Hiring an accounting firm is a big step for a business. It is a milestone, since the decision to hire accounting help usually coincides with the realization that the business has grown, and the business owner can no longer do it all. This decision should not be taken lightly. A successful relationship with an accountant is one where you are comfortable discussing personal finances, family affairs, business growth plans and eventually, retirement plans. A good accountant becomes the most trusted advisor, not just some guy who does your taxes.
CPA Ontario’s Directory of CPA firms lists over 3600 firms in South Central Ontario alone. How can you narrow it down to just one?
Start by asking your network for referrals. Chances are, your business contacts have some accounting firms they can recommend. After you get a few names recommended by your network, schedule a time to interview these firms. We recommend you ask the following 5 questions:
Accounting firms can provide a variety of services or specialize in a particular area. The firm you choose needs to be capable of providing the services your business needs, which may include bookkeeping, tax compliance, tax planning, assurance, and others. If you do need bookkeeping help, ask if the firm has dedicated bookkeeping personnel. Having bookkeeping work done by staff who charge lower rates and have more experienced staff look after tax compliance is usually more economical. If you envision the need to have assurance work done (ie audits and reviews), whether now or in the future, you need a firm who is licensed to do this kind of work.
Billing practices vary from firm to firm. Some firms quote a set fee and stick to that fee, whether actual time spent on the engagement is more or less than was budgeted. Others, charge based on the actual amount of time spent. How does the firm deal with billing for inquiries you make throughout the year (you know the time you call your accountant and say, “I have a quick question”)? Is it part of the fee initially quoted, or would that time be billed separately?
Certain industries require the accountant to possess a certain level of specialized expertise. You don’t want volunteer your company to be the guinea pig for the accountant to figure out the nuances of your industry. As your company grows, the need for accounting services will change too. You want to be comfortable that the firm can accommodate this growth (for example, have the potential to assist with restructuring, purchase or sale transactions, tax planning).
The opportunity to have a firm’s partner or senior management personnel at your fingertips can have a tremendous advantage. Larger firms tend to preserve the time of their more senior personnel for larger clients, making smaller clients feel lost in the mix. Do you want to feel like the big fish in a small pond, or a small fish in a large pond?
In this day and age, location becomes less and less important, especially if face to face communication is not a must. Do you value having in person meetings? How often? Is the firm so far that even getting together for your year end meeting would be a challenge? Even if face to face meetings are not important to you, keep in mind country and province-specific taxation rules. At the very least, you likely want to choose an accountant in your province.
To sum it up, making the right decision about which firm to hire is an important component of your business’ success. Start by interviewing a few firms recommended by your network, ask for client references for a hand full of firms you liked most, and don’t underestimate the importance of having a good personal connection. Your accountant is a valuable member of your team. You want them to be excellent at their job and make you feel comfortable to discuss your finances. A trip to your accountant should not feel like a trip to your dentist.