Should you outsource your accounting? Here are 6 questions a creative business should ask before hiring an accountant.
When it comes to creative businesses, the owner is often the visionary. They are your marketing gurus, design aficionados, and architectural geniuses. They are great at what they do and are best positioned to grow their business through their creative talents. However, one crucial area for creative businesses that often gets overlooked is accounting.
Accounting is not the most glamourous part of owning a business, but it is necessary. Smart business owners know that as their firm grows, outsourcing their finance and accounting needs can be hugely beneficial.
But, it is still a big decision and recognizing when your creative business is ready for an outsourced accounting solution is a process. We’ll be covering the two most common scenarios we encounter below.
Another part of that process is ensuring that you get the right accounting firm in place to support your business needs. Asking the right questions before hiring an accountant is absolutely critical. That is why we are also sharing our 6 top questions to ask an accountant during the selection process.
When should I hire an accountant?
The answer to this question often falls under one of these two scenarios:
- You’ve outgrown your current accounting solution. Either you were doing it on your own, a trusted family member helped you out to this point, or you had outsourced to a bookkeeping firm but you are starting to find cracks in this solution.
- You have an in-house solution, and while most of the day to day gets taken care of, you don’t have the expertise to know if they are doing a good job and they don’t have time to provide much more than transactional level support. You’re starting to have more questions about the business, what all that accounting data means and you’re finding your in-house solution isn’t able to provide that level of insight your business has grown to demand.
If either of these scenarios match your current reality, your creative business is ready for an outsourced accounting solution.
What questions should you ask before hiring an accountant?
This is such a critical part of the process. Hiring the right accounting firm for your creative business can make all the difference. You’re not looking for traditional accounting only here. You’re looking for someone who understands the day-to-day accounting and is experienced with creative businesses. Asking the right questions and knowing the questions to ask a potential financial partner is key.
Here are our top 6 questions to ask before hiring an accountant:
- What accounting services do you provide?
- For accountants who provide advisory and bookkeeping services, what is the scope of their services?
- What industries do you specialize in?
- What is your service level agreement?
- What is your pricing model?
- May I speak to your references?
1. What accounting services do you provide?
Just like other professions (like law and medicine for example), all accountants are not equal. Some have spent their careers doing tax and audit, while others have focused on business performance. An accountant who is good at one, likely isn’t great at the other. It’s important that you are clear on your business needs and you find an accountant who is best able to solve for your needs. This might require hiring two accountants. One to take care of your tax accounting and another to take care of your business performance.
2. For accountants who provide advisory and bookkeeping services, what is the scope of their services?
Most small business owners would not be familiar with the extent of tasks that go into maintaining a good set of financial records and most of this work is required on an ongoing basis.
Here are some examples:
- Entering accounts payable
- Paying your suppliers
- Invoicing clients
- Following up on late payments from clients
- Tracking project revenue and costs and making sure that all revenue is billed, and costs received don’t exceed costs estimated
- Filing sales tax returns
- Reconciling bank and credit card accounts
- Maintaining balance sheet schedules
- Processing employee expense reports
- Paying employees
- Filing payroll tax returns
- Filing WSIB returns
- Managing cash flow
- Responding to client, employee and supplier queries
- Producing monthly reports so you can visualize your performance
These are just the transactional things required each month. There are also strategic things, like making sense of the accounting data and using this to influence your future decisions.
If you are looking for an accountant to take over the accounting function for your business, it’s important to understand to what extent they take over all of this scope and the frequency with which they will do it.
3. What industries do you specialize in?
Business needs are different depending on your industry. If your chosen accountant has specific experience in your industry it is usually helpful. An accountant with experience in your industry:
- Should get up to speed on your business more quickly
- Will understand the language around your business and your industry
- Will be able to share industry best practices
- Will understand the cultural differences between your type of business and a business who serves a different industry
4. What is your service level agreement?
Accountants aren’t always the best communicators and for accountants that have never worked in a private business, they sometimes don’t realize that clients expect timely responses.
You will want to understand what your prospective accountant will commit to in terms of:
- Response to emails and phone calls
- How frequently the work will be done
- If and how they will represent your business to your clients if they are dealing directly with your clients
- Who will be your day to day contact?
5. What is your pricing model?
Accounting services are generally priced in two different models. Hourly and fixed fee.
In the hourly model, the firm can be rewarded for being inefficient.
In the fixed fee model, you need to ensure that they don’t cut corners. You need to invest time in creating a clear scope of work and ensure that your entire scope is included in the fixed fee quoted.
In the fixed fee model, out of scope items are usually priced on a project basis
6. May I speak to your references?
When buying a service, it’s really good to speak to a couple of references.
- How well did the accountant communicate?
- How accessible were they?
- Was work completed on time?
- Was work completed with a high degree of accuracy?
- Can this accountant represent my business to my clients?
- How has their oversight and influence improved your business performance?
Last but not least, you will want to make sure you select an accountant that you want to work with. Your finances are important. You’ll be sharing information with your accountant that most professionals would not have access to. You have to be able to work with your accountant. If you can’t picture yourself working closely with prospective accountants or their team members, then this is probably not someone you want to commit to.
READY TO OUTSOURCE YOUR ACCOUNTING?
At Finally, we specialize in providing fully outsourced accounting solutions to creative businesses including marketing, architecture and design firms.
We help high potential entrepreneurs in creative industries be successful without the stress and yawns of traditional financial management. We are the strategic voice for growth and the daily doer of the stuff you don’t want to do. Soup to nuts – we got you covered, all for fixed monthly fee. All backed by many years of experience working for firms just like yours.