When to hire an accountant and how to choose the right one for your business

Hiring an accountant can feel like a major step for your business. How do you know when your business is ready? Will they cost you an arm and a leg?

I wanted to share the answers to common questions when it comes to hiring an accountant.

When do I need to hire an accountant?

In an ideal world I’d recommend that you hire an accountant before you start your business as you’ll be able to get advice on the right legal structure, your budget, how much to invest into the business, and any tax impacts. In reality, only about 2% of my clients will do this.

The most common reasons for hiring an accountant are:

·        When you’re not comfortable doing your own tax return.

·        When you’re confused about what’s tax deductible.

·        When you’re about to register for GST.

·        When you’ve realised you messed up last year's tax return and need help sorting it out.

·        When you have more elements to your tax return than just your business e.g. rental properties and investments.

But, did you know that some accountants (myself included!) do more than simply prepare tax and BAS returns? You might also want to hire an accountant when:

·        You want help to create an accurate budget for your business.

·        You want business strategy with a focus on the numbers, e.g. clarifying your goals and mapping out the steps to reach those goals.

·        You want a trusted mentor, who has worked with many businesses, to support your decision making and risk management.

·        You want support to regularly review your progress towards your goals and understand your numbers, e.g. profit & loss statements and balance sheets.

How do I find the right accountant?

Not knowing where to look for an accountant, or being nervous about how much it will cost, can result in this hiring decision being delayed for longer than it should be. That’s why I wanted to give you three resources to get you started.

Xero has a list of registered partners that includes accountants. If you use Xero, then this can be a good place to start.

By ensuring that your potential accountant is either a Chartered Accountant (CA) or a Certified Practicing Accountant (CPA) you’ll have the confidence that they have a certain level of skill. Accountants aren’t required to join either of these associations, but it does mean they're required to complete on-going professional development, so you know their skills are up to date.

How do I choose the right accountant for my business?

First, you need to decide what you want an accountant for. Is it simply to complete your tax and BAS returns, or are you looking for something more? Having that clarify will make the hiring decision easier for you.

Next, you need to interview them as you want to make sure they’re the right person for your business. I recommend you cover the following areas when interviewing potential hires:

1.      Are they registered with the ATO? To be registered they need to do professional development each year, so you’ll know they’re on top of any tax changes.

2.      Can they explain complex terms in a way you understand?

3.      Do they show an interest in your business? Did they have questions for you?

4.      Are they familiar with your industry? This isn’t always necessary; it may be useful if your industry has specific grants etc that are unique to it.

5.      If you’re looking for more than returns being completed, ask them to explain how they would help your business grow and support your business.

6.      Do you feel comfortable with them? They’ll be asking personal questions of you in the future, e.g. are you married? How many children do you have? So, you need to hire the kind of person you’ll be happy sharing that information with.

Get quotes from 2 to 3 accountants so that you can compare the fees that different people charge. Standard fees aren't the norm because each business is different in terms of the number of transactions they have, and everyone's circumstances are different, e.g. you may have rental properties but someone else may not.

Always ask for referees before making a final decision. By speaking to their current clients, you’ll get a good sense of whether the person is a good fit for your business.

What kind of contract do I have with my accountant?

Accountants are required to send you a contract that details who will do what and by when. The contract will also include confidentiality terms, how much you’ll pay and when, and how any disputes will be resolved.

Do read the contract to make sure it reflects what was agreed. It’s not necessary to have a lawyer review the contract as the terms are standarised throughout the accounting profession.

Make sure that your bookkeeping program subscription stays under your control - don't transfer ownership to your accountant. If there is a dispute you don’t want them in control of your program as they could lock you out.

The next steps in your working relationship will be decided by mutual agreement.

Do I need a bookkeeper and an accountant?

I would recommend having both on your team as they perform different roles. This blog post - How to know when your business needs a bookkeeper and how to choose the right one – goes into more detail about what a bookkeeper does.

Hiring an accountant can feel like a big step. Yet, they’re ordinary people; employees and business owners, just like you. Having a trusted advisor by your side can make a positive difference to your business and make it easier for you to take responsibility for your numbers.

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