What questions should I ask a prospective small business accountant?
January 19, 2010 3:08 PM   Subscribe

Recently started a small business. Meeting a few prospective accountants. What questions should I ask?

Basically, I'm going to see a few prospective accountants (some were recommended, others I found via review.

I'm not sure what to ask, but a few things on my mind:

-What business form (LLC, etc.)
-business registration
-tax stuff
-what don't I know?
-record keeping and deducting expenses
-whether I should even have an accountant at this point - under 15K in gross income (it's a part time business)
-what kind of accountant i should choose, out of the ones I meet with

Any suggestions? I do marketing consulting in my spare time. I also have a couple of joint ventures happening in 2010.

PS. I'm in Los Angeles, so if you have a recommendation, I'd love to hear it.
posted by jeff1010 to Work & Money (4 answers total) 7 users marked this as a favorite
The accountant should be a CPA and have experience in your industy or some related industry.

The accountant should feel comfortable telling you if a question is outside his area of expertise, and if so, provide you a referral to someone who can answer your question (for example the question about an LLC).

As to wheher you should have an accountant: a number of people I know who run small businesses have been tripped up by accounting and related paperwork problems. If it's not your forte, I'd say having an accountant is pretty mcuh a requirement.
posted by dfriedman at 3:45 PM on January 19, 2010

Find out how their fees work. What software do they use? Will you need to purchase Quickbooks, for example?
posted by lsemel at 3:51 PM on January 19, 2010

Your questions look like a good start. Some to add:

- What software do you use?
- Will I be able to just give you my Quicken/whatever file at tax time or when I have questions?
- What should I track in my records? (or What categories should I set up in my financial software?)
- Can I file my LLC or whatever by myself?
- What do you charge for a tax return? (Is it a flat fee or hourly?)

I agree with lsemel that it's pretty important to find out what software they use. It turned out that my first accountant wanted me to write everything out by hand on his printed forms, so my valiant efforts with Quicken seemed pointless. It seems like many accountants in the US use Quickbooks, which might be overkill for you.

When I got fed up with Quicken, I switched to Xero for my business books. It's a far more pleasant solution and almost painlessly produces all the standard reports that businesses use. I recently switched my personal finances over to it as well. Xero is an online financial management system that you can invite an accountant into, so they could even set it up for you. It's not the cheapest solution, however.

Your accountant should help you set up your financial record-keeping system, even if they just help you decide what categories to track. I brought in a printed list and he looked it over.

You might also have the accountant do your first taxes for you. Then you could follow their example for future taxes and do them yourself. That's what I did, and it was worth the minimal expense.

For what it's worth, I got a lot of help from books by Nolo Press, which are available as PDFs for instant gratification. Deduct It! has been especially useful.
posted by PatoPata at 7:20 PM on January 19, 2010

dfriedman is corrrect - there are many people who are great at their work but are tripped up by tax laws, cash flow, etc.

Your business sounds predominately knowledge-based (although I only have a vague idea what marketing consulting is). The accounting will be straight forward and something the size of your business, I don't think that you necessarily need accounting software - maybe excel and dropping all the paper receipts in an envelope.

As Ismel says, find out how the fees work. Is the bookkeeping, tax returns, tax planning, and financial planning and advice all included in the fee or charged separately? When you are doing the interview with the accountant, hopefully they should make a suggestion that will save you what you will pay them for the year. Will the accountant also do your personal tax return?

I think that your accountant will ask you some of these questions: Is there a chance that you could be sued in your line of work? (If so, maybe you should consider an incorporation.) Are you pursuing this business as a hobby (so to speak) that makes money or as something you hope to grow into a full-time business? Are you the only owner? Is it only you who are working, or will you have occasional or consistent part-time help? How many sales/contracts/clients do you have to earn $15 000 - five, fifteen, fifty? Are they repeat customers? Are you doing work across state or national boundaries? What are your expenses? How much do you earn per hour? (I'm not asking you to answer these questions here on askme.)

(I know an accountant who specialises in small businesses (but more labour, skilled trades, restaurants, and retail, not so much the knowledge business that you have). I don't run a business. I am not an accountant. I do not live in USA. YMMV.)
posted by philfromhavelock at 8:04 PM on January 19, 2010

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