When business owners are searching for an accountant for their small business, they often have no idea how much they should be paying for accounting services per month and per year says Edmonton accountant. It may be tempting for them to hire the least expensive accountant they can find in order to save on costs, but in adequate services will cost business owners far more with additional tax. 50% of all businesses are out of business in five years, and 29% of those failed businesses say that they ran out of cash, therefore it’s extremely important that business owners hire accountants that will be able to help them minimize the amount of taxes that they have to pay, to help increase their cash flow and avoid running out of money in their business.
In order to hire the best accountant they can, entrepreneurs need to understand the various ways accountants charge for their services. There are three typical ways that accountants normally charge. The first one is the most common way which is by the hour. This is a straightforward, and accountants charges their client every hour that they are working on their files. Unfortunately, this can create a situation where the accountant gets paid more the longer they take to complete a job. This can create friction between the accountant and the business owner, because the business owner ends up wondering if the accountant is taking longer to get jobs accomplished in order to bill more, or if the accountant is actually working on services that the business owner needs. As a result says Edmonton Accountant, business owners and often counselling certain services in order to save money. If they end up cancelling the planning aspect of the accountants job, they can end up making poor tax decisions, which cost them much more in the long run.
The next way that accountants typically bill their clients is by a flat fee per service. This can look attractive to entrepreneurs, because there able to see the prices up front, and see exactly what they’re getting for that price. Edmonton accountant cautions business owners to be aware when there is a flat fee per service billing, because often many things are excluded from those services such as phoning CRA, or sending emails. The accountant charges extra for additional work, which they can then bill back to the client at a much higher rate. Many accountants use this method of billing, to be able to land clients on a low price, while increasing their fees later once the business owner signs a contract.
The last way accountants typically charge, is the least common way says Edmonton accountant, but it can be the most efficient. And that is a flat fee every month. The accountant figures out how much it’s going to cost the client to get all of the accounting done that they will need in a month, they charge them that rate, and everything that they work on gets covered under that price. Can increase the confidence of the business owner, because they know all the services are going to be covered, and they know what to include in their budget for accounting services.
When entrepreneurs are looking for which accountant they should hire to work on their business finances, they often don’t know how to go about hiring an accountant says Edmonton accountant. While it may be tempting for them to go with the lowest price, in order to save money, that may end up costing them in the long run due to getting in adequate services. Red Adair specialized in extinguishing and capping oil well fires, he was famous for saying, if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur. That doesn’t mean that business owners should hire the most expensive accountant either, but if they understand what’s involved in hiring an accountant, they can find the one that best fits their needs.
One of the most important services an accountant can provide a business owner is effective tax planning says Edmonton accountant. Since this is an extremely important service to help the business owner minimize their tax payments, which can have a greater effect on their business, they should look at hiring accountants that do planning. Some business owners have a separate accountants to planning them to do their finances, and it is not advised to do that approach, because once an accountant takes the time to completely understand the entrepreneurs business in order to do the plan, they are the best accountant to continue working on the entrepreneurs finances as well.
When business owners are hiring accountants to do their planning, they should be aware that not all accounting firms actually do planning. CPAs end up doing the services that they get the most of, which means if they don’t get a lot of business plans, they usually won’t end up doing business plans in the long term., Edmonton accountant says therefore it’s very important that business owners ask accountants if they do business planning.
Once they have narrowed down a handful of accountants that actually do business planning, the next step is to set up a consultation with each of them, with the purpose of reviewing what their business plans typically look like says Edmonton accountant. The CPA should be able to pull up a document that will show them either a completed business plan, or what completed plan would look like. The first thing that a business owner should take note of, is the number of pages. It should be more than just one or two pages, great business plans start at about 30 to 40 pages. They should ask the accountant where their recommendations for the clients are, what considerations they had, but most importantly, how the CPA and the business owner is going to quantify the plan to ensure it’s working. Without metrics, the business plan has no power to increase their business. Hope to see you soon!