Your business is your baby. And your accountant is the nanny you invite into your home to care and love your baby and do some light housekeeping.
That analogy may not be that relatable for us small business owners trying to balance work and childcare, but I’m serious when I say that picking out an accountant should be more than just scrolling through their website.
What happens when accounting goes bad? Why is quality such an emphasis? And why is it worth it to have a CPA, EA, and degreed accountant on your side?
Unfortunately, in our line of work we have heard so many bad stories and helped numerous clients recover from “battle wounds” due to unqualified financial professionals. One in three clients comes to us having a bad experience with their prior accountant. Those stats are insane!
For some specific examples, one client just found out their previous firm haphazardly filed payroll taxes and W-2s for them manually, without actually coaching them as to how to remit payments for these taxes. Now, they owe the IRS almost $15K and will be paying that off for the next four to five years. Plus interest and penalties.
That same accountant prepared their business income tax return but never e-filed it, causing them to incur some late filing penalties.
This is why quality matters and investing in that quality could actually save you money in the long run.
When you become a CPA, an EA, or get your bachelors degree in accounting, there is a looming responsibility and seriousness to it all. You are inherently trusted to make financial filings that could impact a person’s life and business for years to come. This should not be taken lightly by accountants, and it definitely should not be taken lightly as a business owner.
So how can you verify that your business is in the right hands?
With bookkeepers, it’s a bit harder to formally verify them because there’s no specific credential they need to have. As a best practice, you can ask them for references, ask details about their accounting background, and look for someone who has the experience and infrastructure to set you up on the right path.
Moreover, there are more bookkeeping tech companies claiming that they have the expertise needed to provide accurate books using AI (artificial intelligence). Don’t get me wrong, AI is a great and super helpful tool. But for most of these companies it’s a quantity, not quality game.
Likely, they are charging bargain prices, and their quality reflects that as well. We’ve had to charge upwards of $3,000 cleaning up the books for clients that had previously paid a firm like this monthly, and they simply weren’t doing their job. Bank reconciliations weren’t being done, transactions were missing and categorized incorrectly, and revenue was being recorded the wrong way.
Anyone can say they are an accountant, but not everyone has the intuition ingrained upon them to know when things seem right or wrong. Does your current accountant have your back, or do you sense a flighty feeling? If it is the latter, it might be time to invest in some quality.
Gradient Accounting is a firm built with modern small businesses in mind. Our mission is to help you get your finances under control so you have time to travel, enjoy your life, and pursue your passions. Our team has more than 33 years of cumulative accounting, tax, and consulting experience. Our blog reflects our unique take on the latest news you need to know in the small business world. We are also passionate about providing free resources here to help you scale your business and earn more money in the process.