Women entrepreneurs: Tips for choosing an accountant

By Joanna L. Krotz

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Finding the best accountant for your business is an issue that straddles the gender divide.

In other words, money is green, not pink or blue.

As a result, much of the sage advice about how to find and evaluate a business accountant applies equally to male or female small-business owners.

However, there are a couple of issues to consider that makes selecting an accountant a decidedly different decision for women than for men.

• No. 1: As demonstrated by several studies and by overwhelming anecdotal evidence, women typically start, grow, and manage their businesses differently than men do.   

  Women-focused business associations and incubators have discovered that women often launch businesses that evolve out of their lifestyles or career experiences: yoga centers, Web site design, retailing, marketing, and tutoring, to name a few.

  Women are more likely than their male counterparts to consult outside sources about business management and growth issues, according to the latest available data, a 2001 survey from the Center for Women’s Business Research. They rarely begin with fully-formed business plans or outside financing. Instead, women tend to run the business alongside other responsibilities, including family and jobs. That’s not the usual path that men follow.

• What this means: Women typically tap the expertise and advice of their accountants more often than men do.   

  Women tend to forge closer relationships with such experts, viewing them as advisers rather than mere tax preparers. So women often benefit by working with more seasoned and big-picture accounting experts who can provide strategic analysis about financial decisions, risk management and lending, credit, and tax ramifications.

  For instance, Suzan French was a senior publicist at a corporate agency before going out on her own, working from her home in Allentown, Pa. "I started my PR and marketing business three years ago," she says. "The first year I showed any real profit was 2007. As a result, I was hammered by taxes. I didn't know to pay quarterly. I didn't track business expenses properly and I made other costly mistakes, like invoicing for expenses, but not separating them from the cost of service, so I paid taxes on expenses."

  A friendly accountant could have saved French a bundle in money and growing pains.

  A smarter choice for women business owners would be an accountant with whom they can spend time exploring financial options, such as the timing and tax consequences of capital expenditures or working as a partner with another small business on a short-term project. This means that women also should consider only accountants they can trust with confidential intelligence about clients, business associates, and deals.

• No. 2: Without formal business plans, women tend to grow sales and profits by working on their instincts.   

  They're often not as skilled or confident as men in controlling the company financial dashboard. "Lack of desire to delve into the financial side of the business is what keeps many women business owners from growing to their maximum potential," says Elizabeth Gordon, who runs a management consulting firm in Atlanta called Flourishing Business, and is the author of "The Chic Entrepreneur."

• What this means: The accountant's insights and expertise are usually more pivotal for a woman's success than they are for male business owners.   

  A woman entrepreneur ought to look for an accountant who takes time to understand how she works and who perhaps has some knowledge of her field or industry.

  "Hire someone who understands small and family businesses," urges Donna Maria Coles Johnson, who owns Indie Beauty Network Media in Charlotte, N.C., a trade organization for entrepreneurs.

  Before finding her current accountant, who specializes in small business, Johnson got burned by the first one she hired. That accountant, she says, "was bad at being self-employed. It was so overwhelming to her that it compromised her ability to serve."

  Bottom line: "It's not just school smarts that counts," Johnson says. "And it's not just experience. What counts is experience working with businesses that are similar to yours, and working with someone who manages his or her own affairs well."

   Tip   Learn more about electronic financial recordkeeping with Microsoft Office Accounting Express 2008. And get help in finding a local accountant through Office Live Small Business partners.

Choose an accountant who can help you grow

The upshot is that every business owner must be careful about choosing an accountant. But women typically need to be even more careful.

You want to find an expert who will become invested in your success and be more of a trusted adviser than a pay-by-the-hour tax preparer.

Women business owners who have been through the process, such as French and Johnson, also advise starting the recruitment effort early. "Don't get stuck like me and hire the first person who comes along," says Johnson, whose revenues climbed for a while before she had a good accountant in place.

With all this in mind, here are 10 dos and don'ts for choosing the right accountant.

1. Do ask the accountant to give you references from other women clients—and check them.   "A good firm will not hesitate to provide several references for you to explore before committing," says Andra Watkins, a certified public accountant based in Charleston, S.C., who often works with women-owned businesses.
2. Do check credentials.   Qualifications from the Institute of Chartered Accountants, the Association of Chartered Certified Accountants, or the Chartered Institute of Management Accountants carry credibility.
3. Do choose someone who makes you feel comfortable.   You want an accountant who will empower you with the info you need to run your business.
4. Do find an accountant can explain everything without wallowing in financial lingo.   "Too many accountants simply take a woman owner's information, prepare the taxes, and never explain what any of the mysterious numbers really mean," Watkins says.
5. Do get a specific fee schedule.   You shouldn't be charged for the initial consultation and the accountant should be able to estimate your annual costs after hearing your needs.
6. Don't forget to set up a schedule to pay yourself.   Ask the accountant to arrange for a plan for retirement or tax-free savings, such as an IRA or a SEP. But be wary about any investment advice he or she may offer.
7. Don't get oversold.   A bookkeeper or more junior CPA can handle many tasks, so ask about separate billing rates and who will be performing which functions.
8. Don't outsource and then forget it.   Even with an experienced accountant, you must monitor the books, taxes, and other work.
9. Don't cheap out.   Pay well for expert help, even when your business is young and strapped for cash. Like everything else, you get what you pay for.
10. Don't start looking for an accountant during tax season, which is usually January through mid-April.   Accountants are way too busy to talk to you then.

Selecting the right adviser accountant can make all the difference in building success more quickly and easily. Plus, if you choose well, you won't need to worry about financial errors catching up with you.

About the author   Joanna L. Krotz is the founder of Muse2Muse Productions, a custom content company for business and consumer magazines, newsletters and digital imprints. Krotz has launched marketing Web sites and e-news portals, as well as created magazines and online marketing for a variety of companies. She is co-author of The Microsoft Small Business Kit, a 500-page guide to launching and running a small business.