We are often asked by business owners about what to look for when hiring an accountant or accounting firm. Our feeling is that there is no one-size-fits-all approach when selecting an accountant or accounting firm. However, understanding what to ask during the hiring process can help you evaluate their capabilities and identify potential blind spots. Here are some key factors to consider:
Assessing Capabilities and Identifying Weaknesses of Potential Accountants or Accounting Firms
Understand the Team’s Strengths and Weaknesses
- Inquire about the breadth of capabilities of the firm. During this process ask about specific ways they’ve delivered some of their capabilities to a firm similar to yours.
- Use what you discovered in this inquiry to identify potential weaknesses or gaps in services that you may need.
Seek Transparency in Expertise
- A good professional will openly acknowledge their limitations and recommend a more capable specialist when needed. Don’t hesitate to directly ask what they feel are their limitations and how they advise clients when situations arise that may need a certain type of expertise that they don’t possess.
- Just as in medicine, where you must advocate for yourself, the same applies in accounting. Be proactive in assessing your needs on an ongoing basis and evaluate whether your current or prospective accountant will fully meet your needs.
Mitigating Conflict of Interest
All service providers have a vested interest in keeping clients so it can be hard for someone admit they can’t do something. If you ask about their limitations in a general setting—before the need arises—it can lead to more honest conversations.
The Importance of Specialization
MPPL Financial has personally interviewed numerous CPAs and attorneys and encourages its business owner clients to build a network of professionals with specialized expertise. This proactive approach ensures that clients have the right expert for each specific need rather than relying on a generalist. MPPL maintains a curated list of specialists and shares it with clients as needed.
Many business owners prefer a single point of contact for all their financial and legal questions, as it feels simpler and more efficient. However, the complexities of accounting and finance make this unrealistic. Even if such a professional existed, their broad expertise would likely come at a premium, meaning clients might overpay for routine services. Specialists typically charge appropriately for their niche skills, while more basic tasks can be handled at a lower cost by other professionals.
For this reason, it often makes sense to work with a general accountant for compliance needs while maintaining relationships with larger firms for specialized planning and advice.
Understanding Cost vs. Value When Hiring Professional Service Providers
Many clients hesitate to invest in professional services, especially accounting, over relatively minor cost concerns. However, the benefits often outweigh the costs:
- You Get What You Pay For. Expertise and experience matter more than just an hourly rate. Less experienced professionals may take longer to research and complete a project, leading to higher overall costs.
- Avoiding Costly Mistakes. Errors due to lack of expertise can be expensive to fix. For example, our firm once had to bring in a specialist to correct a tax mistake for a firm’s sale due to an accountant’s oversight. Experience often surpasses education in professional services, but the ideal candidate has both.
Choosing the Right Firm Size for Your Needs
Different accounting firm sizes come with distinct advantages and drawbacks, making it beneficial to maintain relationships with more than one type:
- Small Firms often provide lower-cost services and tend to focus on compliance rather than strategic planning. However, they may have blind spots when dealing with complex tax or legal matters.
- Medium Firms offer a balance of generalists and specialists, providing both compliance services and some level of strategic planning.
- Large Firms grant access to a broad range of specialists and prioritize planning and advisory services over basic compliance.
By leveraging the strengths of different firm sizes, business owners can ensure they have the right expertise for both routine needs and complex financial strategies.
Leveraging Professional Recommendations To Find an Accountant for Your Business
Business owners typically work with only one CPA, limiting their ability to compare expertise. However, professionals such as attorneys, financial advisors, commercial lenders, and business consultants interact with multiple CPAs and can provide you with valuable insights regarding:
- Billing practices
- Service quality
- Industry expertise
- Overall experience
Final Thoughts
Your accounting needs will evolve as your business grows, so your choice of an accountant or firm should not be a “set it and forget it” decision. Regularly reassess whether your current provider meets your needs, and don’t hesitate to seek recommendations from trusted professionals in your network. The right accountant can be a valuable partner in your financial success.