Finding the right accountant for your financial health begins with understanding the financial “profile” of your business and setting financial goals for it and you and your family.
Do you operate a simple business, with no expansion plans, that collects “cash” payments, pays its bills, has two or fewer employees and any net profits become your income?
Do you operate a simple cash business today, but have big expansion plans for the future?
Do you expect to sell your business when you retire and receive a substantial price?
Do you plan to use net profits to invest in securities and/or commercial real estate?
Do you have a family and do you want to establish a trust or other financial mechanisms to protect family members, to create a college fund, etc?
Your choice of an accountant also depends on how much you want to be involved in your finances.
You may be the kind of business owner who doesn’t want to manage any of the financial details. You want someone to collect the money, pay the bills (including payroll), prepare tax forms, provide you with regular reports as to the financial health of your school and advise you when needed.
Alternatively, you may want to maintain sales and payable records, so you always know the exact status of your business. You may choose to use accounting software to make those entries, and then provide an accountant with that data to perform other tasks, such as tax forms and financial reports.
In either case, you may also want someone that can provide you with financial and strategic advice to help with your long-term planning.
Types of Accounting Services
Bookkeeper: You may be one of many photographers that only need a bookkeeping service to manage daily cash flow and to record that data. Some bookkeeping services can prepare basic tax forms, such as payroll taxes. Bookkeeping fees are typically less than an accountant or accounting firm.
Enrolled Agent (EA): If your finances specifically require tax services, then an enrolled agent may be the best choice. The Internal Revenue Service tests and certifies an enrolled agent as a professional that is qualified to represent taxpayers before the IRS. An EA will prepare and file forms and other documents, communicate with the IRS and attend meetings in the name of his or her clients.
Certified Public Accountant (CPA): If you are operating a larger business, have big expansion plans or dynamic personal financial goals, then you’ll need the complete services of a CPA. He or she is so designated by the state because of the examinations he or she has passed and the continuing education he or she acquires. A CPA can provide all the services of a bookkeeper (and probably has one on staff) or an enrolled agent, plus:
Guide you through the complexities of payroll accounting and reports.
Help you with a major change in the ownership structure of your business.
Prepare financial data in such a manner to increase the likelihood of being approved for a bank loan.
Provide comprehensive business and personal financial advice.
Remember, you have the flexibility to use some or all of the services of these professionals. You can keep the cost of these services lower by using a bookkeeper for regular financial tasks, and then hire an accountant for more complicated tasks, such as business and personal income tax returns and the business loan process. In reality, few small businesses need all the services of a CPA or accounting firm all the time.
Your Search for Accounting Services
Referrals may be the best way to create a list of accounting services to consider. Your business neighbors probably operate companies of the same relative size. You can also ask your attorney, banker, insurance agent or other professionals with which you already work. Many attorneys have relationships with accounting services, since often they must work together for their clients.
Contact your list of candidates and schedule a meeting. It’s often a good idea to have them come to your business, so they have first-hand experience of what you do and the structure of your finances.
Then, ask them many of the same questions to be found in the PhotographyTalk.com article, Photography Business Tip—How to Select An Attorney As One of Your Invaluable Strategic Partners, Part 1 and Part 2. What exact services do they provide? Do they represent businesses similar in size? What problems have they solved for those clients? How have they helped their clients save money or grow their businesses? Do they know the financial software that you are using? How do they use technology to serve their clients? Do they represent clients with the IRS? What are their specific fees for specific services?
One of the most important qualifications of the accountant you choose is his or her local connections. If you want a business loan, then has he or she worked with local financial institutions to secure similar loans for other business? Can he or she introduce you to better suppliers or other local businesses that will save you money?
Just as with selecting an attorney, don’t hesitate to dismiss an accountant if you are dissatisfied. Finding a replacement may be a bit time-consuming, but that is better than mistakes being made on tax forms, for examle.
Finally, establish a binding relationship with all the professionals you meet and hire by providing them and their families with a free photography session.
Recommended Reading:
- How to Create a Successful Photography Business
- The Photographer's MBA: Everything You Need to Know for Your Photography Business
- Best Business Practices for Photographers
- The Fast Track Photographer Business Plan: Build a Successful Photography Venture from the Ground Up
- Commercial Photography Handbook: Business Techniques for Professional Digital Photographers
- Tabletop Photography: Using Compact Flashes and Low-Cost Tricks to Create Professional-Looking Studio Shots
- Low Budget Shooting: Do It Yourself Solutions to Professional Photo Gear
- Starting Your Career as a Freelance Photographer
- Photographer's Survival Manual: A Legal Guide for Artists in the Digital Age
- Legal Handbook for Photographers: The Rights and Liabilities of Making Images
- Taking Stock: Make money in microstock creating photos that sell
- Going Pro: How to Make the Leap from Aspiring to Professional Photographer