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5 Tips on How to Choose a Small Business Accountant

5 Tips on How to Choose a Small Business Accountant

Small businesses need to weed through mediocrity and be on the lookout to find an accountant that will genuinely help their business move upward and forward to more scalable and profitable future.

The problem is that for decades, certified public accountants and bookkeepers have been in the compliance game, operating reactively and simply doing the bare minimum.

A great business accountant is going to provide leadership, guidance and help their clients achieve truly better outcomes in the future.

We want to equip you with 5 different things you should be looking for when choosing a certified public accountant for your small business, or even if you are trying to identify a good bookkeeper to help you in the future.

5 tips when choosing a business accountant or bookkeeper

1 - Look for  certified public accountant

We think that you should be looking for an actual certified public accountant that has gone through the rigorous process of licensing with the state accountancy board because generally, they're going to be more competent.

I, Trevor Haug, am a Certified Public Accountant in Minnesota.

Over the last decade, many amateur bookkeepers and tax return professionals have learned how to Market themselves using digital marketing like Facebook advertising, Google paid advertising, and even working on their own website so that people can find them.

While there are plenty of accountants and bookkeepers that are phenomenal and do not carry the title of certified public accountant, we've found that business owners suffer a bit when their bookkeeper or tax professional doesn't have the in-depth finance and Accounting competency to serve as a Chief Financial Officer for their small business.

Why choose a certified public accountant over a more traditional tax professional or bookkeeper?

Business owners are always trying to scale their business and become more profitable.

In order to scale their operations they're going to need pristine bookkeeping, but they're also going to need to manage their balance sheet and cash flow over time, so that when it is time to invest and place their cash flow towards things like real estate investments, serious machinery or equipment, or even just preparing for significant staff investments, they will need to tap into financial acumen that's not necessarily typical.

As a Minneapolis-based certified public accountant, we will serve as a proactive, outsourced accounting firm to help you achieve better outcomes such as reduced taxes, lean staff operations, dramatically improved financial positions and a balance sheet that you can scale a business on.

We suggest that you look for a Certified Public Accountant; but that's definitely not sufficient for a small business owner to get good advice and service from their accounting and tax professional.

2 - Look for a Proactive Guide vs. Reactive, Compliant Focus

The most important thing to look for when choosing a small business accountant is to find someone who wants to be a proactive guide, rather than simply doing the reactive compliance work.

What is reactive compliance work?

  • Monthly bookkeeping
  • Tax returns
  • Reconciliation
  • Bare minimum

You need to find somebody who will engage with your operations throughout the year and come to you with a vision for the future that will help your business thrive.

A proactive accountant is going to make sure your bookkeeping is done throughout the year, but they're also going to come to you with ideas about where you can save money, how you can reduce your taxes, and how your operations could benefit from various strategic changes.

You should look for an accountant with leadership and vision.

Most entrepreneurs and small businesses have a make up that's much different than the typical employee or citizen in the United States.

The skillset and behaviors required to start and grow a small business are often antithetical or at odds with the behaviors that it takes to formalize and scale a business over time.

If you're a business owner looking for a great business accountant, you've probably done some really great work when it comes to sales and production, and now your accountant is the primary perspective you will get that is more formalized and corporate.

Whatever you do, don't choose a milquetoast reactive accountant, look for an accountant eager to bring leadership and move your business toward a preferable future.

What does a proactive accounting guy do for a small business?

  • Help them reduce and mitigate their taxes
  • Help them streamline their operations
  • Ensure that their financials are pristine
  • Help them put a process and roadmap to achieve short-term and long-term goals
  • Implement standard operating procedures to help scale

At minimum, you should be looking for a business CPA or small business accountant that will ensure that you are doing everything possible to reduce your taxes, and at most, they should be a partner and virtual Chief Financial Officer.

3 - Look for Tax Reduction Planning

We provide aggressive, year-long, tax reduction planning for small businesses.

Businesses will stagnate and die if they do not aggressively work to mitigate their taxes.

How certain are you that you are not over paying in taxes?

Is your accountant coming to you throughout the year with ideas to invest and tactics to implement in order to mitigate your taxes?

Every business owner owes it to their operations to find ways to save on taxes. Why is tax reduction planning so important?

Our modern societies make it sounds selfish for businesses to try and keep as much of their prophets is possible, and to try to reduce the amount of tax they pay. Businesses will die if they do not work on reducing this bottom-line expenditure.

Taxes are bottom-line expenditures.

It's important to remember that taxes are a result of profits, and profits are only a small portion of the total financial flow of the business.

In order to create $100,000 in profit on a business with a 15% profit rate, they would have to have $666,000 in revenue in order to generate that profit.

Businesses will stagnate if they do not mitigate taxes.

Paying taxes is essentially like spinning your wheels when it comes to business, every dollar and tax that you have to pay, is something that could have gone to your employees in order to make them more satisfied, is money that could have been reinvested in the business and you wouldn't have to pay taxes on, or it's something that could have been invested in the market and earn a return.

Not only do taxes represent monumental revenues required to generate the bottom-line profit that's being taxed, but there is an opportunity cost as well.

You could invest those taxes into the market and it would generate returns for you, generally speaking.

The common narrative in society glosses over the thuggery involved with taxing businesses because they ignore how monumental a project it is to generate profits, let alone the opportunity cost associated with those taxes.

For a business and its ownership to thrive, they need to be looking for an accountant that will come to them with ideas to reduce their taxes.

4 - Look for Integrated Services

When choosing a business accountant, choose a one-stop-shop that integrates all the services necessary to your operation. If you don’t, you’ll lose out big time.

Tax reduction planning, bookkeeping, year end taxes and financial admin help should all be integrated for a small business.

Coordination Fatigue and Messing Around

Vendor reduction is a good thing.

When you have to coordinate multiple vendors, that requires time, effort and resource from your business.

If you have a separate bookkeeper and tax professional, you're going to find that neither of them have what it takes to provide deeply qualitative advice or services because there's no communication between the two.

We recommend that you choose an integrated, full service accountant because you'll end up getting a much better outcome and it will require significantly less energy and resource to manage.

We provide a single Outsourced Accounting Service, where we engage throughout the year to do all your bookkeeping and accounting, help you pay in your taxes throughout the year, provide aggressive tax reduction planning, and then make your year-end tax season an absolute breeze.

Bookkeeping without tax guidance is useless.

Bookkeeping serves as the foundation for great tax reduction planning and we've found that when you have a detached tax & bookkeeping solution, your business will suffer.

If you want an easier life and better outcomes, choose an integrated, full service business accountant.

Look for CFO Perspective to Scale & Manage the Balance Sheet

Businesses want to scale their operations, so that it doesn't require them to do everything.

Businesses cannot scale if they do not build standard operating procedures, processes and a financial map to actually achieve their goals.

You should look for an accountant that will serve as a Chief Financial Officer, to help you implement processes and financial accountability within your business so that your team is empowered to grow a more scalable and profitable operation.

The skills required to start and grow a business are often different than what it takes to scale your operation. A Chief Financial Officer is a position that most small businesses shy away from, until they reach significantly higher revenues.

Small businesses can get the benefits of having a Chief Financial Officer without having to hire an executive or giveaway equity within their business, simply by choosing an accountant that wants to add that type of value.

Look for an accountant that will also be your Chief Financial Officer.

You can get a CFO, without giving up business equity or paying executive wages. Your accountant can be your CFO.

Here at Passageway Financial Tax & Accounting, Trevor and Anna have both had the experience within very large corporations that enable them to provide executive level financial reports and guidance, so that you can truly make better decisions and hold your team accountable in a simple and effective manner.

From implementing job costing and reporting on the profitability of different employees and cruise, to investing in new machinery properly, a Chief Financial Officer for small business will add a ton of value without costing a great deal.

Choose a business accountant that’s a Chief Financial Officer.

5 - Look for a Focus on Helpfulness in Operations

A great accounting team will help you focus on production, while helping you run a lean business and avoid hiring staff.

Our accounting services are a replacement for staff. Rather than hire administrative staff, you should simply look for an integrated Accounting Service that will help you with all the detail work required to keep great finances.

You need to build a team, but every staff person not focused on production or sales is a risk.

Administrative staff and financial staff create overhead. Small businesses should work to avoid adding overhead.

Eventually, your business will need staff outside of sales and production, but that’s usually far off.

Your accounting team should help a great deal to let you focus.

Your business will thrive as you add complementary team members to the operation.

Great entrepreneurs focus on sales and production primarily and then slowly build non-production staff around them as needed.

Often times, a business owner needs to add administrative staff to help them with accounts payable, accounts receivable, and onboarding staff and financial operations so that they can focus.

When you're choosing a small business accountant, you really owe it to yourself to find a team that will be a complimentary set of talents and strengths to your sales and production staff.

At minimum, a great business accountant will empower you to focus on what's most important and generate momentum for your business by taking away all the tasks that stagnate a business or make momentum harder to build.

Conclusion

Don't settle for a typical accountant. Make sure that you find a business accountant that will provide integrated services, work aggressively to reduce your taxes, serve as a Chief Financial Officer, and help your team focus by handling all the messing around that's required within a business to keep great financials and operations.

We would love an opportunity to connect with you and see if we are a good fit for your operations so book a consultation and we'll take a look at your tax return and find out if there's any opportunity to reduce taxes and improve your operations. We also have a great resource if you're looking for an accountant in the MSP/Twin Cities area; check out our list of the best of the best here.

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