This list of questions to ask a CPA will help you find an accountant or accounting service that can fully support your business. Your company has a unique combination of accounting and back-office needs—whether it’s bookkeeping, tax filing, CFO services, HR & Payroll support, and more — it’s important that you find a partner with the skills and resources required to help your business grow.
Key Takeaways
- It is essential to ensure a CPA is well-versed in tax laws and their experience aligns with your business’s tax requirements to optimize financial planning and tax efficiency.
- Make sure your CPA or accounting service is using technology—it will save you hours of time, reduce accounting headaches, and drive organizational efficiency.
- A CPA’s approach to tax season preparation and cash flow management strategies is critical for minimizing liabilities and ensuring the financial health of a business.
- Transparency in billing, tailored partnership alignment with business needs, and a CPA’s role in guiding business growth and structure optimization are key factors in a successful financial management relationship.
1. What Experience Do You Have With the Tax Laws and Regulations that Impact My Business?
Your business greatly benefits from a CPA’s expertise in tax laws. Understanding tax laws and regulations is not a ‘nice-to-have,’ but a ‘must-have’ attribute for tax preparers. An experienced accountant can leverage this expertise to provide tax efficiency and valuable insights for financial planning and business optimization.
Take a moment to ask your accountant about their experience with tax laws and regulations. Do they specialize in serving clients like small businesses and understand the unique accounting needs of your sector? Are they proactive in updating their skills and knowledge to keep abreast with the ever-changing tax laws? Make sure your CPA’s tax law expertise matches your business’s tax commitments.
2. How Will You Approach My Business's Tax Season Preparation?
Any business owner may find tax season to be a stressful time, due to the various financial and administrative responsibilities that come with it. However, with an experienced accountant by your side, the tax filing process can become more manageable. You need to comprehend your CPA’s strategy for your business’s tax preparation.
Strategic tax planning throughout the year can help minimize tax liabilities. This strategy may involve deferring or accelerating income and expenses based on anticipated changes in future tax rates and brackets. Also, your CPA should be well-versed in the intricacies of tax forms concerning employees and independent contractors.
3. Can You Provide Guidance on Optimizing My Business Structure for Tax Advantages?
Your business structure significantly influences your tax situation, including sales taxes. Choosing the right business structure—or switching from one to another—can provide tax advantages and efficiency, and positively impact your bottom-line.
Different business structures have varying tax implications. For instance, S Corporations allow shareholders to report income and losses on individual tax returns, avoiding double taxation, whereas C Corporations are taxed separately from their owners.
Working with a CPA to determine the best business structure for tax purposes is important. Be it an LLC, S Corporation, or C Corporation, the choice should align with your business goals and tax efficiency plans.
4. What Strategies Do You Recommend for Effective Cash Flow Management?
Cash flow management is the lifeline of any business. It’s about managing the money coming in versus the money going out. And a proficient accountant will help you come up with effective cash flow management strategies for your business.
One strategy is to regularly monitor cash flow by reviewing bank statements. This involves keeping an eye on monthly cash outgoings and incomes to spot mistakes and cash shortages promptly. Another strategy is to utilize a cash flow statement. This statement offers a comprehensive view of money movement and helps assess the company’s cash position on a monthly basis.
Moreover, building relationships with banks can secure lines of credit and preserve cash flow positivity. Renting equipment instead of purchasing can free up cash for operational flexibility. Additionally, efficient invoicing practices and the use of automated systems for regular billing can create a reliable cash flow.
5. How Will You Help Me Identify and Claim All Eligible Tax Deductions?
Tax deductions can significantly reduce your tax liability, leading to substantial tax savings. You should inquire with your accountant about their methods to help you pinpoint and claim all applicable tax deductions.
CPAs can assist in identifying a range of tax deductions and credits, including those for retirement contributions, health insurance premiums, and employee-related incentives.
6. What Measures Should We Take to Minimize Audit Risks?
Audits can be intimidating for any business owner. Minimizing audit risks is paramount for maintaining a healthy financial standing and avoiding potential penalties.
Understanding and adhering to tax regulations is key to mitigating audit risks and ensuring all financial practices are compliant. Additionally, maintaining updated and comprehensive financial records, including invoices and tax returns, is essential to avoid penalties and reputational damage.
Engaging a certified public accountant for their expertise in tax planning and guidance can be invaluable, especially during an audit, to manage the process effectively and negotiate on behalf of the company.
7. Could You Assist in Evaluating My Financial Records and Accounting Software?
Accurate financial records and efficient accounting software are cornerstones of sound financial management. A capable accounting firm can help evaluate your financial records and assess the efficiency of your accounting software.
Documenting expenses on the go and backing up digital receipts are key strategies recommended by CPAs for maintaining accurate financial records. Additionally, using accounting software such as QuickBooks can significantly enhance the accuracy and accessibility of financial records. CPAs can offer system implementation and training to clients, which is pivotal in selecting and utilizing accounting software that aligns with the company’s needs.
8. How Does Your Firm Ensure Continual Education and Staying Tech-Savvy?
In an ever-evolving financial landscape, staying up-to-date with the latest industry trends and technological advancements is crucial. You want to work with a CPA and financial services firm that knows how to leverage technology to your business's advantage. So it's important to ask how your CPA maintains ongoing learning. You'll also want to ask what technology they'll use to manage your finances.
Many accounting firms proactively offer CPAs a variety of educational opportunities for continuous learning, including lunch-and-learn training, in-person webinars, and self-study options. CPAs are also encouraged to engage with new technology tools, set Google alerts for relevant topics, follow podcasts, and attend annual conferences on industry and technology trends to ensure personal and professional growth.
9. What Additional Services Can You Offer as My Business Grows?
As your business grows, your financial needs will evolve. Understanding what supplementary services your CPA can provide to meet your evolving business needs is vital.
Some CPA firms specialize in supporting businesses at different growth stages, from new ventures to maturing companies, providing tailored services to build a strong financial foundation for each stage. As your business expands, you may require additional services like:
- Business valuation for mergers or acquisitions
- Part-time or outsourced CFO services for strategic planning and financial expertise
- Succession planning for transitioning business ownership
- Accounts payable services and spend management support to manage the money coming into—and out of—your business
- HR compliance support and payroll services for onboarding and managing employees
10. How Transparent are Your Fees and Billing Practices?
Transparency in fees and billing practices is a cornerstone of a trustworthy CPA-client relationship. You should inquire about your accountant’s fee structures and billing practices.
Many CPA firms are moving away from traditional hourly billing to more diverse structures such as fixed or flat fees and fee-for-service models, promoting greater transparency in billing. Such practices require clear communication to ensure clients understand the costs associated with the services they receive.
11. Tailoring Our Partnership: How Will You Align With My Specific Business Needs?
Every business is unique, and so are its financial needs. For a successful CPA-client partnership, alignment of the CPA’s services with your specific business needs is required.
CPAs can personalize their services by:
- Providing ample time during appointments for discussions
- Respecting the client’s schedule and offering flexible meeting times
- Engaging in background research
- Confidently providing strategic advice
- Genuinely caring about the client’s financial goals to create tailored solutions.
Hiline tailors its accounting services for every business it works with. If you want a team of seasoned bookkeeping, accounting, tax, and CFO professionals taking care of your financials, get in touch and see how we can help.
Questions for New Business Owners: Starting Strong With a CPA
For a new business owner, it’s vital to start on a solid financial footing. Engaging a CPA early in your venture can set a strong financial foundation for your business. Asking the right questions is key to safeguarding your financial interests.
1. How Should I Structure My New Business for Tax Purposes?
The structure of your new business plays a significant role in its tax obligations. Selecting the appropriate business structure is vital as it influences your tax obligations, personal liability level, and legal duties.
Specialized structures such as benefit corporations, close corporations, nonprofits, and cooperatives all cater to specific organizational goals and operational methods. It’s essential to align your choice of business structure with the specific needs and goals of the business to ensure the desired legal and tax outcomes.
Hiline, for example, has teams that specialize in Nonprofit Accounting, Startup Accounting, and several other niches. It’s important that you work with a partner who thoroughly understands the needs of your business type.
2. What are the Tax Implications for Hiring Employees vs. Independent Contractors?
Hiring employees and independent contractors each come with their own set of tax implications. Grasping these differences is important to avert potential tax issues.
Proper classification is crucial to avoid tax problems and penalties when hiring workers. An accountant can provide guidance to ensure workers are classified correctly as employees or independent contractors, thus avoiding misclassification issues.
3. What Financing Options are Available for Startups, and How Can You Assist?
Funding is often a significant hurdle for new businesses. Comprehending the variety of financing options available for startups and how a CPA can assist in choosing the right one is key.
Financing options for startups include:
- Traditional loans
- Venture capital
- Angel investors
- Crowdfunding
- Small business grants
Each option has unique qualifications and benefits. Your CPA can guide you through these options, helping you choose the one that aligns best with your business needs.
Put Your Questions to Ask a CPA to Use
We’ve covered a lot of ground, from understanding a CPA’s experience with tax laws, their approach to tax season preparation, to additional services they can offer as your business grows. Remember, asking the right questions can ensure your business’s finances are in expert hands.
Arm yourself with this knowledge and take charge of your business’s financial health today!
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