How to Hire an Accountant for Your Business

The tax folks at J.K. Lasser sent us a press release today that provides tips on what a small business needs to look for when hiring an accountant. It is not easy to find an accountant that you can trust, much less really look out for your interests.

According to J.K Lasser, the following are the questions you need to ask prospective accountants:

• How are you going to help my business grow? Ask for an outline in writing.
• Are you a tax planner or a tax preparer? You will want to meet with your accountant once a year for both strategic and tax planning.
• What benchmarks will you help me set for my business, so that I can track my projects? An accountant specializing in small business finances should be able to help you set month-by-month goals to chart your progress.
• How tech savvy is the accountant? Are you going to have to print out your accounts to hard copy or can you simply transfer everything electronically? What kind of software are you going to have to buy?
• What overall services can the accountant provide besides business advice, like estate planning, gift planning, legal referrals, etc.?
• How do you calculate your fees? In a time-based fee structure, make sure to find out the hourly rate, as well as all fees for expense reimbursement.

Read the Questions to Ask a Tax Accountant

Importance of Good Bookkeeping

The tax deadline is almost upon us and I hope that most of you have completed, if not submitted your tax documents.

In talking to other entrepreneurs, tax time is either made easy or unbearable by quality of their bookkeeping. Some have it great with their accountants who do everything for them. However, many more do their accounting and tax work by themselves -- and some are pretty diligent about it and do it regularly; while others do it only before April 15 rushing to find all their receipts and listing their expenses and income. I know of many home-based entrepreneurs who don't even know how much they make in a month except what they see in their bank account!

If you will do it yourself, you need to have a system that you will work most for you.

It can be as simple as using a software such as Quicken or Quickbooks. Or it could be as easy as an Excel spreadsheet. You can also use a paper system such as any of the bookkeeping books sold in your favorite office supplies store.

Someone recently gave me a copy of the Tax Minimiser system. which is a paper based daily planner system designed specifically for keeping track of your business expenses and income. I haven't used it yet, but it seems that it is a simple enough system that even non-accountants can understand. I am hopeless with accounting and I don't even want to understand how Quickbooks work, so I am looking forward to checking out this paper based system.

Bookkeeping is one of the necessary constants in doing business -- whether you hate or love it, you have to do it.

Collect from Late-Paying Clients

The year is coming to an end, and it is time to close your books. Unfortunately, you may have late-paying or deadbeat clients who need to pay you. Here are some tips on how to improve your receivables collection and avoid delinquent accounts:

1. The first step is to institute controls in your receivables to make sure that you collect everything that is owed to you. Send your client an invoice immediately after the completion of the contract or delivery of product. Track carefully your receivables to make sure you catch which those that are about to become overdue.

2. Prepare a contract or keep a record of what was ordered. One of the reasons clients do not pay is because they feel they did not receive what they ordered or you fell short in terms of deliverables. Having a contract puts everyone on the same page. If you made a mistake and sent them a different item than what they ordered, remedy the mistake. But remind them to keep their end of the bargain and pay you.

3. You may want to try to offer incentives to fast paying clients, e.g. if they pay within a certain time period, they can get a discount.

4. Inquire if they actually received the invoice. If a client doesn't pay you, it may be because they are stalling, don't want to pay you or because they haven't received your invoice. Do not assume that they got the invoice. Call them and check whether they have received the invoice because you have not received the payment as yet.

5. Don't fall into the "check is in the mail" trap. If the client uses this excuse, inquire when the check was indeed placed in the mail. Sometimes, you'd be amazed to find the check placed in the mail ONLY after you made your follow-up call.

6. Get to know the people responsible for cutting the check, especially if you are dealing with a big company. A one-person business is easy because you only follow up with one person. A big company, however, has more complicated accounting procedures where different people are involved in the processing of the invoice to the signing of the check. Be sure that you know who actually control the purse strings -- and make your follow-ups with that person.

For additional tips on how to improve your collection, read the articles "When Customers Don't Pay You" and "How to Double Your Debt Collections".