Accountants

Small Business Accounting

This article provides general accounting information, with a focus on accounting for small business.

Generally Accepted Accounting Principles (GAAP)

Accountants conduct their profession according to the Generally Accepted Accounting Principles (GAAP). These describe the rules associated in recording and summarizing financial transactions and the preparation of financial statements. The GAAP applies whether the company in question is publicly traded or privately held and regardless of the accountant's professional designation.

Certified Public Accountant (CPA)

A Certified Public Accountant (CPA) is someone who has passed the Uniform Certified Public Accountant Examination and has satisfied other requirements (education and experience) related to the CPA designation within their state. A CPA is mainly concerned with financial audits. It is often said that to become a Certified Public Accountant you have to show profiency in the Four E's: Education, Examination, Experience, and Ethics.

Certified Management Accountant (CMA)

A Certified Management Accountant (CMA) is a person who has been judged professionally competent by his peers and has been awarded this designation by the Institute of Management Accountants (IMA). A CMA is focused on internal finances and management reporting.

The Big 4

The following are known as "The Big 4" auditing firms.

  • PricewaterhouseCoopers
  • Deloitte Touche Tohmatsu
  • KPMG
  • Ernst & Young

     

These are the largest international accounting firms, responsible for the majority of audits for publicly-traded companies. They are typically amalgamations of local firms working under a common brand. Depending on the size of your business, you may wish to include one of the Big 4 in your shortlist of potential accountants.

Small business accounting

The following questions will help you choose the best accountant for your needs.

Are you a good match in size? As with other businesses, accounting firms service the largest clients first because they generate the largest fees. Make sure your accounting company has selected your sized business as their target client.

What accounting services will you receive and what will they cost you? Know exactly what will be provided, and how often.

Where does he/she go for second opinions? No one who deals with tax accounting can claim to know it all. A good accountant will have a formal procedure in place to refer to others more expert in their particular fields.

What is the basis for the fee? Part of the fee will be based on the time necessary to complete the work. Look for someone who is willing to say that if you furnish your information in a certain format at a certain time, he/she will do the work

Is he/she interested in your business? Did this person take the time to review the financial information provided? Did he/she make sure you understood the concepts?

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