Accounting: what to know

What the job involves, what changes the price, and what to ask a pro.

What accounting is

An accountant records and organizes your finances, prepares financial statements, reconciles accounts and advises on reporting, helping you understand how your business or household is doing. People hire one when records are messy, lenders ask for statements or growth makes bookkeeping alone not enough. This is general information, not tax or financial advice.

Signs you need it

  • Your records are behind and you do not know your true profit or loss
  • A lender, investor or buyer asked for financial statements
  • Your books do not match your bank balance
  • You are growing and need cleaner reports to make decisions
  • You want help setting up a chart of accounts and monthly routines
  • You inherited a messy set of books from a prior bookkeeper

What the pro does

  • Review your existing records, accounts and software setup
  • Set up or clean up the chart of accounts so transactions land in the right categories
  • Reconcile bank, card and loan accounts to the records
  • Prepare financial statements such as a profit and loss report and a balance sheet
  • Explain what the reports say in plain words
  • Set a monthly or quarterly schedule for ongoing work and review

What changes the price

Every job is different, so we do not publish prices. These are the things that move the quote up or down.

  • Size and complexity of the business
  • Number of accounts and transactions
  • How far behind the records are
  • Whether the work is one time cleanup or ongoing
  • The reports needed and how often
  • Whether payroll, inventory or several entities are involved
  • Whether the accountant also prepares tax returns

What a written quote should spell out

  • Reports to be delivered and how often
  • Whether cleanup of past months is included
  • Which accounting software is used and who pays for it
  • Whether tax return preparation is separate
  • How and when you will meet to review the numbers

Questions to ask before you hire

  • What credentials do you hold, and do you check that with a state board?
  • Do you handle ongoing monthly work or only year end?
  • Which accounting software do you use?
  • How do you handle a backlog of past months?
  • What do you need from me each month?
  • Do you also prepare taxes, or will you work with my tax preparer?
  • Who has access to my accounts and records?

Red flags

  • An accountant who will not explain the reports in plain words
  • Asking you to hand over bank logins with no written agreement
  • Promises about tax outcomes before seeing your records
  • No written engagement letter
  • An accountant who cannot show a credential when you ask

What you can do yourself

You can keep receipts, download monthly bank statements, separate business and personal accounts, and use basic software to record income and expenses. Call a professional when records are far behind, a lender requires statements or the business has employees, inventory or several owners. Tax questions go to a CPA or enrolled agent.

Licenses and permits

Accountants who hold the CPA credential are licensed by a state board, while the title accountant alone may not be regulated. Ask which credential the person holds and check it with the state board of accountancy or licensing agency.

Accounting questions

Is an accountant the same as a bookkeeper?

Not always. Bookkeepers record transactions. Accountants usually review, report and advise.

Do I need a CPA?

Some tasks, such as certain audits and reviews, require a CPA. Ask what your lender or situation requires.

Can an accountant give me tax advice?

A CPA or enrolled agent can. Ask about credentials.

How often should reports be prepared?

Many owners review monthly. Ask the accountant what suits your business.

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