanks a lot for the article. Lord knows I have took on clients with a complete mess on my hands from someone not knowing what they were doing -- and sometimes that person is the owner! My advise to ya'll is, if you don't know what you're doing, then don't try to do accounting on your own because it creates an even bigger mess.
  • Danny posted on 3/9/2009
    SUPERB ARTICLE! I have just spent time venting about my horrible experience with accountants. I am SO DISGUSTED with the accountancy profession (if you can call it that). It seems either they don't understand the neo-small business (i.e. e-commerce, integration of personal and business finance, etc) or they don't want to touch you yet because you aren't bringing in their standard of income. UGH! I will DEFINITELY be printing this and taking it along to my next accountant interview. I live in Australia but the advice is sound. THANKS!
  • sisi posted on 7/21/2009
    Great article. I will be asking these questions while interviewing accountants tomorrow!
  • Mike posted on 8/24/2009
    Great article!My wife and I have been in business for 5 yrs now and have almost nothing(finances)to show for it.We do look forward to our next 5 yrs to be both productive and lucrative.Thank's to your article we DO KNOW how important it is to not only have an accountant but to have an accountant who can make you company grow and not just crunch the number's.
  • Suzi posted on 9/23/2009
    I started an equine business (breaking colts, riding lessons and boarding). I just got my LLC and have not seen a CPA yet. I went to H&R Block with questions and they scared me pretty bad with what their fees would be, plus what my taxes, SS, etc., would amount to! I was ready to fold right there and then. My worry is that my small and un-ordinary business isn't making money yet, so how do I even pay fees? Most the horse trainers I know work under the tax radar, so I can't ask them for advice about taxes and CPAs.
  • Ken Gaebler posted on 9/24/2009
    Ken Gaebler
    Suzi, if you cannot afford an accountant, you should track your income and expenses in a spreadsheet. Keep business money and personal money in separate accounts. Don't mix personal and business expenses together. Put together a budget as best you can, making sure to budget what you take out of the business first. Call federal and state agencies to get info on filing deadlines and requirements. That advice is free, as is advice from SCORE advisors and any local SBDC group. Don't be tempted by off the books and under the table options to avoid taxes. It's not worth it. As your business grows, book time with an affordable accountant and just tell them what you can afford and make sure they don't bill you more than that. Good luck!
  • Nick posted on 10/26/2009
    This was very helpful. I'm interviewing accountants now. Didn't really know what to ask. The questions and responses stimulated a lot of good thinking. Thanks!
  • Rutz posted on 12/29/2009
    Thanks for this valuable read! We haven't been comfortable with our accountants. We have been contemplating changing accounts. Although switching accountants could prove costly, it may be worth it nonetheless!
  • Bon posted on 1/13/2010
    My partners and I are are just starting out in a new business (ad)venture. At a recent tax seminar for business owners at SEFCU I learned that a good accountant can really help your business start off on solid footing as well as grow in the direction you want it to. So I've been researching how to go about finding one. Do you recommend setting up interviews with several different people? And should we expect to pay them for their time? Is there a place to go online to find a listing of local accountants and their business expertise?
  • Ken Gaebler posted on 1/14/2010
    Ken Gaebler
    Bon, I would never pay an accountant for that initial meeting, and I would disqualify any accountant who tries to charge you for what is effectively a sales appointment for them. Yes, it's best to talk to a number of accountants. I'd start with maybe four accountants. As for online resources, I don't have any personal experience using them but they do exist. What I did in the past was simply to ask other entrepreneurs for a recommendation. That gave me a shortlist and ultimately resulted in my finding an accountant that I've worked with through multiple ventures. Hope you find a good trusted partner for your new venture!
  • Sylvia posted on 1/26/2010
    I'm a young woman who just started a business which seems to be doing well so far, but with an accountant, I believe I can achieve more. In any case, I wasn't sure how to approach my prospective accountant and this article just made me feel in control and prepared for the interview. Well done!!
  • Edi Osborne posted on 2/8/2010
    Edi Osborne
    While you are out searching for you next accountant I would add one additional criteria on your list of questions. Ask the accountant this: what are you passionate about? If their answer doesn't include small business, then move on. Accountants who are passionate about their clients businesses have typically worked hard to expand their skill set beyond the traditional tax and accounting service areas. Go ahead, do a search on google for passionate accountants - there are an increasing number of practitioners who have made the transition from being accounting services focused to being a lot more client needs focused. I spend a lot of time working on my business, I want someone by my side who is just as passionate as I am.
  • Debra posted on 2/15/2010
    Thanks so much! Great information. I am seeking an accountant, and this article has definitely armed me with powerful data to help make the right/best choice.
  • Spi & Span posted on 4/7/2010
    Spi & Span
    An excellent starting point for me as a new business owner. I have been thoroughly stressed trying to hire an accountant. Now my hesitant feeling is validated. Thanks for the good advice!
  • Will Y.A.B.A.W.A. posted on 5/19/2010
    Will Y.A.B.A.W.A.
    This has put me quite a bit at ease. I've been stressing steadily over the lack of impression and viability the accountants I've talked to have expressed. This has definitely helped me form a list of accountant expectations to press forward with and will undoubtedly expedite the accountant selection process. Thanks so much!
  • Accountant posted on 7/8/2010
    I am an accountant and I hear stories like this almost everyday. It is unfortunate that there are people that think they are bookkeepers or accountants but don't have the experience or knowledge to back it up. The one thing that I would add to the article is to ask for references and then call those people and ask about the accountants knowledge, performance, and service.
  • Chinyani posted on 7/28/2010
    I am still learning to be an accountant and this is very motivating and informative, it prepares me very well for what is coming and how I can personally contribute to this wonderfull proffession of ours!
  • tess_delena posted on 8/23/2010
    I have been a CPA for a good number of years already and I am proud to say that I am not one of the accountants that people feel negatively about. It is my first time to read an article like this - short and concise and useful in every sense in terms of finding a good accountant. The accountant today should really be more of business consultant than a bookkeeper. Sometimes, it also makes sense to invest in an accountant who can give you sound advice - whether it be in the field of marketing, finance, sometimes even HR and admin.
  • The Imposter posted on 9/3/2010
    The Imposter
    Has anyone actually followed this advice and what happened? I find accountants get really offended. They figure their credentials should speak for itself period. Would love some feedback.
  • rose posted on 9/8/2010
    Should a financial statement be supplied by my accountant as part of year end tax preparation or is it an extra, billable document that is given only when requested?
  • Ken Gaebler posted on 9/9/2010
    Ken Gaebler
    Rose, this will vary from accountant to accountant. I'd recommend you tell your accountant it's important to you to get your financial statements when they do your business taxes. How they respond will tell you a lot about whether you've selected a good accountant. I assume they maintain your books or have access to them. It should be trivial for them to generate an income statement, balance sheet and cash flow statement for you. So I would not expect a significant charge just for pulling the reports. A fee, however, might be warranted if you asked them to walk you through the financials and advise you. If they do that and don't charge for it, great. But it could also simply mean they've built that extra service level into their pricing for tax prep.
  • sasha posted on 9/13/2010
    my accountant is asking for $8000 for making a 5 yr business plan for a small business we are buying? is that ok or is he ripping us off?
  • Ken Gaebler posted on 9/13/2010
    Ken Gaebler
    Sasha, you'll know the answer when you get the business plan. Seriously, that's not an unusual fee for writing a business plan. It depends a lot on the nature of the acquired business. Still, you should ask your accountant for some sample business plans that he's written so you understand what the deliverable is that you'll be getting for your money.
  • Dianne posted on 10/1/2010
    We have been in business for 25 years. About three years ago, new owners took over the accounting business we use. It is run by a CPA. We have them do our monthly statements and year end taxes. In the past, I have been able to call with questions, and the girl I deal with would help me with them. Now, I am told that there is a charge for doing so. Is this normal? And is it normal to never work with the CPA in the firm at all? I work with the girl that has been with the company for the 25 years we have been with them. I feel like they are only number crunchers. They have never given voluntary advice on anything. And if they do, I feel I am going to get charged for it.
  • Ken Gaebler posted on 10/2/2010
    Ken Gaebler
    Dianne, it could just be that the new owner is running the firm tighter than the old owner, and he wants all their time to be billabe. He or she may not realize that it's annoying you. My suggestion would be to talk to the new owners and give them your feedback. See how they react and make your decisions after that. Is it normal to charge for every call like that? I think it depends on the accountant. But in most cases, free ad hoc advice will have been built into the costs of the services you pay for. My sense is that you're not getting the consultative services you desire from this particular accounting firm. It's probably time to shop for a replacement and see if you can do better. Good luck.
  • sara posted on 10/22/2010
    This article is great but now that I know how to rate an accountant, is there a listing by areas/city, of CPA's or non-CPA accountants?
  • Nikki A posted on 10/29/2010
    Nikki A
    Wow, this is great advice. I've needed an accountant for some time now and have been so afraid to approach anyone because I had no idea what criteria I should use to choose one. Thanks for the great article!
  • pelzfit posted on 11/27/2010
    I will definitely be using this for my next accountant selection interview. I own a personal training business in Chicago and was wondering if anyone could recommend an accountant in the area or at least a reference?
  • juanita posted on 12/12/2010
    My accountant always wants to pray with me before our meeting. I feel this is not prefessional, and he is trying to make me think he is such a Christian ...what is your thought? He talks so fast that I cannot understand him. He does not make me feel comfortable.
  • Sunshine posted on 4/13/2011
    My husband and I have a small business with 3 full time employees, 6 contract workers and an S-corp business. We have a partnership LLP without much activity. We use Quickbooks for payroll and monthly and quaterly taxes. We do the bank and credit card reconcillation ourselves. Our CPA does tax estimates, annual professional and personal tax filings, W2, and files our franchise tax form. Our CPA charges approx $8,000 annually. We find this to be a rip off. We are scared to call him for a question if we have a payroll-related question. What should be a reasonable fee and how to find a different CPA? Does anyone have any advice. Thank you.
  • AnthonyBT posted on 5/22/2011
    I've owned a small cafe business for two years, and I've tried to track everything myself. I've had a bookkeeper/friend help me out with my payroll taxes and a couple other things, but I know now after reading this article that I definitely need to find a good CPA right away. I also didn't know what questions to ask.. so THANK YOU for the advice. I'm going to start interviewing some CPAs tomorrow. What should I be expecting to pay them?
  • posted on 6/7/2011
    To the person who wrote "I am SO DISGUSTED with the accountancy profession (if you can call it that)," I can't imagine why your accountants don't like you. Maybe it's because of how you view them? The sooner you realize accounting is not the same as bookkeeping, the better off you'll be.
  • Tony posted on 6/29/2011
    I am a British national living in Frankfurt, Germany. I have recently started working as a freelance translator (which has not yet brought in much, but is generating some interest), and I need some advice from an accountant. Preferably one with a good command of English. Any idea where I might find one who can be recommended?
  • joanne posted on 3/31/2012
    I have to weigh in on one of the comments above. $8,000 is way too much for the business plan. The business plan is made up of gathering information and forecasting projections. Most of this is supplied by you. A business plan is nothing more than a step by step mathematical exercise, and it will not take too long to prepare at all. I do bookkeeping and have worked for several accountants. They usually get someone else to do pretty much everything and pay them a minimum wage per hour and then charge you between $100 and $150 per hour on top of what they are paying the bookkeeper who does the actual work and who is more often than not more up to date on everything than the accountants. My recommendation is to get them to do an itemized account of everything involved in preparing this business plan. Only a good and honest accountant would be forthcoming and honest about what he is doing and would not be so grossly overcharging. Sadly, accountants do take advantage of your lack of knowledge and they make it all sound complex when it is in fact very very simple and not time consuming at all. If they won't explain the details, walk away and get quotes. It is time consuming to create a business plan I grant that -- but not $8,000 worth.
  • Marie from Zumwalt Accounting posted on 8/17/2012
    Marie from Zumwalt Accounting
    Thank you for an excellent article on the benefits and services that a good business accountant can provide. I will be bookmarking this page, and would love to be able to share this information with my accounting clients and potential clients. I have based my practice on exactly this type of value-added model. I offer my clients so much more than simple compliance reporting. I feel that their success is mine as well. Nobody should compromise and accept an accountant that does not add value to their business.
  • S. Hill posted on 10/23/2012
    S. Hill
    Great Article!! I used these tips to select my current accountant. I am based in Chicago. The accountant showed me the benefits of outsourcing this service to allow me to focus on my business. I truly gained a partner in business. Thank you tons.
  • Frank Alfano posted on 11/14/2012
    Frank Alfano
    I've been a small business owner for 15 years and have yet to find an accountant who does all of these things. Where can I find one? I am in New Jersey.

Leave a Reply

Questions, Comments, Tips, and Advice

Email will not be posted or shared
Code Image - Please contact webmaster if you have problems seeing this image code

Problem Viewing Image? Load New Code