As a small business owner, you need to be able to rely on your accountant to handle your financial affairs. It's your accountant's job to keep accurate records, file your taxes in a timely manner and compile the necessary documents that will portray your company's financial health to banks and investors.
A single act of accounting negligence, however, can ruin your business reputation, damage your investors and cause you significant personal financial losses. Any breach from acceptable accounting practices -- whether done intentionally or not -- can be a disaster. So, if you find any of the following danger signs happening with your accountant, it's time to hire someone new:
1. Your accountant offers to cheat for you
Most business owners develop a strong personal relationship with their accountant. However, no matter how friendly your connection is with your accountant, your accountant should never offer to manipulate your books to help you present an unrealistically-rosy portrait of your company's financial health. That's fraud and no reputable accountant would risk his or her license that way.
2. Your accountant isn't up-to-date
Accounting is a constantly evolving profession. Find out what type of ongoing training your accountant gets in order to stay current on the tax laws. In addition, you probably want to look for an accountant who -- by now -- has fully entered the digital age and makes use of professional technology that will benefit his or her clients.
3. Your accountant doesn't have the right skills
If your accountant seems to be "muddling through" the process of handling your most recent business concerns instead of acting like a knowledgeable guide, that's a sign that your accountant has reached beyond his or her level of professional skill. Accountants come with varying degrees of ability and knowledge -- and every accountant should know his or her limitations.
4. Your accountant can't explain your statements
You should be able to rely on your accountant to break down your company's financial statements in a way that you can understand them. If your accountant seems unwilling -- or unable -- to do so, that's a big danger sign. If you can't use the reports you're paying your accountant to produce, you're essentially wasting money.
Don't overlook these problems. Otherwise, you could easily end up the victim of accounting malpractice -- and that could destroy your future.