How to choose an accounting service provider
A business cannot exist today without accounting. This is self-evident and no longer requires proof. However, financial records can be managed in different ways. This responsibility can be entrusted to an in-house accountant—an employee who is constantly up to date with what is happening in the company. Alternatively, it can be delegated to an accounting service provider—a firm that serves multiple clients simultaneously.
High labor costs are encouraging small and medium-sized enterprises to look toward outsourced accounting services. But how does one choose the most suitable provider?
Assess your needs
Before making a decision, it is important to analyze the current situation. A new company will have less to reflect on, as there are no established processes or division of duties yet. More established companies must start with a situational assessment. It is essential to understand what the company's in-house accountant or current service provider has been doing. In small businesses, the accountant often also performs the duties of an office manager, HR manager, secretary, and legal advisor, and frequently assumes responsibility for workplace safety as well. In small companies, an in-house accountant handles not only financial records but also management accounting, which includes inventory tracking and calculating production costs. Replacing such an employee will not be easy, but at least the business owner will have clarity on which functions need to be redistributed to other staff or which outsourced services need to be engaged.
Comparison table
Once you have clarified this part, you should begin selecting and comparing accounting service providers. It is important to create a table for each candidate and fill it with comparable metrics—how many years they have been in the industry, how many employees the firm has, whether it holds a license issued by the State Revenue Service (VID) for providing accounting services, and so on. Also, check if they have mandatory civil liability insurance and what the coverage amount is. These basics will help you gauge the candidate's experience, competence, and ambition. Of course, a larger and older company does not necessarily mean a better one, but at least it is clear that you will not be dealing with an unreliable fly-by-night operation.
In-depth research
The next step is to conduct in-depth research. A good start is reading reviews online or asking one of the accounting firm's existing clients about their experience.
It is equally important to review the service provider's latest annual reports. An accounting firm must know how to operate profitably and manage cash flow. If the company has large debts or liens, it is a red flag to stay away.
Useful information about a company's "seriousness" can also be found on its website and social media profiles. It is worth taking a look at the employees' profiles on Facebook and other social networking sites. These will also show you the kind of people you will be working with. This should not be underestimated. After all, your company's financial data is at stake.
Discuss the prospective partnership
Once the pool of potential candidates has been narrowed down to a minimum and you are ready to choose a winner, it is essential to clarify the expected terms of cooperation in detail. For example, how many and which accountants will work with your company? What is their education and work experience? Have they worked with companies of a similar specialization and do they understand the specifics of that work? It is advisable to find out if an internal control system, or the so-called "four-eyes principle," is in place.
You should also ask for information about the accounting firm itself. Do its employees hold competency certificates, such as those from the Association of Accountants or the LRGA? Does the company send employees to professional development courses and training? Is there a process for tracking changes in tax laws, and how is it implemented?
Verify liability
Be sure to request proof of civil liability insurance so that, in the event of a problem, you do not have to cover the accountant's mistakes from your own budget.
Ask to see their methodology for anti-money laundering and personal data protection, and agree on the signing of 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 end up in the public domain without your knowledge.
Only if a candidate meets the main requirements and satisfies all others is it worth turning to the terms of the cooperation agreement.
And finally: ask the service provider if they are prepared to perform all the tasks currently handled by your in-house accountant. And if they will, how much will it cost? It is possible that all additional tasks come at an extra charge, and in the end, the price may be higher than hiring an accountant, or you may still need to hire an employee to perform all the remaining tasks.
Love your accountant, whether in-house or outsourced!
