Top Considerations Before You Hire A CPA

Hiring just any CPA doesn’t work for most businesses — you must hire the RIGHT CPA. But what does that mean for you?

Every business has different needs. You should hire a CPA that is experienced in your industry, business size, or with your specific needs. Hiring a CPA isn’t a one-size-fits-all approach, so I’ve outlined the steps for you below so you too hire the right CPA.

Reasons to be careful when you hire a CPA

You’d think hiring a CPA is simple. You look up a CPA online and choose the one whose credentials sound like they are a good fit for you, right?

Wrong.

Unfortunately, there are dozens of tax scams every year, and if you aren’t careful, you could be taken by one. This is by far the most important reason to be careful when hiring a CPA. You should only hire one you know has the credentials, experience, and reviews to prove they have a solid track record.

Other reasons to be careful when hiring a CPA include:

• Being promised lofty refunds when the CPA knows it’s not reality, but they still get your business
• Unscrupulous CPAs could claim inaccurate deductions or credits, getting you in trouble with the IRS
• Crooked CPAs may even talk you into not paying your tax liabilities or taking shortcuts to save more money

What to consider when hiring a CPA

Like any service you pay for to help with your business, you should consider some important factors before hiring a CPA.

Industry experience

CPAs can specialize in specific industries, and that’s just what you want. Find a CPA familiar with your industry, and you’ll get a more accurate tax return. When you hire a CPA who knows your industry’s ins and outs, they will be familiar with your typical expenses, income, and the nuances that could benefit you at tax time.

State Registration

When you hire an accountant online, it can feel scary. You probably won’t know much about the person or how they work. But one thing you can check is if they are registered with the state and up to date on their credentials. This prevents you from hiring a CPA whose credentials have expired and takes you to the cleaners.

To check a CPA’s state registration, click here. 

Check the Better Business Bureau

You can read reviews online in many places to check on an accountant, but you’ll get the most accurate results from the BBB. Here’s why.

First, the BBB grades businesses. If the company has any grade lower than an “A,” look elsewhere. There are many accountants with much higher grades, whether you hire a CPA in person or online.

Next, most businesses reply to complaints made about them on BBB because it affects their rating on the site. You’ll be able to see both sides of the story if the accountant does reply to any complaints. This makes it a lot easier to make a decision. 

Ask other businesses for referrals

If you have a network of businesses or you’re on your local Chamber of Commerce, ask for referrals. You may even have CPAs in the group that you can work with. Either way, ask businesses near you who they use and what they think. Nothing beats real-life experience, and word-of-mouth is a great way to get the best referrals.

Reasons you need a CPA

You might think you can just do the accounting yourself, right? You took a couple of accounting classes in college — you’ve got this.

Don’t.

Unless you’re an accountant by profession, there are plenty of reasons to hire a CPA versus doing it yourself.

Tax filing

Taxes are complicated whether you run a freelance business or a business with employees. Why take a chance with your taxes when you could have a professional do it? You’ll lower the risk of an audit and maybe even save money on your tax liabilities.

Make smart money decisions

How you handle your money affects your business’s bottom line. So if you don’t have a budget, don’t follow your budget, or don’t know how to make sound financial decisions, a CPA can help keep your business in line and out of the red.

You don’t have to do payroll

Payroll is necessary, but it’s time-consuming. In addition, you have to do it on time for each pay period, or you violate many laws. If you don’t like burning the candle at both ends, your accountant can do your payroll for you, taking the burden off your shoulders.

You don’t have to do the bookkeeping

Bookkeeping is another important task that can take up many hours of your day or week. Handling accounts receivable and payable, paying the bills on time, getting accounts with new creditors or vendors, and tallying up your monthly sales and expenses is as important as opening your business’s doors every day. It can be too much for you on top of running your business, but a CPA can do it. 

Questions to ask a CPA

You should interview them before hiring a CPA, just like a boss would interview applicants for a job. Essentially, the CPA is applying for the job of handling your business’s finances and taxes.

You want the right man for the job, and here’s what you should ask.

1. What is your experience? Ask specifically what industry the CPA has worked in, how long ago they were in school, and what companies they worked for to gain the experience.
2. How do you communicate? Communication is key with your CPA. If your CPA works limited hours, only converses via email, or isn’t reachable, it may not be a good fit for you. Decide how often you’d like to talk to your CPA and how and find one that offers what you need.
3. Will I be working with you or your staff? Many CPAs have assistants and staff members that handle most of the work. You may talk to the CPA himself a few times, but any behind-the-scenes work or gathering of paperwork may be with an assistant. First, decide if you’re comfortable with the CPA’s procedures.
4. Do you work year-round? Some CPAs only work during tax time. If you happen to hire the CPA at that time only to find out they have another career the rest of the year, you may not get the service you need/want.
5. What are your fees? Of course, you must know how much an accountant charges. Some charge a flat fee, and others charge by the hour. Discuss the pricing and the terms. What’s included in the flat fee or what counts as an “hour of work”?

When should you hire a CPA?

Every business owner hires a CPA at different times. Some wouldn’t think of starting their business without one, and others wait until they absolutely need a CPA, so they save on the costs.

Here are different times you should consider hiring a CPA.

When you’re starting your business

Before you choose your business structure, how you’ll file your taxes, and even how you’ll handle accounts payable and receivable, it’s beneficial to get a CPA on the books. Yes, it may feel like another expense dragging you down, but a CPA may save you money in the long run. Do things right from the start, and you’ll have a better chance of succeeding.

If you have questions about your finances

Sometimes you just don’t know the best way to spend your money or if you should take out a business loan. Having a second set of eyes looking at the numbers and telling you how to handle your money can be a breath of fresh air. You can rest assured that you’re making the right financial decisions and not second-guessing yourself.

If you need help filing your taxes

Filing business taxes is no joke. Many aspects are much different than individual taxes. If you don’t know the laws and can’t make heads or tails out of what you need to file your taxes correctly, hire a CPA to do it for you.

If you’re being audited

If you receive notification from the IRS that you're being audited or even if they send you a letter asking for more information, you should have representation. Dealing with the IRS can be overwhelming and scary. You may say or do the wrong thing. Working with an experienced CPA, though, you’ll have the representation of someone who knows how to deal with the IRS.

The bottom line

I suggest you hire a CPA before you start your business, but if you’re past that point, anytime is good. The right CPA will help you make smart financial decisions and walk you through tax time. 

You can get as little or as much help as you want. Whether you want a hands-off approach to accounting, handling it all over to your CPA, or you just want to hire one for certain tasks, there are plenty of CPAs out there to help you with your accounting needs.