How to Choose an Accounting Service Provider?
A company cannot exist without accounting in today's world. This is self-evident and no longer needs to be proven. However, financial accounting can be handled in different ways. This responsibility can be entrusted to a hired accountant – a company employee who is constantly aware of what is happening within the company. Alternatively, it can be delegated to an accounting service provider – a company that serves multiple businesses simultaneously.
The high cost of labor encourages small and medium-sized businesses to consider outsourcing accounting services. But how to choose the most suitable one?
Evaluate Your Needs
Before making a decision, it is important to analyze the current situation. A new company will have fewer considerations, as there are no established practices or division of responsibilities yet. For those operating longer, it is necessary to start with an assessment of the situation. It is crucial to understand what tasks have been handled so far by the company's hired accountant or the service provider. In small businesses, the accountant often also performs the roles of a clerk, HR manager, secretary, and lawyer, frequently taking responsibility for workplace safety as well. A hired accountant in small businesses not only handles financial accounting but also engages in management accounting, which includes inventory tracking and calculating production costs. Replacing such an employee will not be easy, but at least the company manager will have clarity on which functions need to be redistributed to other employees or which external service providers need to be engaged.
Comparison Table
Once you have clarified this part, proceed to select and compare accounting service providers. It is important to create a table for each candidate and fill it with comparable evaluations – how many years they have been in the industry, how many employees the company has, whether it has a license issued by the State Revenue Service to provide accounting services, and so on. Does it also have mandatory civil liability insurance, and what is the coverage amount? These basic elements will help assess the candidate's experience, competence, and ambitions. Of course, a larger and older company does not necessarily mean better, but at least it ensures you are not dealing with an unserious one-day operation.
In-Depth Research
The next step involves conducting in-depth research. A good starting point is reading online reviews or asking existing clients of the accounting company about their collaboration.
It is equally important to review the service provider's latest annual reports. An accounting company should be able to operate profitably and manage cash flow effectively. If the company has significant loans or liens, it is a warning sign to stay away.
Useful information about the company's "seriousness" can also be found on its website and social media profiles. It is worth taking a look at employee profiles on Facebook and other social networking sites. These will also indicate the type of people you will be working with. This should not be underestimated, as your company's financial data is at stake.
Discuss Future Collaboration
When the pool of potential candidates has been narrowed down to a minimum and a winner needs to be chosen, it is essential to clarify the expected terms of collaboration in detail. For example, how many and which accountants will work with your company? What are their qualifications and work experience? Have they worked with companies of a similar specialization and understand its specifics? It is also advisable to find out whether an internal control system, also known as the four-eye principle, is in place.
Request information about the accounting company itself. Do its employees have competency certificates, such as those from the Accountant Certification Center or LRGA, does the company send employees to qualification enhancement courses and training? Are tax law changes monitored, and how is this done?
Ensure Responsibility
Be sure to ask for proof of civil liability insurance to avoid having to compensate for accountants' mistakes from your own budget in case of problems.
Request to see methodologies for combating money laundering and personal data protection, as well as agree on signing a confidentiality agreement. This is more important than it might seem, as you certainly would not want information about your company's clients, employee salaries, and other financial data to be disclosed without your knowledge.
Only if the candidate meets the main requirements and satisfies all others should you turn to the terms of the collaboration agreement.
And finally, ask the service provider if they are willing to perform all the tasks currently handled by the hired accountant. And if they are, how much it will cost. It is possible that all additional tasks come at an extra cost, and in the end, the price turns out to be higher than hiring an accountant, or you will need to hire an employee to handle all the other tasks.
Love your accountant, whether hired or outsourced!