Choosing the right accountant is one of the most important decisions a business owner can make. Your accountant isn’t just responsible for crunching numbers and preparing taxes – they can provide invaluable advice to help your business reach new heights. Selecting the wrong accountant can be an extremely costly mistake that leaves you frustrated and in the dark about your company’s financial health. 

Many business owners end up with accountants that charge high fees but provide poor customer service, deliver financial reports late, or lack the skills and experience needed for their particular industry. This prevents owners from having the timely, actionable financial insights they need to make strategic decisions and investments for growth. 

In this comprehensive guide, we’ll walk through a 10-step process to ensure you find the ideal accountant for your business needs and build a relationship that will provide value for years to come. Follow these steps carefully, and you’ll avoid the common pitfalls and stresses that come with having the wrong financial partner. Let’s get started!

Steps to Choosing the Right Accountant

1. Understand Your Business Needs

The first step is taking a close look at your business to determine what you really need from an accountant. Consider factors like:

– Your industry – An accountant experienced with your specific type of business is crucial. For example, a restaurant has very different needs than a software startup.

– Business structure – Is your company a sole proprietorship, partnership, corporation, nonprofit, etc.? Each of these has unique accounting considerations.

– Business size – Larger businesses generally have more complex needs. But small businesses often cannot afford a huge firm with steep hourly rates.

– Growth goals – If rapid growth is planned, ensure they can scale their accounting services your business.

– Reporting needs – Do you want weekly, monthly, quarterly reports? Specialized reports like cash flow statements?

– Budget – What can you afford to spend? Get quotes from several providers.

Taking the time to analyze and document your needs and expectations will make your search focused and effective. Share this documentation with prospects so they understand the scope of work.

2. Ask Business Contacts for Referrals

Your business colleagues likely have experience working with accountants. Reach out to your network, including:

– Fellow business owners in your industry – They will know which accountants understand your specific needs.

– Lawyers and bankers – These professionals often have long-standing relationships with accountants and insights into their reputations.

– Trade associations – Most industries have trade associations that recommend preferred accountants.

– Online business forums – You can post on sites like Reddit and Quora to get accountant referrals from the business community.

Ask contacts detailed questions when getting referrals:

– How long have they worked with the accountant?

– What challenges/needs did the accountant help solve?

– Were they responsive and meet deadlines?

– Did services stay within budget?

– What is the accountant’s communication style?

– What is their area of expertise or specialty?

This will generate a strong initial list of quality accountants to further vet and interview. Reach out to several so you can compare options.

3. Research Credentials and Specializations 

Now conduct preliminary research into referral prospects’ backgrounds, certifications, and specialties:

– Certifications – Most reputable accountants have credentials like Certified Public Accountant (CPA), Enrolled Agent (EA), or Certified Management Accountant (CMA). Verify certifications are up-to-date.

– Years in business – Look for providers that have served clients for 5+ years consistently. This demonstrates stability.

– Firm size – Bigger firms have more bandwidth, but smaller firms or sole practitioners provide more personalized attention. There are pros and cons to each.

– Specialist vs. generalist – If you have specific accounting needs related to your industry, a specialist may be appropriate. But generalists have broad expertise across accounting topics.

– Industry expertise – Make sure the accountant has extensive experience in your specific industry. They should have other clients from similar businesses.

– Services offered – Do taxes, bookkeeping, payroll, consulting, etc. align with your needs? Do they provide advisory services?

Use this research to narrow down your options to 3-5 candidates that seem best qualified on paper.

4. Interview Multiple Candidates

It’s critical to have in-depth discussions with several prospective accountants before committing to one. This allows you to truly vet them and compare based on your specific business needs. Key questions to ask:

– How long have you worked with businesses like mine in my industry? Can I speak to some of them?

– Which accounting software programs do you use? Are you familiar with any I currently use? 

– What is your approach to tasks like bookkeeping, payroll, taxes, budgeting, and reporting?

– How responsive are you to inquiries and requests? What does your communication style look like?

– How are your services priced? Do you charge hourly or have monthly retainers? 

– What add-on services do you provide, like advisory or consulting?

– How do you ensure accuracy in your work? What is your process?

– How many clients do you currently work with? How many of those are similar sized to my company? 

– For what length of time do you prefer to be contracted?  

– What will be our detailed scope of work and expectations for each other?

 Listen closely to their responses to determine if they have proper expertise in your niche and can clearly communicate insights in a way you understand. Take notes after each call to compare candidates.

5. Check References Thoroughly  

Speaking to an accountant provides helpful insights, but you need outside perspectives to vet them fully. Reach out to 1-2 references provided for each prospective accountant to ask additional probing questions, including:

– How long have you worked with this accountant? How frequently?

– What accounting and advisory services have they provided? Were you satisfied?

– How knowledgeable are they about your industry and business needs? 

– Did they deliver financial reports/taxes by the agreed deadlines?

– Did the accountant proactively offer advice to maximize growth and financial health?

– Were they responsive to calls and emails? How quickly?  

– Did the services come in within the quoted budget? Were there any surprise extra fees?

– On a scale of 1-10, how likely are you to recommend them to a colleague?

Gauge if responses are consistently positive across references. Any red flags should eliminate prospects from contention immediately.

6. Review Their Proposal

Once you’ve narrowed down the candidate pool to 2-3 promising options, ask each to provide a detailed proposal for your work. Compare these side-by-side to understand the full scope of services offered and fees charged. Key details to examine: 

– Comprehensive description of services included

– Hourly fees and/or monthly retainers 

– Contract length and early termination policy 

– Charges for add-on services like advisory, consulting, projections, etc.

– Guaranteed turnaround times for completing tasks

– Frequency of meetings and financial reporting 

– How quickly they respond to urgent requests

Look for consistency between verbal discussions and the formal proposal. Ensure the pricing aligns with the value being offered based on your business needs.

7. Trust Your Gut

Data and proposals provide extremely valuable insights. But at the end of the day, part of your decision should come down to simple comfort. Consider:

– How well do your personalities mesh? Is there good rapport and chemistry?

– Do you trust them to handle extremely sensitive financial information for your company?  

– Do they seem to truly understand and show enthusiasm for your business?

– Do they listen more than they speak? Are they solutions-oriented?

– Do they alleviate your worries instead of provoking new concerns?

This relationship is crucial, so your intuition matters. But don’t let charm outweigh lack of qualifications – verify skills first.

8. Start Small

Once you’ve selected the best accountant for your business needs, it’s wise to start small instead of signing a long-term contract right away. First, engage them for a defined one-off project such as:

– Preparing financial statements

– Filing a tax return 

– Conducting a payroll audit

– Creating a dynamic cash flow projection model  

This allows you to experience their workmanship firsthand before fully committing. If satisfied, you can then expand the relationship from there.

9. Define Service Expectations

Before cementing a long-term contract, carefully define expectations for reliable service. Get agreements about:

– Response time for emails and calls – within 24 hours? 48 hours?  

– Frequency of meetings – once a quarter? Monthly?

– Deadline to deliver monthly/quarterly reports – 10 days after close?

– Notice required before increasing fees – 30 days? 60 days?

– Which cyclical services they will provide – taxes, projections, payroll, etc.

– Software platforms they will keep updated and compatible

Clarify who is responsible for what to minimize surprises down the road. Get it documented so you can hold your accountant accountable later for consistent, high-quality service.

10. Start a Trial Run

Once expectations are defined, do a test drive by engaging your chosen accountant for 3-6 months. Give them real assignments like:

– Bookkeeping 

– Financial report generation

– Sales tax filing

– Payroll processing

– Tax planning for the quarter

Monitor to ensure they meet deadlines, stick to budget, communicate regularly, are easy to work with, and provide value beyond basic services. If satisfied after 3-6 months, sign a 1-year contract to officially cement the partnership. But if issues arise, switch providers before getting locked in long-term.  

Conclusion

Finding the right accountant for your business needs is well worth the effort. Having a true financial partner provides peace of mind and enables smart decisions that drive growth. Use this rigorous 10-step process to avoid settling for a mediocre option that hampers your success. And invest the time to establish crystal clear expectations upfront so the relationship flourishes. With the proper financial expertise in your corner, you can realize the full potential of your business.