Be Choosy When Choosing an Accountant
Canadian Business Franchise
Published October 2005
When you are a new franchisor or franchisee, at times your “to do” list can seem almost overwhelming. There are innumerable tasks to handle and people to deal with – and never enough time.
One task, however, for which you want to be sure to allocate sufficient time, is selecting an accountant. Working with the right professional can mean the difference between the success – or failure – of your new enterprise.
A knowledgeable, capable accountant can help you get to where you want to take your business by providing strategic financial and tax advice, helping you make the right business decisions and alerting you to risks along the way.
Perhaps one of the most valued – but often overlooked -- benefits that a professional accountant or accounting firm offers is credibility. Without a track record, it can be difficult for a franchisor or franchisee to secure sufficient financing to get up and running. An association with a respected accounting firm can add immediate value to your business venture since this conveys your commitment to a well-run operation.
Since both franchisors and franchisees are business owners, accountants play similar roles for each type of business – albeit from a different perspective. A franchisor wants to sell franchises while a franchisee wants to buy a franchise. Both, however, have the same goal: building a successful business.
How an Accountant Adds Value
Selecting the right accountant involves identifying your specific needs and then matching those with a professional who can meet them. To help you make the best choice, following are some of the specific ways that accountants can add value to a franchise system or franchise – and some questions you might want to ask when interviewing prospective accountants.
Business advisor
Accountants are skilled in identifying challenges and problems and devising appropriate solutions. Thus your accountant can serve as a valued business advisor by helping you assess where your business is, where you want to go and how best to get there. He or she can provide objective input into your business plan and help you prepare or review financial statements and projections, including cash flows and break-even analyses. In fact, based on experience with other clients, your accountant should be able to provide objective advice on virtually any aspect of business operations.
Financial advisor
Your accountant should be able to analyze and interpret financial information, enabling you to understand and use it effectively. He or she can also help you set up a reliable accounting system, recommend appropriate technology, ensure that your disclosure documents comply with regulations, provide advice related to hiring internal financial staff, and, for franchisors, can even act as external/part-time CFO until the business can support an internal professional.
Moreover, your accountant should be able to provide you with financing advice: how much you will require, in what form and where you can secure needed funds. And, when you secure that financing, he or she can help you monitor your financial situation and alert you to any developing problems.
Tax advisor
Canada’s tax-focused business environment requires franchise owners and franchisees to take advantage of every tax-saving opportunity available. Your accountant can provide advice regarding ways to structure your business and transactions so as to minimize taxes and maximize profits. Moreover, your accountant can advise on how to best arrange your personal financial affairs in order to reduce the overall tax burden for you and your family. This might include, for example, advice regarding income splitting, retirement planning and estate planning.
Referral source
It takes one to know one – a good professional that is. This means that a good accountant will know good bankers, good investors, good lawyers, good real estate agents, good property managers, good technology pros, and so on.
This network can be a priceless source of support and expertise for your business. Your accountant should be familiar with your needs -- and able to introduce you to the people who can help your business succeed.
How to Find the Right Professional
So how do you go about finding an accountant who can meet your needs? Start with your own network. Ask friends or colleagues with successful businesses whose opinions you respect. Or, if you have a banker or lawyer with whom you are doing business, ask for their suggestions.
Before interviewing accountants, spend some time outlining your specific goals, needs and expectations. To begin with, this will help you determine whether it would be more appropriate to work with a single accountant, or with a larger accounting firm. Public accounting firms range in size from local sole practitioners to global organizations with thousands of professionals located in cities around the world.
Some of the following questions can help you narrow your search.
What are your professional qualifications?
First of all, it’s important to make the distinction between a bookkeeper and an accountant. The former verifies and balances receipts, post debits and credits, and records transactions, which are used to generate financial reports.
The accountant organizes, analyzes and interprets this data to produce business knowledge needed by you, the government and your suppliers and funders.
There are three professional accounting designations: CA, CGA and CMA. Many accountants with either of the first two designations work for public accounting firms, which offer services to individuals and organizations. CMAs are typically employed in industry or government. All have extensive training in finance, tax and business operations. Thus it’s important to ensure that the accountant you choose has one of these designations since all follow accounting standards within their respective designation and their work is governed by professional bodies.
Who are your clients?
You want to be sure that your accountant has experience in your industry and with your type and size of franchise. You also want to ensure that he or she has the time and resources for you, so ask those you interview how many clients they have and whether you are typical of the other clients. It’s also perfectly appropriate to ask for the names of a few clients whom you can contact to find out their satisfaction with the accountant’s support and services.
What services do you offer?
Based on your list of needs, find out whether the services offered by the accountant will meet those needs. Ask how the individual provides those services: personally or delegated to others in the firm or to other firms. Ask how the accountant would work with you. How would financial and other information be shared? How does he or she communicate with clients?
How do you participate in the business community?
You want to be sure that your accountant is well connected in the business community so he or she can put you in touch with others who can contribute to your success. Ask about business and professional memberships, volunteer work and other activities in which the accountant is involved that nurture his or her network. Discuss what types of introductions the accountant has made for other clients and whether he or she will do the same for you.
How do you calculate and bill fees?
Many accountants work on a monthly time and billing arrangement. Ask those whom you interview how they calculate fees and invoice. Find out the hourly rate for their work as well as for any others who might provide you with services. Ask what he or she expects fees might be and how you can ensure that they won’t exceed a certain limit. But do keep in mind that while fees are obviously important, they are only one aspect of choosing an accountant; since you usually “get what you pay for” – quality counts most.
When making a final decision, ask yourself whether you feel comfortable with this person. Does this individual communicate well with you? Take sufficient time to clearly and completely answer your questions? Does he or she show interest in your business and in working with you? Would you trust this person?
Working with a knowledgeable, capable accountant will make you a more knowledgeable, capable business owner. Good reason for being choosy when it comes to choosing your accountant.
Rick Chittley-Young, CGA, is a principal of BDO Dunwoody LLP (www.bdo.ca). One of Canada’s leading accounting and advisory firms, BDO helps entrepreneurs, family businesses, franchisors and franchisees succeed. If you have questions about this article or would like to receive BDO’s “Tax Factor” newsletter, contact Rick in the Oakville office at (905) 844-3206 or rchittley@bdo.ca.
