Woman working at an office by Andrea Piacquadio
The growth of your business depends heavily on how well it manages its accounting. Many companies, especially smaller ones, find this difficult or time consuming.
Some businesses have in-house accounting departments, but many outsource their accounting work to firms in order to lower costs and save time. In the latter case, choosing the right accounting firm is crucial, as not all accounting firms can suit your business.
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To choose the right accounting firm, it is important to evaluate both their capabilities and their limitations.
Accounting companies vary greatly according to:
Verticals they serve
The scale of companies they work with
The level of service they provide
Hence, each firm will be suited to certain businesses and sectors. Understanding these differences can help you choose the right firm without a long process of trial and error.
Since there are so many accounting companies you can reach out to and it can be difficult to sift through them all, we’ve narrowed down some of the key criteria for choosing the right one.
What are the Responsibilities of an Accounting Company?
Depending on your business needs, an accounting company can provide an array of services that an internal accountant may not have the skills (or bandwidth) for. Some essential responsibilities include:
Tax planning & preparation
Payroll & accurate bookkeeping
Business valuation & development
Let’s dig a little deeper into these services.
Tax Planning & Preparation
Helping to efficiently file taxes
Providing in-depth understanding of tax breaks
Efficient accounting firms will make taxes as beneficial as possible to your company.
Payroll & Bookkeeping
Creating profit and loss statements
Helping to intelligently allocate funds
Recording your business’ withdrawals and deposits
Managing invoices, financial statements, balancing books, and more
Ensuring your company has enough money to pay staff and cover other major expenses, and managing cash flows
Business Valuation & Development
Helping to create financial goals and scale the company
Assessing how past financial processes can affect future operations (especially useful to companies looking for investors)
Types of Accounting Companies
It is important to know the types of accounting firms so you can narrow down your search. You can also have multiple firms that specialize in certain areas.
Bookkeeping Service Firms
These firms cater to businesses of all sizes and manage daily operational finances, such as credit card reconciliation, payroll, and preparation of financial statements.
Tax Accounting Firms
Tax accounting firms provide tax planning and preparation services. They help you complete tax and income reporting on time and make sure you are informed of any relevant tax breaks prior to filing.
Public Accounting Firms
These firms manage operational financial tasks and make sure that your company is growing. They do this by reviewing the company’s financial statements, recommending ways to increase profits and reduce costs, and complying with all legal requirements.
Forensic Accounting Firms
Forensic accounting firms, as you might have guessed, detect illegal practices from within a company. They do this by analyzing expenditures and expenses and determining whether relevant laws are met.
If you suspect malpractice in your business or wish to prevent fraud, a forensic accounting firm might be the one you want to turn to.
Key Criteria for Choosing the Right Accounting Firm
It is crucial to find an accounting company that has the correct combination of features that will suit your business needs. These features can include experience with similar businesses, overall business experience, audit facilities, goal settings, cost, and more.
Whichever firm you decide, ensure that they are transparent about their operations and their past work. Furthermore, ask yourself what the relationship will look like. Will you have a dedicated team of people or an account manager?
With that, let’s dive in.
1. Tax Law Changes
The accounting company should be familiar with any changes to tax law. Staying on top of these changes is among the most valuable – and safest – things that certified public accountants (CPAs) can offer any business.
2. Industry Knowledge
The correct financial accounting firm will thoroughly understand your company’s operations, whether you develop mobile applications or manufacture cars. The firm’s familiarity with industry-specific knowledge and data can provide you with critical insights to help grow your business.
Generally, accountants will serve a select few areas for the best results. If you are a farmer, for example, a tax accountant may not be as helpful as an accountant with experience in handling agricultural clients.
3. Clear Communication
Good CPAs will take the time and effort to understand your business and its goals. They should provide consistent and clear communication every step of the way, as well as ask relevant questions, so that they can understand how your company defines success and deliver the service you require.
Furthermore, attempt to identify an accounting company that offers availability even on an urgent basis. This is one sign of a reputable service.
4. Strong Reputation
If possible, choose a firm with a strong reputation and a proven track record of providing high-quality results. The accounting profession is built on serving the public interest and a commitment to professionalism. You should expect the same level of integrity and trust from your accounting firm as you do from your partners, employees and vendors.
5. Experience with Companies of Different Sizes
It is recommended to choose an accounting firm that has experience with companies the same size as yours. A firm that only deals with Fortune 500 companies will not be suited to, say, a startup in its early stages.
6. Accounting Fees
Accounting fees will vary by company. Some may charge by the minute, while others will have a set rate for certain tasks. Look out for any hidden charges – make sure to ask about them.
7. Current Accounting Software
Many firms still use outdated accounting software. This lowers the price, but can compromise the quality of service. If you have the funds, we recommend hiring a firm that is familiar with the most advanced software available on the market.
8. CPA Designation
Do the firm’s accountants all have a CPA designation? Note that not all accountants are CPAs. CPAs go through several years of rigorous education and take an exam to earn this certification. Hiring a CPA offers you the confidence that they have the skills to deal with your business needs.
9. International Accounting Experience
If your company is entering international markets, it is essential to work with accountants who have expertise in this area. Some of the experience they have may include:
Preparing balance sheet reconciliations for international entities
Reconciling intercompany balances
Reconciling monthly foreign exchange transactions
Assisting in the close process of foreign subsidiaries
If you are a rapidly growing business, your needs might change very quickly. This may include financial hurdles. Hence, it is best to hire a firm that can easily adapt to changing needs.
We hope this article has given you some insight into choosing the right accounting service for your company.
If you require financial consulting services or reconciliation services, NextGen is available. Our management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC. NextGen was founded with your challenges specifically in mind and are dedicated to providing a seamless experience.
Whether you require bank reconciliation, credit card reconciliation, or consulting, we are determined to give you a high level of service. Contact us now for a free quote.