It refers to the recording, reporting and analysis of financial data for economic entities such as businesses but also including economic entities such as states and countries. Accounting practitioners are generally referred to as accountants but the discipline of accounting has a number of specialized fields.
A small size business is probably most interested in a tax accountant considering that the major factor of concern is in relation to the payment of taxes and meeting other government compliance requirements.
Having said that, an accountant with management accounting expertise is also of benefit to small businesses that often get into difficulties because they do not understand the numbers. Management accounting essentially deals with the analysis of the financial data for use by internal business management.
Financial accounting deals with the record keeping processes and reporting of a company’s financial information. This is an area where small business owners can make savings if they have the right knowledge and tools to enable them to undertake the bulk of the bookkeeping processes.
The other area of accounting is called auditing. In this role, the accountant, or auditor as they are commonly known, review the recording of data as well as the financial processes to ensure, to the best of their ability, that the financial statements are likely to be accurate. This is more likely to be done for larger businesses.
Here is a video on 5 tips to choose an accountant
So whether you are involved with a small or large business, what are the factors you should consider when hiring the services of an accountant? Here are some things to consider:
Professional Association Accreditation
It is important to hire an accountant who is fully qualified and a member of a professional organization. The professional accounting organizations ensure that their members keep up to date with professional development and, to the extent that they can, abide by their rules and ethics. While this does not guarantee that your accountant will be competent, it is much more likely than hiring somebody who is not a member of such an organization.
Relevant Small Business Accounting Experience
It is no point hiring an auditor if you need a tax accountant. Even then you want a tax accountant who has experience that is relevant to you. A small business needs an accountant who has experience in all the disciplines – tax, management, financial and even auditing. So ensure that the accountant you hire has considerable experience not only in accounting, but experience with your type of entity.
Seek References from Existing Clients
A good accountant will have clients that will give them a reference. Ask for references and call them to determine what they think about the person or firm. Do a Google search and see what other references there might be on the internet as well.
Accounting is a critical element of a business and it is important to have an accountant who is experienced and with whom you have a good rapport. As you grow they will become an important partner in your business.