In the early days of a small business, it is normal for a company’s initial members to play several different roles. For instance, the business owner is often saddled with maintaining the books, amongst many other critical tasks.

While this juggling act may be manageable early on, the bigger you grow, the more bookkeeping evolves into a full-time job. Not only is there more work to do but there are also increased regulations and rules that a company must abide by.

As a result, hiring a professional accountant—either on a full-time or outsourced basis—represents an important financial milestone for every business. But, it is not a role that should be handed out frivolously.

With so much on the line, are you wondering how to find a trustworthy accountant? This guide aims to teach you how to screen the perfect candidate.

What to Look For in a Trustworthy Accountant

Business owners, be on your guard!

Just like with any other industry, the field of accounting has its fair share of hucksters and fraudsters. According to the New York Times: “Each year, the I.R.S. compiles a “Dirty Dozen” list of tax scams. Although the scams are wide-ranging, many of them include actions taken by shady tax preparers, such as promising inflated refunds, falsely claiming deductions and credits, or encouraging clients to avoid their tax obligations.”

To that end, many states have rather lax standards for becoming a professional tax preparer.

In some cases, the barrier to entry is low. So, you must be careful as you search for and select an experienced and credentialed tax professional. To discover an accountant that is a seamless fit with your organization, follow these steps:

#1 Ask for Their Preparer Tax Identification Number (PTIN)

Anyone who prepares or helps with federal tax returns in exchange for money is legally required by the IRS to have a PTIN. You can search the IRS directory—which includes CPAs, attorneys, and enrolled agencies—for practicing professionals who have up-to-date credentials.

The system will also let you know if your accountant has completed the Annual Filing Season Program, which is an ongoing educational program that reviews federal tax laws and ethics.

Also, this PTIN number must be included on tax returns filed on your behalf. If you do not see one on the finished documents, that calls the accountant’s credibility into concern.

#2 Check Online Directories

A PTIN is the bare minimum credentials an accountant should have. Ideally, you want an accountant to be a certified public accountant (CPA) or enrolled agent. And there are other credential programs that further add to an accountant’s dependability. For instance, directories may list that an accountant completed the Accredited Business Accountant course—a program that requires accountants to go through rigorous classes, studies, and exams.

By hiring someone who is credentialed, you know that they are familiar with historic and updated tax laws and serious about their profession.

#3 Ask About their Memberships

Memberships are another form of certifying an accountant’s trustworthiness. There are several accredited organizations, such as the National Association of Tax Professionals or the American Institute of Certified Public Accountants. Typically, to join these groups, an accountant must abide by an ethics code and conduct requirements, and complete certification programs.

#4 Be Wary About Overpromising and Under Delivering

Accountants may be financial wizards, but be cautious when you conduct interviews. When an individual makes grand promises about big refunds or deductions without even looking at your financials, that is a red flag.

Be on your guard and ask them to show their work. True professionals will demonstrate their proficiency and expertise without boasting.

#5 Ask For Referrals

How have others enjoyed their work relationship with the accountant or accounting firm?

Referrals—especially from friends or business contacts—are an incredibly helpful screening tool. Conduct an online search to see whether others have had a positive experience. You can read review sites and client referrals on their website. Also check to see if they are on social media apps like LinkedIn, Twitter, Facebook, and YouTube.

#6 Interview

After you have conducted your due diligence, you should be able to narrow down your list of potential accountants. Make appointments and begin interviewing them.

Questions to consider asking include but are not limited to:

• Are you a CPA?
• Can you legally practice in my state?
• Where did you receive your license from? And when?
• Who are your clients? What is the normal size of the business?
• Who are clients in a similar position to myself?
• Where did you undergo schooling and training?
• What do you specialize in?
• What are your fees?

Whatever your business’ specific accounting needs, be sure to bring those up as well. You would hate to hire someone who checks all of the other major boxes but lacks the expertise to handle something that is integral to the company.

Know When to Search for a Business Accountant

There is no universal time when companies hire accountants. Some hire these professionals the moment their doors open. Others might wait years before hiring.

So, how do you know when the time has come to hire an accountant? The following are some factors that might impact your decision:

• You are starting up and do not know anything about bookkeeping or taxes – If you lack the financial know-how to handle your bookkeeping and taxes, it may be smart to hire an accountant immediately. An expert can help you avoid making critical business mistakes that could cost you or land you in hot water with the IRS. According to government statistics, approximately 58% of all business taxes in 2019 were handled by an accountant.

• You want to select the company’s legal structure – Do you know the difference between an LLC and a sole proprietorship? Is a C corp more advantageous than an S corp? Deciding on your legal structure is a critical business decision since it can impact your company’s liability and tax payments. The right accountant can help you select the structure that suits you best.

• Your business is growing fast – As a business owner, you have a limited amount of time. So, even if you can handle the books, it may be an ineffectual use of your vital business hours. By hiring an accountant, you help alleviate pressure on everyone in the business (including yourself) by specializing. You can create internal efficiencies by allowing everyone to focus on what they do best.

• The IRS has come knocking – In the unlikely event that your business is being audited, hiring an accountant can save you time, money, and a world of worry throughout the auditing process. So, if you do not have an accountant before an audit, the second-best time to hire one is immediately after you have been notified.

CFO Hub—Filling Your Accounting Needs

Today, you can’t be too careful with your business, especially when it comes to protecting the company coffers.

So, where can you find a trustworthy accountant?

You already have. Welcome to CFO Hub.

We’re the better, more efficient and cost-effective way to hire a single CPA or an entire team of accounting professionals. At CFO Hub, every one of our accounting experts is licensed, credentialed, and boasts years of practical experience crunching numbers and filing taxes.
Want to find out more? Reach out today to see what a partnership with CFO Hub can look like.