Finding a good accountant can be a difficult job – so much so, that it has become the subject of many jokes in the world of small business owners. Here are a few tips on how to find the right accountant for your company.
Question: What is the definition of an accountant?
Answer: Someone who solves a problem you didn’t know existed in a way you don’t understand.
OK, this may not be entirely fair. But as with all jokes, it does hold a piece of truth. Most small companies choose an accountant or an accounting firm only when the financial challenges have become far too big for them to cope without expert help. Very often there are also the following circumstances:
- You want to improve the financial health of your business.
- You work with your own accounting software, but it does not provide you the data in a user-friendly format.
- You have difficulties understanding the difference between Cash flow and Statement of operations.
- You cannot switch from single-entry bookkeeping (the simplest example of income and expenditure accounting) to double-entry bookkeeping, which is characterised by continuous posting.
- You cannot submit the necessary statements to the banks in the required format.
- Your financial statements are incorrect or incomplete? And you have difficulties getting financing or during tax audits or inspections.
These are all valid reasons for you to search for a good accountant. It all depends on the size of your company. If you are a small business owner and you are wasting your time with an accounting software instead of focusing on your business, this is a good signal that it’s time for you to find an expert. Here is how to decide if you need an accounting firm or an internal accountant, how to determine what qualifications you should be looking for and how to choose the best accountant for your business.
Accounting for start-ups
Choosing the right accountant: hiring an accounting firm or internal accountant.
You are probably one of those numerous entrepreneurs, who start their own business and, in the beginning, also take up the role of an accountant – preparing all the reports and statements themselves, on top of all other business tasks. In the beginning you use Word, Excel and the software provided by the National Revenue Agency and you manage somehow. But there comes a moment when the company grows and it makes more sense to transfer the responsibility for taxes, insurances and the dozens of reports and statements to the experts. The right accountant can help the business not only with tax statements, but also in the long-term tax and business planning. The moment you make the decision to find an accountant is very important – you already believe that if you have an accountant, the financial future of your business will be more successful; you hope that they will know your needs well and will have a lot of experience. Before you start looking for the best accountant, you have to determine whether you need an accounting firm or an internal employee.
On the market for an accountant
Choosing the right accountant: When is the right time?
The document flow of many small companies is not that big and does not require hiring a full-time accountant (or even a part-time one). On the other hand, the financial state of some businesses is such that they could benefit from a more regular revision and processing of accounts instead of waiting until the last moment at the end of the year.
Hiring an external accountant or accounting firm on a consultancy basis is a good first step for a growing business. External firms sometimes can cost less than the salary and benefits of a full-time employee, while at the same time the resources you save can be used for consultations with a tax lawyer or a certified accountant, usually available at accounting firms.
An accounting firm
Accounting firms usually perform the following accounting functions:
- Preparation of tax returns;
- Preparation of financial statements;
- Analysing and/or solving tax and accounting issues;
- Payroll and tasks related to employment;
- Representation before the institutions.
Each company is different and the owner might want to expand the scope of activities and have additional requirements towards the accountant related to everyday business (e.g. invoicing, keeping cash books, records of attendance, accounting of working hours), but this is usually a task for the internal bookkeeper – it is not cost-effective to hire an accounting firm for that.
An accounting firm also has other clients, besides you, so they won’t be able to be at your disposal at all times. Most accounting firms offer a service package at a fixed price, but prices can vary for different accounting tasks, depending on the level of complexity. Bear in mind that a good tax expert can save the company more money than the costs for his remuneration. The total annual cost may seem large, but you will have a professionally kept finance documentation and reliable tax protection.
When the business is continuously growing and the transactions become more complex, it is time to consider hiring a full-time or part-time internal accountant. The internal accountant’s salary depends on the size of the business. Very often business owners decide it is more cost-effective for them to hire an internal accountant, who would be available on-site.
Consult your colleagues and business partners regarding the required level of proficiency and the remuneration of the internal accountant. Recruitment companies can also advise you. Of course, you can also tie remuneration to performance.
Choosing the right accountant: Key competencies
After you have decided whether you want to hire an internal or external accountant (accounting firm), it is important to decide what qualification does your future accountant need to have, in order to start searching.
Some good indicators are:
1) An MA degree in Accounting, specialist school in commerce and banking or mathematics would be an advantage.
2) Having the minimum work experience, which together with the qualifications allow them to prepare the company’s financial statements.
Under article 35 of the Accountancy Act, financial statements can be drawn up by a person (natural or legal) who meets the legal requirements for minimum professional experience and minimum degree of completed education. The term “completed education” is important. A document for a completed degree is required. The requirements for professional experience and educational degree are related, i.e. they are interdependent. So this is how we are going to review them here.
а) higher economic degree and professional experience in the field of accounting, external or internal audit and financial inspection, tax audits or as a professor of accounting and control, respectively:
- for MA – 2 years;
- for BA – 3 years;
- for a “specialist” degree – 4 years.
This combination is not arbitrary. Higher educational level requires shorter professional experience.
б) other higher education economic degree and professional experience in the field of accounting, external or internal audit and financial inspection, tax audits or as a professor of accounting and control – five years; c) secondary economic education – eight years professional experience as an accountant.
As it is evident, the preparer of the annual financial statement can only be a person with economic education, but not necessarily higher economic education and not necessarily in accounting and control. Other types of economic education are also accepted, including secondary economic education, only combined with longer professional experience. If the candidate has a secondary economic education, the professional experience must be as an accountant.
3) Having solid experience in tax and social security law
4) Knowledge of at least one foreign language. Command of English is a huge benefit if your company is international or has transactions with foreign partners or if you have foreign associates.
You, as the company owner, should know what kind of accountant or an accounting firm is right for you. You may feel more comfortable with a smaller accounting firm which would dedicate more time and attention to your cases. You should know that with accounting firms there is usually a dedicated person responsible for your company – find out who they are and be sure to meet them. Your decision about the exact qualifications to look for in an accountant also depends on the exact accounting services you need – maybe you are looking for someone to prepare your Annual tax return and Annual financial statement at the end of the year. But if you want ongoing tax forecasting, advice on financial planning or personnel management and business plan preparation, you might need to look for someone with much higher qualifications and experience.
Ask your friends, colleagues, partners which accounting firm they use. Ask people whose business is similar to yours for names and references.
In many respects, the accountant is a reliable business consultant, so take the time and look for the right one for you.