Five ways small businesses can choose the right accounting firm
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Five ways small businesses can choose the right accounting firm

6 months ago · 4 min read · AICPA Insights Blog

In my years working with clients in the auto repair, auto body and real estate industries, I learned firsthand about the financial challenges entrepreneurs and small businesses face.

Serving as the managing partner at a small accounting firm in the Minneapolis area certainly helped. I could identify with their unique needs, questions and search for sound financial guidance. Running a CPA firm that focuses on specific industries is what makes a CPA so valuable to a small business and their ability to advise from practical experience.

Especially in this tax preparation season, the financial realities small businesses face are hitting home. Tax law changes and shifting conditions must be taken into account. Small businesses that went remote in 2021, for example, may need to consider for the first time the rules that govern a slew of home office deductions.

And if you’re a small tech start-up looking to increase capital to expand your business, a lender is going to want independent confirmation that your financials have been accurately reported. You’ll need the right firm with familiarity and experience to provide that review.

These all point to a question worth considering no matter the business need: How can small-to-medium-sized enterprises (SMEs) select the right accounting firm?

In short, the search process demands comprehensive research and your undivided attention. Details matter. But that doesn’t mean it needs to be an arduous affair. I’d like to suggest five essentials that will ease the search process.

1) Start soon after you form your business.

The best time to hire a CPA firm is before you’ve offered your first product or service. Yes, you need to think about it at the beginning of your journey to create a new organization.

The right CPA firm will help you get the best business framework in place even as you develop a relationship based on trust and one that is rooted in financial excellence.

Think: What’s going to happen to your business in two years? Five years? We see most entrepreneurial businesses going through that rumination process and sharing that with us. In doing so, they come to realize that they need a CPA firm’s expertise to grasp what that future might hold so that they don’t face roadblocks and hurdles later.

Suppose you’re stumped. In that case, you can join and get involved in industry-specific organizations to help you gather intelligence on a formal level — the builders association of any major metro area, for instance.

As you go, you’ll find people to talk to and learn which CPA firms have a reputation for being the best in that industry and provide great service.

2) Look for a regulatory expert.

No matter the industry, small businesses have regulatory and compliance concerns to address. Your CPA firm must have a deep knowledge of meeting these concerns to handle all your business activity correctly.

With many regulatory bodies governing how business is done, savvy CPA firms will have the expertise and knowledge to operate within those frameworks. This becomes especially crucial if your company operates regionally, as regulations change from state to state.

3) Find a firm that stays on top of tax law changes.

We only have to look back to 2018, when sweeping federal tax code changes took effect under the Tax Cuts and Jobs Act (TCJA). In 2022, digital services such as PayPal, Venmo and Zelle will, for the first time, report payments of more than $600 to the IRS.

Meanwhile, new revenue procedures and guidance are constantly issued; things change fast.

The right CPA practice takes a proactive approach to make sense of — and work with — the changes. Staying afloat with all this is one of the most valuable things CPAs can offer an organization.

Will your firm, at some point, require an audit? Not all small businesses fall into this category. But if the SME’s bank or investor requires an audit, your business should consider an audit firm with experience within your industry.

This is the first criteria to consider. Using an advisory CPA’s knowledge is the best resource for finding the right audit firm.

4) Leverage CPAs for their industry knowledge and ability to move your business forward.

The right firm will understand your enterprise on a deep level, whether you manufacture machine parts or employ new cloud software products. A CPA firm well versed in your industry allows you to benefit from the intimate knowledge they have — and will continue to glean from other clientele in your line of business.

Their familiarity analyzing industry-specific data can unlock the critical insights you need to create an actional plan to help your business thrive.

5) Get clear and responsive communication.

While accounting demands a laser focus on numbers and laws, communication and responsiveness provide the glue that holds everything together. CPAs will take the time to understand you, your business and your goals.

Every step along the way, they will provide consistent, clear communication and ask the appropriate questions so that they can learn and deliver the correct guidance. Your relationship with a firm’s CPAs is vital to your success, so choose a firm that fits your personality and recognizes how you define success, whether in strictly financial terms or going further by giving back to the community.

If I had to boil all this down to two concepts that can act as overarching guides for you, they’d be reputation and relationship. A CPA firm with a strong reputation in your industry points to a track record of doing business the right way, with high-quality results and satisfied clients to back up their performance claims.

Our profession is built on a foundation of serving the public interest, honoring the public trust and demonstrating a commitment to professionalism. When it comes to a relationship with a CPA firm, expect the same level of trust and integrity you would expect from your vendors, employees and community-level partners.

Ultimately, all business success is achieved not in isolation but among equally dedicated businesses that commit to a common good. The right CPA firm will want to serve that role with you as they bring their excellence and passion to the table.

That’s what I love about our profession. We get to help people achieve their dreams: to lead entrepreneurs to where they want to be and go on that journey with them. It’s the kind of success not only reflected on a balance sheet, but that also transcends it: the very intersection of passion, practice and purpose for small businesses and CPAs alike.

Carl Peterson, CPA, CGMA

Carl Peterson, CPA, is Vice President of Small Firms at the Association of International Certified Professional Accountants.

In this capacity, he meets with small CPA firms regularly to understand their issues and represent these firms from an advocacy and firm development perspective. Peterson serves as the voice of small firms within the AICPA on standard-setting, regulatory and small business issues. He is responsible for ensuring AICPA initiatives continue to meet the needs of small firms.

Carl is a licensed CPA, and previously served as a managing partner at Peterson, Peterson & Associates, PLC, in Minneapolis/St. Paul, where he built its service and client base.

Carl has a history volunteering within the profession, including having served as a member of AICPA Council and as a member of the AICPA’s Accounting and Review Services Committee. In addition, he has served the Minnesota Society of CPAs as Chairman of the Board of Directors, as well as Chairman of the Political Action and Legislative Affairs committees. In 2013, he was honored by the Society with their Distinguished Service Award.

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