Some of the earliest writing archaeologists have discovered relates to accounting. Clearly, the concept of tracking goods and services exchanged has been with us for some time. That doesn’t stop businesses from repeating mistakes that could cost them – mistakes you could be making too. The good news is that seeing these pitfalls helps you avoid them, so here’s what you need to know about accounting for your organization whether you’re looking for a CPA firm to handle all your needs or just take care of routine bookkeeping.
Relying on the Wrong Credentials
Accounting is a more varied field than some business owners realize, and not every accountant is qualified to take on every task. A bookkeeper or tax preparer may not be an accountant at all, yet for business owners seeking financial services, the distinction isn’t always clear. A CPA goes through years of education, rigorous testing, and ongoing coursework to maintain the title. They also have experience with handling an organization’s most sensitive data, including personnel files and financial information.
Accountants certified in multiple states are important assets for businesses that have additional branches. Your New York accountant who’s also a CPA in Florida, for example, can manage your financial records seamlessly. There may also be times you need specific accounting services such as forensic accounting or audits, and a CPA firm with a broader range of experience can provide them.
Not Knowing What You Need
You may want someone who can handle daily and routine tasks such as preparing accounts payable, accounts receivable, and payroll. You might need a full-service accountant who also creates budgets and builds financial statements. You could be preparing for a sale or acquisition, a process that requires sharp accounting skills. For many businesses, not knowing what they want from their accountant becomes a stumbling block.
No matter what degree of service you need now, keep future growth in mind. Make a list of what you need now and what you may need soon. Consider the size and frequency of your financial transactions when deciding how much you need from your accountant too.
Working with a CPA Firm That Doesn’t Fit You
Accounting is about more than crunching numbers. You also need to feel comfortable with your CPA. The accountants you hire must understand your business thoroughly and be able to communicate their information to you in clear, concise terms. Look for a firm that stays in close contact with you and is readily accessible when you reach out to it. Your finances deserve individual attention, so pay attention if you feel you’re being overlooked or treated as part of a crowd.
Establishing a personal rapport also matters.
Your CPA will see every detail of your company’s finances, and financial records are often closely tied to other sensitive information. A trustworthy accountant is a must for any business.
Lacking Financial Analysis
All the knowledge in your accountant’s head doesn’t do your firm much good if it isn’t available to you. Your CPA service should provide you with regular reviews of your organization’s financial health. A dashboard or daily report that lets you take the pulse of your company’s finances every day is essential to making informed business decisions. Look for a firm that gives you quality analytics, with figures broken down into comprehensive categories so you can watch growth as it happens and spot problems before they affect your bottom line.
Going It Alone
For start-ups and small businesses, handing the books to someone who took a few accounting courses in college is common practice, but it can backfire. Accountants have more than their education to support their skill; they also have experience. An in-house bookkeeper may handle corporate taxes once a quarter, but an accountant at a third-party firm deals with tax preparation every day. Accounting is important enough to entrust to professionals.