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Financial Accounting Services: Find the Right Accountant for Your Needs in Chicago, IL
Whether you're managing a rapidly growing business or launching a start-up in Chicago, having precise, up-to-date information about your company's finances is critical to making informed decisions. The right financial accounting service can ensure you always have accurate insight into your business's fiscal health.
Read on to learn more about what an accountant does, the different types of accounting, and how to choose the best accounting service for your business.
What Does an Accountant Do?
Before getting any further, it's important to clarify the difference between a bookkeeper and an accountant.
- A bookkeeper records the daily financial transactions of a company, which involves categorizing and inputting expenses and income.
- An accountant takes financial data created by a bookkeeper and generates reports to gain insight into a company's performance.
Some businesses employ accountants who also provide bookkeeping services.
Should I Hire an Accountant?
It's not uncommon to find entrepreneurs who use accounting software to manage their finances. When you're watching your bottom line, it's understandable if you want to take a do-it-yourself approach to keep your costs down.
This may work for a business with limited transactions, but hiring an accountant to oversee the finances of a business from the outset can make long-term sense. Whether you own a sports bar near Wrigley Field, or a book shop in Hyde Park, a professional accountant in Chicago can help position your business for future growth.
1. They can set up the right accounting systems
It's essential that your financial data is properly collected and stored so you can present information to the government, banks, auditors, and investors when needed. An accountant can recommend the right software or systems that work for your business. They can also establish proper procedures to ensure your books meet generally accepted accounting principles.
2. Their expertise can save you money
While many businesses only consider accountants at tax time, financial accounting services can provide year-round support. An accountant can make sure you're registered for the right small business programs and incentives, recommend ways to cut costs, and provide tips on the right time to make key expenditures.
3. They can help you plan financial strategies
In addition to making sure your day-to-day transactions are tracked, an accountant can generate the reports needed to analyze your company's performance over time. You can use the expertise of an accountant to understand trends in revenue and costs, and effectively plan the growth of your business.
4. They follow principles of financial accounting
Accountants ensure that best practices are followed when it comes to gathering and presenting financial information. They typically implement Generally Accepted Accounting Principles (GAAP), which are the standards by which financial statements are prepared. While the use of GAAP is required by publicly traded companies, many businesses also consider them standard practice.
Following GAAP assures that financial statements are:
- Complete, meaning all transactions are represented
- Consistent, meaning a company's statements can be compared over time to determine trends
- Comparable, meaning a company's statements can be compared meaningfully with those of another business
5. They give you more time to focus on growing your business
The less time you're spending on the finer details of accounting, the more energy you have to devote to running your business. If you don't need a full-time or part-time staff accountant, it may be cost effective to use an outside accountant on an as-needed basis.
Do I Need a Certified Public Accountant?
Accountants come with a wide variety of credentials. In fact, anyone can provide accounting services, even without a degree.
A Certified Public Accountant (CPA) meets the industry's highest standards. CPAs have graduated from an accredited degree program and passed a rigorous exam administered by the American Institute of CPAs.
CPAs must meet minimum experience requirements, follow a Code of Professional Conduct, and satisfy continuing education requirements to maintain their designation. They must also hold a state license in order to use the CPA designation.
Determining the Type of Accountant Your Business Needs
A CPA's skill set may include:
- Creating financial statements
- Preparing tax returns
- Auditing
- Regulatory compliance
- Risk management
- Financial planning
Like many professionals, accountants may be generalists who serve the needs of diverse businesses or specialize in certain areas.
Here's a look at what different types of accountants do to help you determine the expertise your company needs.
What does a financial accountant do?
All registered companies are legally required to prepare regular statements that show a company's financial situation. Most businesses hire financial accountants to prepare these reports.
What does a management accountant do?
Management accountants develop customized reports to help with planning and forecasting. Some may have a Certified Management Accountant designation and specialize in management accounting for larger corporations.
What does a cost accountant do?
Cost accountants analyze a company's manufacturing costs to see if there's a more effective way to manage them. This specialty falls under managerial accounting.
What does a tax accountant do?
Tax accountants focus on tax planning, preparing returns, maximizing deductions, and ensuring records are compliant with the requirements of the IRS and industry regulations.
What does an auditor do?
External auditors examine a company's financial statements and ensure they're presented properly. Internal auditors look at a business's accounting systems to ensure there's no fraud, mismanagement, or waste.
What does a forensic accountant do?
Forensic accountants are hired on a project basis to investigate fraud, negligence, and disputes, often for legal or insurance purposes. They may also be required to reconstruct missing or destroyed records. Some forensic accountants may have a Certified Fraud Examiner designation.
What does a fiduciary accountant do?
Any businesses or accounts administered by a third-party may be managed by a fiduciary accountant. This includes estates, trusts, and assets in receivership.
What does a project accountant do?
Project accounting involves tracking the finances of a particular project and creating frequent reports to ensure the project stays on track until completion. Accountants in this field often work on construction projects or new product launches.
A Closer Look at Financial vs. Managerial Accounting
While there are many branches of accounting, the two main types used by businesses are financial and managerial.
What is financial accounting?
Financial accounting involves the creation of reports and statements including:
- Income statements
- Balance sheets
- Cash flow statements
- Statements of changes in equity
These reports are created on a monthly, quarterly or annual basis to provide a consistent flow of information to lenders, investors, and other external audiences.
Principles of financial accounting
Financial accounting is Intended to provide a snapshot of a company's financial position during a specific period of time. Financial statements are prepared according to GAAP and do not include forecasting or projections.
Financial vs managerial accounting
Management accountants help companies set realistic goals through highly detailed reports for an internal audience. Managers request, at their discretion, specific information to help with planning and decision-making.
Unlike financial statements which follow a set presentation, these types of reports are customized and often include an analysis of a company's resources and future projections. Management accountants may help with:
- Budget planning
- Forecasting
- Cash flow projections
- Cost analysis
Tips for Hiring an Accountant in the Windy City
Chicago is home to many experienced accounting professionals. If your company doesn't yet have the means to keep an accountant on staff, consider hiring one to work with your business on an hourly or retainer basis.
Here are some things to consider when trying to find a professional accountant who's well-matched to your business needs.
1. What services do you want to outsource?
Before you begin your search, make a list of your needs. Decide how much work will be done in-house, and what you want an accountant to perform. Do you have an established accounting system, or do you need one set up?
Some businesses may choose to have an internal bookkeeper record daily transactions, and ask an accountant to help with financial statements and tax returns.
2. Certification and licensing
Review the credentials of candidates. Do they have a formal degree and training? If they're a CPA, make sure they're in good standing and licensed to practice in your state.
3. Relevant expertise
Consider the size and types of businesses the accountant has experience with. Ideally, they should have clients with companies that are the same size as yours and larger. It's even better if they have experience working with companies through stages of growth.
Previous expertise in the same industry may be an advantage if you're in a specialized sector.
4. Fees
Accountants typically charge by the hour and submit monthly invoices. Depending on the volume of work, some may ask for a monthly retainer.
While more experienced accountants charge higher fees, they are often more efficient at completing work. It's useful to outline the services you require, and ask candidates to give you an estimate of how many hours they expect to take so you have a rough idea of the monthly cost.
5. Trust your instincts
Your accountant should be a trusted advisor and support to your business. Make sure you're comfortable with putting your finances in their hands and feel you can ask questions.
Consider how approachable an accountant is when it comes to your business needs. Do they respond promptly and professionally to your emails and calls? Do they take the time to answer your questions carefully and thoughtfully? It's a good sign if they ask for more information to try to thoroughly understand a problem.
6. Check references
Ask for a list of current clients who you can call for references, and review any online ratings or testimonials of each candidate's work. Find out if clients are satisfied with the accountant's quality of work and accuracy.
Try to get a sense of whether the accountant is responsive to a client's questions and needs. Did the clients encounter any problems, and if so, how were they resolved? It's also helpful to find out if there have been any surprises when it comes to fees.
Questions to Ask When Hiring an Accountant
Shortlist a few accountants to meet with in person or by video conference. It's helpful to have questions prepared before chatting with your candidates.
Your questions should be customized to the needs of your business, but here are some basic topics to help you get a sense of their experience and how they might fit with your company.
- Are you a CPA?
- Do you have other credentials?
- Are you licensed to practice in this state?
- What's your educational background?
- Who are some of your clients?
- What size of businesses do you work with?
- Do you specialize in certain industries?
- Do you belong to any professional organizations?
- How do you stay up to date on accounting laws and standards?
- Have you helped a client save money or cut costs?
- How do you ensure your work is accurate?
- What are your fees?
- What hours are you available?
- What software do you use?
- Do you offer other services I might need in the future?
Getting Started With Your New Accountant
Once you've selected the right candidate, take some time to make sure you both have the same expectations of the job at hand. Then, start building a collaborative relationship.
- Make sure you have a written agreement outlining the type of work you require and the agreed upon fees.
- Organize your receipts and records as best you can so your accountant spends less time sorting through them.
- Schedule regular meetings to review financial statements, discuss your business performance, see if you're on track with business goals, and address any concerns.
How a financial accountant can help you
A financial accounting service is a critical part of your business team, whether you're launching a new business, moving into an expansion phase, or wanting to free up other resources by putting your books in the capable hands of a professional.