The accountant.
Company leaders and entrepreneurs know that a good accountant is crucial for maintaining a clear picture of a business’ financial health and staying on top of all of the tax laws. Accountants are valued partners.
But picking the right accounting firm for your own company or startup can be confusing and even a little intimidating, especially if the very thought of crunching numbers makes you want to run away.
“People often think accountants or Certified Public Accountants are nothing more than number crunchers, and that’s not true. They’re trusted business advisers and the most important part of the client experience is that relationship, that competence, that trust between the two,” says Jeannine Birmingham, CPA and president and CEO of the Alabama Society of Certified Public Accountants, which represents 6,000 CPAs across the state.
But she and other experts say the first step to finding a great accountant is having a clear understanding of which accounting services your business actually needs and the type of professional best qualified to provide them.
First, it is important to know that accounting professionals have varying levels of education and expertise and, thus, can differ on the kinds of services they can offer clients. Bookkeepers, for example, generally have associate’s degrees.
“A bookkeeper can provide basic day-to-day functions at a lower cost, but won’t possess the formal accounting education of a CPA,” the U.S. Small Business Administration says.
Specifically, bookkeepers’ duties often include managing invoices and payroll, recording transactions and producing balance sheets and income statements.
Accountants are professionals with bachelor’s degrees in accounting. But to be certified as a CPA in Alabama, candidates must complete 150 semester hours of study, including upper level courses, and pass all four sections of the rigorous Uniform CPA Examination.
After passing the exam, to be licensed in Alabama, CPAs must work full time at least a year in a public accounting firm as a staff accountant or two years under full‐time supervision in a workplace that offers “sufficient quality and depth in the accounting field in industry, business, government or college teaching or a combination of the two,” according to the Alabama Board of Public Accountancy.
CPAs, therefore, can provide clients with a host of services that are more tailored to a client’s specific business needs, the SBA says.
“A business doesn’t necessarily have to have a CPA to do their work unless they need financial statements that are compiled, reviewed or audited,” Birmingham says.
“So, if a business is growing, they’re merging, or whatever their story is, and they, for example, go to a financial institution to acquire a loan, the bank may require financial statements. If it’s at the level of an audit, compilation or review, most businesses will want a CPA to prepare those types of financial statements,” Birmingham says.
Once a business owner has assessed the level of accounting services they need, it is a good idea to seek recommendations from associates they know in their industry, says CPA Gerard Kassouf, director of Kassouf & Co. PC, which is headquartered in Birmingham.
“Your lawyer is also a good option,” he says.
Kassouf, however, cautions people against relying too much on online reviews of accountants for information.
“I think online reviews are an option, but in the professional service area, online reviews are sometimes given by individuals who haven’t had the most positive experiences, and that doesn’t necessarily translate to the technical competency or abilities of the accounting firm,” he says.
People can also turn to the Alabama Society of Certified Public Accountants for advice. Birmingham says she always starts by asking callers questions about their businesses.
“Generally, we go through what they’re looking for as far as the sophistication of their work, and, depending on the size of the entity or even their geographic location, I might identify for them three to five firms or individual CPAs that they could talk to about doing their work,” Birmingham says.
With recommendations in hand, it is time to take a deep dive into the firms’ or CPAs’ background and query them about the specific services they offer clients, Kassouf and Birmingham say.
“Ask about their work history or professional background. Where did you go to school? Who have you worked for? These are important to me,” Kassouf says.
As a part of the background research, he says those in specialized industries may find it beneficial to ask if the accounting firm has experience working with clients in that particular industry. For example, someone operating a health care firm might check to see if the accountant or CPA has worked with other health care facilities and if they hold memberships in medical or health care industry associations.
“You look at someone’s technical expertise by asking if they have either a certification or a life experience within an industry that would be helpful to your situation,” he says.
A CPA with specialized knowledge will, for example, have a better understanding of how tax laws affect that industry, Kassouf says.
But, the majority of small, main street Alabama businesses can benefit from a CPA who is a generalist rather than a specialist, Birmingham says.
She says, however, that the hunt for a CPA firm should include querying them about the kinds of services they offer clients.
Kassouf adds, “The discussion should include specific review of the desired services, including consulting with your internal accounting staff or controller or whether they’re engaging the accounting firm to outsource the bookkeeping and financial statement preparation, and serving as an outsourced CFO.”
For example, a business may want an accounting firm to manage all of their accounting duties, including bookkeeping services, from paying bills and writing and dispersing checks to the preparation of income tax returns. The client, in the case of outsourced accounting, may approve each invoice, maintaining control over who and what gets paid, Kassouf says.
“Determine what services are available, what the process would be, and what the charges would be for that type of an arrangement,” he says.
“Also, any good relationship between a client and an accounting firm needs to include a discussion of fees. There needs to be an open and honest discussion of accounting fees that are going to be based upon the complexity of the work, the amount of work and the timing of the work,” Kassouf says.
But in the end, says Birmingham, business owners should pick the firm they feel they will have the most rapport with. Having a rapport and a trust that the firm will perform services in a competent and professional manner makes communicating with an accountant much easier, she says.
“Knowing that the numbers being shared with the CPA are accurate and that the CPA is preparing accurate documentation for the client, those are all very important pieces of that business relationship.”
Gail Allyn Short is a Birmingham-based freelance contributor to Business Alabama.
This article appears in the April 2023 issue of Business Alabama.
