How to choose an accounting firm for your business

The business environment can be precarious. Tax laws are notoriously fickle, changing from one year to the next seemly on the whim of the government officials in charge. Markets can fluctuate violently. Business owners need to be prepared and adapt their financial decisions based on these changing conditions.

A good accounting firm will stay abreast of changing tax laws and business conditions precisely so they can offer the financial advice that small businesses need to develop budgets and set financial goals.

The business relationship between a small business and its accountant is critical. A good accountant could, and should, become your company’s financial partner for life, growing with you and your business. So how do you choose?

Ask about their qualifications

First and foremost, ask about their qualifications. Every accountant should be qualified, no exception. Your accountant should at the very least have a finance-related bachelor degree like a BComm and be registered with the The South African Institute of Chartered Accountants (www.saica.co.za) or The South African Institute of Professional Accountants (www.saipa.co.za).

Additionally, accountants in South Africa could belong to one of the other main South African accounting bodies:

Independent Regulatory Board for Auditors (www.irba.co.za)
South African Institute of Professional Accountants (www.saipa.co.za)
The Association of Chartered Certified Accountants (www.acca.org.za)
Chartered Institute of Management Accountants (www.cimaglobal.com)
The South African Institute of Business Accountants (www.saiba.org.za)
Institute of Administration and Commerce (www.iacsa.co.za)
Institute of Certified Bookkeepers (www.icb.org.za)

To become a member of these bodies your accountant will need to meet and maintain certain minimum requirements in terms of education, training and continued learning. So if your accountant belongs to one of these organizations it provides you with greater security. Also, if there is an issue, you will be able to lodge a complaint with that organization.

Any accountant that does your tax return should be registered as a Registered Tax Practitioner with the South African Revenue Services (www.sars.gov.za).

Does your accountant use cloud-based accounting software?

Other certifications are important to. If you accountant is going to be working with a certain tool, Xero Accounting Software or Sage Accounting Software, for example, it’s important that they have the training and experience working with that tool. Your accountant needs to keep pace with a rapidly changing technology sector and should be using recent and relevant software solutions. So ask your accountants what software they use and about any additional qualifications they might have, and then check on the respective company website.

And speaking of technology, an important question to ask your potential accountant is whether they are on the cloud! Joking aside, check whether you accountant has adopted a cloud-based tool like Xero or Sage to manage your accounts. Cloud based accounting services mean that you, as the client have access to your accounts and, to some degree, to your accountant from any device that has an internet connection.

Next, ask about your accountants’ business specialties, and more specifically what level of service or advice you can expect from them.

For small businesses in particular, you want an accounting firm that offers a range of services such as financial management, auditing/reporting, cash flow analysis, and some sort of financial planning.

A good accountant will help you with tricky business decisions

In fact, choose and accounting firm that will do more for your business than just complete your tax returns. A good accountant will provide your business with advice regarding your current financial situation and help you with the difficult decisions you will need to make to plan for your business’s growth.

A good accounting practice should include at least these five basic areas of expertise:

• Accounting and bookkeeping
• Financial management platforms
• Tax advice
• Auditing
• Business advisory services

In reality, these five areas often overlap. A simple example might be when your accountant is helping you to restructure your debt and then offers you some advice on what additional options exist in the marketplace based on the experiences of his or her other clients.

So ask yourself in what other areas you might need your accountant’s help. Do you need to implement a financial management platform like Xero or Sage? Do you need help analyzing transactions for loans and financing? Do you need help managing you financial investments? One of the key areas in which an accountant can help your business is in the implementation of process workflows and the identification of which of these can be automated. Remember ask your accounting firm whether they offer these services, and, of course, if there are any additional fees involved.

Does your accountant understand your business structure?
You will also want to check if your accounting firm has experience working with businesses structured like yours. There will be different requirements for sole proprietors, private companies and partnerships and you want to be sure that the accountants dealing with you needs have the necessary experience, especially during tax season.

That brings us to one of the most important concerns for any business looking to hire an accountant, their fees.

Many accounting companies charge by the hour. Nowadays, however, there are a number of accountants focused on small or medium sized businesses who charge based on a monthly retainer. These companies will generally offer a fixed set of retainer options that include a fixed set of services, so work out what services you are likely to need and which option will be more cost-effective for you, then visit your accountant’s website and check out which plans best fits your requirements.

It’s important that you don’t base your decision solely on cost. An accounting firm that charges more is likely to be more experienced or will include more advanced services in their retainer package.

Can you trust your accountant with the financial health of your business?
And that brings us to another important item when it comes to choosing an accountant. Check their references. If they have references on their website, check that they are real. If possible, ask for references that you can call, and especially from clients in the same industry as your business. Different industries have different ‘regulations’ regarding what you can claim on your tax return, so if your accountant has experience and a detailed understanding of the industry, they will be better positioned to maximise your return. And then make sure to call those references.

Remember, we are talking about somebody who you will trust with financial health of your business, somebody you will turn to when you need advice and guidance, so you want to make sure you do your due diligence.

Which brings us to the next item on the list, availability. It’s important to have a clear understanding of how available your accountant or the associates at your accounting firm will be to meet your needs. Will your accounting firm be available to meet or talk over the phone when you need assistance, or will they only available at very specific times? Will you have to book a time in advance to talk to your accountant? Or will they only communicate with you via email.

You get what you pay for
These details will probably depend very much on how much you pay, so make sure that you are clear on what service you are contracting, and then make sure to get it on paper. At the end of the day, it might be worth paying a little more so that your accountant is available to answer your call when you need them most!

Another thing it’s important to clarify from the outset is exactly who will be handling your accounts. Will it be the well-qualified head accountant with years of experience, or will you get the new junior associate who is still learning the ropes? Most small to mid-sized accounting firms consist of a few experienced accountants who handle the technical work and then maybe some junior accountants to do the more mundane tasks. So find out who those top professionals are and make sure that they are the ones who are going to be working on your account.

Finally, remember to make the most of your relationship with your accountant by doing your part. Stay on top of your finances and maintain your records, the less time your accountants have to spend organising your books for you, the more time they will have to provide you with the high value business advisory services that can help your business to grow.