10 Mistakes to Avoid When Looking Into Accounting Companies

Michael Pignatelli
Sep 17, 2021

Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

Money is the backbone of any business. With the right management, your business can grow even in a short period of time. However, dealing with money is a time-consuming task. This task might take a good amount of time away from dealing with other work-related duties. By then, your workload might increase and cause creases on your forehead.

Getting services from accounting professionals is a good solution for a growing business. The search may take a little effort, but having professionals handle your assets will be worth it. 

The search might be a tricky journey if you don't have experience working with an accountant. There are many things to consider during your inquiries. As such, you might also miss many things while looking for the right accounting service. To help you out with this process, here are ten mistakes to avoid when looking into accounting companies.

Hiring An Accounting Company That Doesn't Specialize In Your Industry

There are several different accounting services in the market. Accounting is an umbrella service that has various branches of specialties.

There are accounting services such as:

  • Payroll
  • Account Audits
  • Tax Accounting
  • Bank Reconciliation
  • Financial Controller Services
  • Chartered Accounting
  • Forensic Accounting
  • Account Receivables
  • Account Payables
  • Bookkeeping

Main accounting types:

  • Internal Auditing
  • Management Accounting
  • Government Accounting
  • Non-Profit Accounting
  • Public Accounting
  • Private Accounting
  • Financial Services

Even though the accounting firm may offer general CPA accounting, it's important to be sure that the services they offer are for your unique business asset. Know the specific services you need first before talking to an accounting firm.

Choosing A New Accountant Without A Background Check

As mentioned, CPA firms may have different specialties. Note that accountants have specific services that they can offer. For example, if you are looking for a payroll specialist, a bookkeeper might not be equipped to handle that service as they may mainly focus on tasks related to only bookkeeping.

Here are questions you can ask during a one-on-one interview with a potential personal CPA:

  • What types of business accounting have you done in the past?
  • What are the common problems you face with business owners' financial assets?
  • Have you encountered strict deadlines? If yes, how did you handle it? 
  • How up-to-date are you with the accounting legislation?
  • What big problems have you encountered when handling finances? What did you do to solve them?
  • What specific service are you the most confident in and why?
  1. Not Being Aware Of Accounting Fraud

Don't lean easily towards a lower service price. It would be best if you were vigilant with the firms you trust. After all, you will be giving them access to crucial financial information.

Be wary of accounting fraud such as embezzlement or misstating expenses and revenue. An example was the Lehman Brothers Scandal in 2008. The executives and auditors of the company hid 50 billion dollars in loans and covered it as sales. The Lehman Brothers' accounting fraud came to light once the firm went bankrupt. Ironically, Lehman Brothers were dubbed the number 1 most admired security firm in 2007 by Fortune Magazine.

Beware of invoice scams as well. It starts with an email from a professional-looking source saying this is your invoice for a standard service. Your bookkeeper might be unaware and proceed with the process of dealing with the invoice. It's essential to hire a professional who knows how to spot email scams and mitigate situations like this.

It's very easy to manipulate numbers and, in retrospect, quite hard for the business owner to know unless you inspect monthly reports carefully, which is why it's important to consider the right budget to get a great and honest service.

Trusting Someone Who Is Too Busy To Provide Anything But Minimal Help

Suppose you know someone who can do the task you need. However, they have many clients on their hands. Even if these professionals are the best in the field, reserving time for your business is still important. 

Like any other job, CPAs need to render 20–40 hours of work or depending on the hours you require. The time they dedicate to your company shows the importance they put on your financial needs. Consider a company or individual that can commit the right hours and focus on your financials. 

Here are some questions you can ask a CPA:

  • Are you handling other clients at the moment?
  • How many clients do you work for monthly?
  • Do you deal with one client at a time?
  • How do you manage your time?
  • How many hours in a week do you usually work?
  • Are you comfortable working for x hours a week?
  • How will you make sure that you stay on top of your game?

Looking At Only One Or Two Companies Before Hiring Them

Usually, we pick the first one that pops up on our search results. This practice is harmless when it comes to personal needs that are not an emergency. To be safe, have a list of more or less three choices of companies with their respective contact information. When you can't contact one of them, replace that option with another company so you still have three companies you can interview.

Before each interview, make sure you know enough about the company beyond what they state on their website. If you can, scour the internet for people who have used their tax services or any business services and weigh in on their experiences.

Not Checking References And Testimonials Thoroughly Enough

Everyone has a different style when giving testimonials and reviews. Some give concise answers, while others provide an in-depth and long testimonial. But did you know that not all five stars on a website are real? There are paid reviewers that use fake accounts to make persuasive points so that you will be roped in. So how do you spot counterfeit testimonials?

Here are telltale signs that what you're reading isn't real:

  • They give five stars and say something along the lines of "Great Service!". They type more or less five words, which would be fishy if they found the service great, right?
  • They don't use a professional or business profile. Credible testimonials come from profiles from existing companies or professionals that can at least be found on LinkedIn. Professionals who are satisfied with a service won't be afraid to tell you their experiences.
  • They give vague recollections. For example, they will put lines like "They helped me put my financials in order, thank you!" This short response is quite hard to determine as the client could be simply lazy and not add more information.

Happy clients will give a detailed review regarding their continued use of the service, and a good financial accounting company will proudly display its big-name clients and their thoughts on their website to further prove authenticity.

entrepreneur actively gesturing
Source: ShutterStock

Failing To Ask Relevant Questions During An Initial Meeting

An initial meeting happens when you reach out to an accounting company representative and set a time and date for discussion. It's the meeting where you, as a client, will get to know a firm and what they can offer. Respectively, it's the meeting where the firm can assess how and if they can help you.

Don't dive into the conversation right away and talk about your budget. Instead, take the time to prepare, and you’ll have satisfying results by the end of the business meeting. 

Here is a list of important things to take note of before, during, and after a meeting:

  • Before an initial meeting, write down the questions you have in mind ahead of time. Our mind works against us sometimes. Often, we think of an important point to bring up only after a meeting ends.
  • During the meeting, don't be afraid to ask hard questions. Business isn't built on politeness and omission of hard truths. It is wise to be honest about your expectations about their services and ask if they can deliver. Take note of their responses so you can assess them again later.
  • After the initial interview, you should review your notes. Check if they answered every question you asked. Assess the answers to determine if they are satisfactory or lacking.

Be bold but professional when asking questions. Remember, a good certified public accountant is willing to answer your inquiries to ease your mind.

Not Discussing The Full Services The Company Offers

Often, a company will not disclose its full services on its website or during a quick phone inquiry. By now, you are aware that there are many different accounting services beyond what you can think of. You don't have to be familiar with all of them in detail. However, you should at least ask about the other responsibilities they carry, aside from asking about which service they specialize in.

By discussing the full list of work they can do, you can also get ideas about what your business might need. At first, you might be looking for someone to do simple bookkeeping services. But later, you might find that you need someone to assist with your tax preparation too.

Not Being Aware of Possible Hidden Fees

Not all services have hidden fees, but knowing that a small percentage of them do is enough for you to be vigilant with the quota they will give you. Unfortunately, for some business owners, it's hard to spot hidden fees.

Here is what you should do to avoid paying extra:

  • Look for fishy fees with small amounts. A good way to hide empty fees is in small amounts, as you're likely to overlook them. However small, these fees will be a disadvantage in the long run as they add up.
  • Compare payments with other companies. Check if they charge similar budgets for various services, and especially the service that you’re inquiring about.
  • Don't be afraid to ask what a certain fee is for. Be forward with your questions to avoid financial losses.

Not Asking If The Company Can Provide Remote Services

Our main concern today is to eliminate the need for physical meetups. With that, we need to switch from paper trails to computer data. Many companies offer remote services, so you can save gas money by conducting your monthly updates online or via Zoom.

Opt for a company that fits your working style. Some companies offer remote services that can help save time and money. Old school bookkeeping methods alone might not keep up with the number of tasks that need to be done. 

Inquire on what tools or accounting software they use for your financial statements. For example, a certified general accountant will use more than one software to make transactions easier and the work more efficient. In addition, you need to be aware of how updated the software is in the current business and financial climates (e.g., is the list of software they use supported by your bank? Are they highly rated tools in the accounting industry?).

You may also ask if there are applications you need to download and use on your end. They might require you to download applications to monitor your books or communicate with your Certified Public Accountant (CPA).

In Conclusion

The decision to hire an accounting company is a big move. It's not always easy for a small business owner, in particular, to find the time or energy to dedicate themselves fully to finding the right person for their needs. We know that you want your business's money management and growth strategy to be taken care of by someone who can provide personalized attention and top-notch service. 

That's why we've compiled this list of ten mistakes people make when looking into accountancy companies, so you don't have to spend too much of your time and money for nothing! Start your journey towards better financial management today with Unloop—our team has years of experience working directly with entrepreneurs like yourself at every stage of business development. We offer tailored packages that can help you choose the best service for your business.

Leave your assets in capable and professional hands, and reach out to us today.

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228 Park Ave S #82849
New York, NY 10003
United States
7676 Woodbine Ave #2
Markham, ON L3R 2N2
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