When choosing from the array of accountants (or re-evaluating your current one) keep in mind that an accounting firm should not simply be part of your overhead, says Jack Kreischer, founder of Horsham, PA-based accounting firm, Kreischer Miller. “Your accounting firm should be an asset to your business...and certainly not a liability,” he says.
Smart Business spoke with Kreischer about how to select an accounting firm that will not only meet your needs and preferences, but will add value to your bottom line.
How can an accounting firm can be overhead to a business?
An accounting firm that just does a tax return or financial statement without providing perspective to the business owner about the results can be considered overhead; that is, it is not adding value to the operation of that business.
When does an accounting firm cross the line from overhead to liability?
Some accounting firms — although far and few between — will actually be red-flagged by the IRS as likely to push the envelope too far. So a tax return prepared by that firm has a high likelihood of being audited.
Another example would be if a firm sends a product late, such as financial statements, so it is stale and of little use to its client. Another less-obvious liability results when a firm observes actions a client could take to improve profitability but fails to communicate them, thereby foregoing an opportunity for profit improvement. Or, even worse, if the firm never notices anything at all.
How can an accounting firm be an asset to a business?
An accounting firm is an asset if it watches out for the protection of its client’s assets and for ways to improve the profitability of its business — and communicates its observations or suggestions. For example, an accountant can notice things that may not be obvious to the business owner, such as lack of a fire suppression system in the room housing a client’s network computers and data storage. This potential for disaster should be brought to a business owner’s attention immediately.
Another example is when an accountant observes...that 80 percent of a client’s profits are derived from 20 percent of its customers, but that customers generating 20 percent of the profit are consuming most of the client’s time and effort. A good accounting firm will alert you to potential opportunities for improving your profit and be willing to guide you through changes to capitalize on them.
How can a business owner select an accounting firm that will be an asset?
Talk to people in the business community and ask for recommendations. Make sure that the firm is respected in the financial community. Remember that years in business may have nothing to do with reputation — a very young firm may be highly respected.
Also talk to clients of the firm you are considering, particularly those who are in businesses like yours. Talk to lenders as well as other accountants. When you talk to other accountants they may be quick to point out weaknesses that may not be apparent to you — but listen carefully. Really good firms have the respect of their fellow practitioners.
What are the top qualities business owners should look for in an accounting firm?
When selecting a firm ask yourself the following questions:
- Does this accounting firm feel you are important to them? Are they on your side?
- Do the owners of the accounting firm devote sufficient time to your company and your needs?
- Is the accounting firm well-managed, and does its degree of business success match yours?
- Do you have good chemistry and similar corporate cultures?
- Will the services be provided on a timely basis so that tax returns and financial services will not be late?
- Will this firm be respected and liked by your employees?
- Will you get returned calls from this firm by the end of the same day?
- Is the accounting firm well-respected by its colleagues and the financial community?