Hiring an accountant can be a daunting process for many small business owners. Before starting your search, it is important to determine the type of experience and skills you need. Are you looking for someone to analyze the numbers for you and create a budget or do you really just need someone to enter the invoice and invoice data?

If you have someone to help you figure out the numbers, or if you have a solid background in accounting and financial management, it will probably be okay to hire someone who is proficient in your accounting software and whose experience and personality fits your business. On the other hand, if you don’t have someone to make sure the numbers are correct, the data entry accountant is not a good idea. In this case, you’ll want to find someone with full load accounting experience. That is, the possibility of reconciling the balance and making a monthly closing. Accountants typically don’t have the skill set to help you with financial management beyond accurate financial reporting.

Once you place an ad, you will be treated with a smorgasbord of candidates. You’ll have to narrow down the number of candidates to those that meet the needs of your job description, and then the interview fun begins. You’ll want to ask questions that ensure that the accountant actually has the right skills and that they fit your business culture. Here are 8 questions to ask your potential accountant:

1) Do you think accrual or cash-based reporting is better for business management?

Look for an advanced accountant to explain that accrual accounting provides better financial reporting, but that the cash basis for taxes is generally preferred. We can keep the books on an accrual basis for management reports and the tax accountant can make adjustments for cash taxes. A standard accountant will probably tell you what their experience has been and will have no preference for either.

2) What is the accounting equation (or the balance equation) or explain the balance.

A good accountant will explain that the balance sheet has assets, liabilities, and equity. This is mandatory for anyone who expects you to provide accurate financial reports. Ideally, they will tell you that the equation is: Assets = Liabilities + Equity. If they can’t explain the balance sheet, ask them to describe an asset and liability account. You don’t want someone who doesn’t know the balance sheet responsible for the month-end close, but if someone else is ensuring accuracy, simply knowing how assets and liabilities are used will be fine.

3) The bank account has a discount of $ 0.72. How long will you spend looking for the problem and what steps will you take to find it?

This problem is tricky and it really depends on what you would like to see in the right accountant. Some will not stop searching until they find it. Sure, there could be a lot of things causing a discrepancy, so you’ll want them to spend some time looking for the problem. But how long? Is spending 2 hours looking for $ .72 the best use of time? If you look at the return on investment, it is a waste of time. If they respond 2 hours, you’ll want to investigate their tolerance for less than perfect circumstances. If you are in the creative field, an extreme perfectionist can drive you crazy. However, if you’re not looking for the bug at all, your attention to detail is probably not strong enough and you should keep looking.

When looking for the error, the ideal candidate will say that it is likely a transposition error and would start there first (transposition errors are divisible by 9). They might just say that they would check each line item against the declaration, which is perfectly valid.

4) In cash accounting, how would you record an annual insurance premium of $ 600?

The correct answer for the cash basis is the $ 600 debit, cash credit, or accounts payable insurance expense. All accountants should get it right.

5) How would you record an annual insurance premium of $ 600 using accrual accounting?

The correct answer here is $ 600 Prepaid Debit Insurance, Cash Credit, or Accounts Payable. Install them to find out when insurance expenses are recognized. Must be $ 50 / mo with a debit to insurance expenses and a prepaid insurance credit. If the candidate cannot answer this question, do not expect them to keep their books based on accrual accounting. You will want to depend on someone else for management reports.

6) How many gas stations (or coffee shops, etc.) do you think there are in the United States?

With this question, we are looking for good critical thinking skills. It’s not okay to guess a number without explanation or say they would Google it. You want the candidate to have a process to get to your guess, no matter how far away it is. There are so many gas stations in my city, I guess so many cities in my state …

7) Rank the following in order of importance to business success: Sales, Teamwork, Quality, Integrity, Profitability, Service

There is no right or wrong answer to this question, but it will indicate whether the candidate is aligned with your company culture and will also demonstrate critical thinking skills. Look for a justification for why they responded the way they did. Does it align with how you would answer the question? For example, if they say that profitability is the most important thing. Why is that the case? If they say teamwork is the least important, you probably want to dig a little deeper if teamwork is high on your priority list.

An accountant should list profitability further down the list because he wants to know that he is considering the entire business, not just his work. You’ll also want to see integrity at the top of the list. Do you really want an accountant who doesn’t value integrity?

8) Tell me about a time when you disagreed with something your boss asked you to do.

The correct answer here will depend on the personality you are looking for. Do you want a follower who does what you say? Looking for an advisor to tell you what to do? Perhaps a combination is the right answer for you, someone who is confident enough to speak his or her mind, but is willing to follow direction.

There are tons of possible interview questions to ask when interviewing accountants. The ones listed above can give you a good indication of whether or not the candidate is suitable. For a better assessment of accounting skill, see the AIPB Accounting Test. Be sure to check references and try to speak to a CPA who has had the opportunity to see your work.

Copyright (c) 2010 Kelly Totten

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