If you are running a business, you probably understand the operations behind it. A bakery owner knows how to craft a decent cupcake, and a plumber knows the cause and cure for a leaky faucet. But for most business owners, financial management of their company is less intuitive and seemingly less urgent than these day to day activities that bring in the much-needed revenue.
This is when you should call in reinforcements: your accountant. Most accountants would love to take on the role of your trusted business advisor. The problem is, though, that many business owners do not take full advantage of this professional associate, perhaps because of disinterest in the financial analysis conversation or limited available time. Given the short amount of time you spend with your accountant and given the wealth of information you could extract from them, it is important to have a plan in place that allows you to fully utilize your accountant and his or her resources.
Based on our interaction with thousands of CPAs over the past decade, Sageworks recommends the following techniques to help you make the most of the time you spend with your CPA and receive more than tax returns:
1. Choose the “right” accountant
Be selective and choose the right accountant from the start. If they are to be a trusted business advisor for your company, then you should interview them like you would—perhaps more than you would—a typical job candidate. Before engaging their services, ask questions about expertise and also about their communication style to be sure it corresponds to your operations. You should also agree in advance who the accountant will report to and whether or not that will also include board presentations.
2. Meet often
Meet with them often enough that they know your business, its complexities, and your struggles. If you only meet with your accountant at year end, they may not remember the details of your conversation and the details of your business. Frequency of your meetings should depend on which services you have your accountant perform, but a good starting point is to meet with them once per quarter. The meeting doesn’t have to take all day. Call them now to get in the calendars for an hour or two. These quarterly check-ups may save you time in the long run as they help you stay on top of financial organization prior to year end.
3. Prepare well in advance
Prepare some questions in advance. You don’t necessarily have to study each line item of your general ledger ahead of time, but prior to your meeting think of questions you can ask regarding inventory levels, investments you are considering, financing sources, cash flow, your company standing compared to peer companies, etc.
4. Communicate ahead of time
Then if you can, submit these questions to your accountant ahead of time so they have ample time to consider your numbers prior to making a definitive recommendation. Timothy Sundstrom, CPA of Newton Square, PA, says “A big issue for many business owners is that accountants tend to be reactive rather than proactive.” If you can present your questions or financial considerations in advance, then they can fully analyze your concerns and deliver a more comprehensive financial evaluation. When that is the case, Sundstrom describes, “In essence we become the business’s primary care physician, not the medical examiner.”
5. Carry necessary documentation
Take with you the necessary documentation, especially if this is your first meeting. You should confirm with the accounting firm which documents are pertinent to your visit, but most likely it will include the past two years’ tax returns and financial statements.