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In the world of business, accountants are employed in one of three sectors: public, private, and government. Having a handle on who does what can help you get a handle on who may best be able to help you when you decide you need assistance. Public accountants sell their services to the consumer public. They may offer their services independently (as a CPA) or work for an accounting firm. Private accountants are employed as in-house accounting staff by companies. And of course, government accountants work for local, county, or state governments, or the federal government. There also are different types of accounting specialties, such as bookkeeping, tax preparation, and auditing. Some accountants specialize in one distinct area, while others perform a wide variety of services.
Among accounting professionals, Certified Public Accountants (CPAs) provide the highest levels of services to the public, due in part to their additional education, experience, and testing requirements. CPAs must earn and maintain state certification, including stringent continuing education requirements to ensure they stay updated on the most current information.
Determine What You Need Help With
Hiring an experienced accounting professional can save you time and money. It can also help you avoid making costly financial mistakes. Before choosing an accountant, try to determine what type of services you will need. For example, if you are starting a new business you might need help with setting up an accounting system. Once your business is up and running, an accountant can help you uncover hidden deductions that will reduce your liabilities at income tax time. When shopping around for an accounting professional, think about what services you need now and as well as what type of services you might require in the future.
Some basic accounting services:
Choose the Right Professional
Once you decide what you need help with, your next step is to figure out what level of services youre looking for. You may find that you end up using a mix of professionals. For example, if you run your own business you might employ an in-house bookkeeper to handle the day-to-day data entry (or do it yourself), but hire out the payroll processing and tax preparation.
Whether youre hiring someone to help with your small business or your household business, choosing the right professional really comes down to two main factors: financial and personal compatibility. Ultimately, you should feel confident that you are getting sound advice at a fair price and that you can fully trust your accountant with a lot of confidential information.
Financial compatibility: In general, higher-level services (tax planning) will usually cost more than lower-level services (basic bookkeeping). Still, its always best to call around and compare fees. For example, an independent accounting professional may offer both higher level and lower level services, but charge the same standard hourly rate regardless of the service. In that case, it might be more advantageous to find a full-service firm that employs different levels of accounting professionals and bills at different rates depending on what type of services you need. Also, make sure you ask whether or not you will be charged for your initial consultation.
In most cases, CPAs charge more for their services than do any other accounting professionals. More letters attached to a name, such as CIA (certified investment adviser), usually also translates into higher fees. On the bright side, you will likely benefit from their increased amount of experience.
Examples of other credentials (not an inclusive list):
Eight questions to ask potential accounting professionals: