Questions to Ask an Accountant When Starting a Business
The questions to ask an accountant when starting a small business are much the same whether it is a shop, a trade, or freelance work that has outgrown a spreadsheet. These 56 follow the order of a first meeting: fees and fit, then structure and registrations, money and bookkeeping, tax, and last of all planning and a first hire. The answers depend on where you are and what you sell, so treat each question as a prompt to hear how it works there, not as a rule.
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The questions
Each question, and why to ask it
Fees and fit
What do you charge, and how is it billed, hourly, monthly, or per filing?
Why ask it
Ask first so the rest of the meeting is honest. A monthly fee that includes questions by phone or email changes how often you will get in touch, which can matter more than the headline rate.
How many businesses like mine do you work with?
Why ask it
Someone who already looks after a few cafes, builders or freelance designers knows the costs and the registration traps of that trade before you explain them. If the answer is vague, have them describe one such client without naming anyone.
Who will actually do my work day to day, you or someone on your team?
Why ask it
In many firms a senior person wins the client and someone more junior prepares the work. Knowing who handles your file tells you who to email and whose experience you are really buying.
What qualification do you hold, and which body regulates you?
Why ask it
In many countries anyone may call themselves an accountant, while titles such as CPA, chartered accountant or enrolled agent are licensed or regulated. Ask what theirs lets them do where you are, such as signing off accounts or speaking to the tax authority for you, and where you can look it up.
What do new business owners most often come to you about too late?
Why ask it
The answer is a free list of the mistakes the firm spends its year cleaning up, so write it down. It also shows whether they notice patterns across their clients or only process the paperwork in front of them.
Can you give me a fixed price for the whole first year, and what would push it higher?
Why ask it
A new business has little history to price from, so first quotes tend to be revised. Hearing the triggers now, such as a second owner, staff, or a shoebox of unsorted receipts, means a larger bill later is not a surprise.
At my size, which of your services do I not need yet?
Why ask it
A firm that can name what a very small business should skip is sizing the work to you. Management reports, a payroll plan and quarterly reviews may all be worth paying for later and not in month one.
How often should we speak in the first year, and what would we go through each time?
Why ask it
Meeting only at filing time means every conversation is about a year that is already over. A firm used to new businesses will have a rhythm in mind, perhaps a call each quarter, and can say what to send beforehand and whether those check-ins are inside the fee.
Do you carry professional indemnity insurance, and what happens if an error in your work costs me money?
Why ask it
Mistakes on a filing do happen, and the question is who pays the penalty and the cost of putting it right. Whether cover is required depends on the country and the professional body, so ask what applies to them and what their engagement letter says about it.
If we stop working together, what happens to my records and my software logins?
Why ask it
Some accountants hold the client's accounting subscription in the firm's name, which makes leaving awkward. Agree at the start that the files and the account belong to the business, and ask how a handover to another firm would work.
Could I talk to a client who set up a small business with you in the last two years?
Why ask it
A recent starter can tell you what the first tax season actually felt like: how fast emails were answered, whether the bill matched the quote. If confidentiality rules out a name, ask them to describe one such client's first year instead.
Structure
Based on what I have told you, which structure would you set up, and why that one?
Why ask it
You want a recommendation with reasons, not a list of options. If the reasoning is entirely about tax and never about liability or future investors, push on that.
What would the tax difference between those structures look like in my first two profitable years?
Why ask it
Rough figures run on your own forecast make the choice real in a way a general comparison cannot. Have them work through a poor year as well as a good one, because a structure that saves tax at a healthy profit can cost more than it saves when there is very little.
How much of my own money and property is on the line under each structure?
Why ask it
Liability is a legal question, so expect an outline here and a suggestion to confirm it with a lawyer. Raise personal guarantees too, because a landlord or lender who has you sign one may be able to reach your own assets even with a company in between.
What extra filings and yearly fees come with the structure you are recommending?
Why ask it
A company or partnership often brings its own return, an annual report and sometimes a minimum tax, and the amounts differ by state or country. Add the accountant's fee for preparing them, then set the total against what the structure is expected to save.
How hard would it be to switch to a different structure once the business has grown?
Why ask it
Starting simple is only a good plan if the way out is cheap. Depending on where you are, a change can mean new registrations, moving contracts and bank accounts, or a tax charge on assets that move across, so get a rough cost for it now.
What do I need to register for before I take my first payment?
Why ask it
Tax numbers, sales tax and payroll registrations often have to be in place before you trade, and a trade licence or permit may sit with a different office altogether. Leave with a list that shows which ones the accountant files and which are yours.
I have already made a few sales as a side project. What needs tidying up before I set up properly?
Why ask it
Income earned before any registration still usually has to be reported, and the dates decide which year it falls in. Bring the amounts and when they came in, since an accountant can only fix what they have been told about.
My spouse or a partner will be involved. Should they be an owner, an employee, or neither?
Why ask it
Each choice changes who is taxed on the profit, who can sign for the business, and what happens if the marriage or the partnership ends. The accountant can show the tax side of each option; the ownership agreement itself is work for a lawyer.
Which date should my business year end on, and does the choice matter?
Why ask it
Some structures and countries let you pick an accounting year end and others fix it for you. Where there is a choice, it shifts when tax falls due and whether the year-end paperwork lands in your busiest month.
Money and books
Which accounts and cards should I open before I start spending?
Why ask it
Separating business and personal money on day one is far cheaper than untangling a shared account later. Whether a separate account is a legal requirement depends on your structure and country, so check if it is a rule for you or only good practice.
How should I pay myself, and when should that arrangement change?
Why ask it
Wages, drawings and dividends are taxed differently, and which of them is open to you follows from the structure and the country. Get the method written down, along with the profit level at which the accountant would want to change it.
No employer is paying into a pension or health cover for me now. What should I set up myself?
Why ask it
What a self-employed person can pay into, and how it is taxed, varies widely by country and by structure. The accountant can explain the tax side and how contributions fit with your pay, while choosing a particular product is usually a matter for a licensed financial adviser.
How much cash should the business hold before I start taking money out of it?
Why ask it
There is no universal figure, but an accountant can turn your fixed costs and the gap between invoicing and being paid into a number of months. Having that floor written down makes the decision to pay yourself less of a guess.
Should I fund the start with savings, a loan, or a credit card, and how is each one recorded?
Why ask it
Money you lend the business, money you invest in it and money borrowed from a bank sit in different places in the books and come back out differently. Label each transfer on the day it moves, because a deposit with no description is hard to classify at year end.
Should I keep the books myself, use your team, or hire someone?
Why ask it
The answer reveals how they price. Watch for whether the recommendation is based on your volume of transactions or on what they would rather sell you.
Which accounting software suits a business my size, and do you get anything for recommending it?
Why ask it
Some firms are partners or resellers of one product, which is not a problem as long as they say so. What matters more is that they can log in to your file, and that the plan they suggest is not built for a company ten times your size.
Should I be on a cash or accrual basis, and how will that change how my numbers look?
Why ask it
The method decides when a sale counts as income, on the invoice date or when the money lands, and so when tax on it falls due. Not every business gets to choose, so find out whether the rules where you are fix it by size or structure, and which basis a lender would expect to see.
What should I be doing every month so that you are not fixing things at year end?
Why ask it
A good answer is a short list you could stick above your desk. If it is longer than five items, ask which two matter most.
Which records do I have to keep, and for how long?
Why ask it
Retention periods are set by each tax authority and can run longer for payroll or for assets you still own. Check too whether a photo or scan of a receipt is accepted in place of the paper, because that decides whether you need a filing box at all.
How do I treat something that is partly business and partly personal, like my phone or my laptop?
Why ask it
Mixed-use costs normally need a reasonable split and some way of showing how you arrived at it. Settle the method once, in this meeting, and apply it the same way every month.
What payment terms should go on my invoices, and what do I do when a customer pays late?
Why ask it
Terms, deposits and late fees are partly a commercial choice and partly set by local rules on what you may charge. An accountant who serves your trade knows what customers there accept and the point at which chasing should start.
Tax
Which deadlines am I responsible for this year, and can you send me the dates?
Why ask it
Get it in writing. Assuming the accountant is tracking every filing is how penalties happen, because their engagement may cover less than you think.
How do estimated or advance tax payments work for me, and what should I set aside from each sale?
Why ask it
A percentage you can move to a separate account the day money arrives is the most useful thing to leave with. Whether you pay in instalments during the year or in one sum after it depends on the country and on your income, and a first bill can arrive together with an advance payment toward the next year.
Will the business file its own tax return, or does everything go on my personal one?
Why ask it
That follows from the structure and the country, and it decides how many returns you pay to have prepared. The two can also fall due on different dates, so get both into your calendar and not only the one you already know.
Do I need to charge sales tax or VAT, and at what point does that start?
Why ask it
Some places require registration from the first sale and others only above a turnover threshold, and what you sell can matter as much as how much. Ask how the rule works where you trade, and whether registering early would help or hurt your prices.
I plan to sell online. Do I owe tax where my customers are, or only where I am based?
Why ask it
Selling into another state or country can create a duty to register there, sometimes once sales to that place pass a set level. Tell the accountant every marketplace and region you expect to sell into, including the ones that feel too small to count.
What is deductible in my situation, and where do people in my line of work get that wrong?
Why ask it
A general list of allowable expenses is easy to find, so the second half is what you are paying for. An accountant with clients in your trade can name the cost that tends to be over-claimed and the one owners forget, under the rules where you file.
If I work from home and use my own car, what records do I need, and starting when?
Why ask it
Both claims usually rest on records made at the time, such as a mileage log or a measure of the space you work in, and the accepted methods differ by country. Start whatever log is needed this week, because one rebuilt from memory a year on is hard to defend.
Can I claim what I spent before the business was registered, such as a laptop or a course?
Why ask it
Pre-start costs are often allowed in some form, but how far back you can go and how they are claimed varies by country. Gather the receipts, including anything bought on a personal card, and ask which of them will count.
When I buy equipment, how does the timing of the purchase change my tax bill?
Why ask it
A purchase made a week before your year end can be treated very differently from one made a week after it. Which allowances and limits exist depends on where you file, so have them named before you plan a large order, and keep in mind that a deduction only returns part of what you spend.
If I lose money in the first year, what happens to that loss?
Why ask it
A loss in the opening year is not unusual, and depending on your structure and country it may be set against other income or carried forward against later profit. It normally has to be reported on a return to count, which is a reason to file even in a year with no tax to pay.
If customers pay deposits or pay in advance, when does that money count as income?
Why ask it
The answer depends on your accounting method and local rules, and it catches out trades that take bookings months ahead. Until you know, treat a deposit as money you might still have to refund or pay tax on.
Are there reliefs, credits or grants for new businesses here that I should apply for?
Why ask it
Schemes for startups, small employers or particular industries come and go, and some have to be claimed in the first year or before a purchase is made. A local accountant should know the current ones, so ask who does the application and what that costs.
What does a late filing or a late payment cost, and what do you do if one happens?
Why ask it
Penalties and interest are set by each tax authority, so get the figures for the filings that are yours. What the firm does next matters as much: whether they tell you at once, and whether they will ask for the penalty to be reduced.
If the tax authority queries one of my returns, will you deal with them, and is that inside the fee?
Why ask it
Who is allowed to speak for you in an enquiry or audit depends on their licence and the country. Some firms include that work, some bill it by the hour and some sell separate cover for it, and it is better to know which before a letter arrives.
Planning and hiring
Can you help me work out my break-even point and what I need to charge to reach it?
Why ask it
Pricing by looking at competitors can leave you with a price that does not cover your own costs. Bring your rent, materials and the income you need, and ask for the monthly sales figure at which the business stops losing money.
Can we build a simple month-by-month cash forecast for the first year?
Why ask it
A forecast shows the months where money goes out before it comes in, such as a deposit on premises or stock bought ahead of a busy season. Ask for it as a spreadsheet you can update yourself, so it is still true in month four.
Which early signs in my books would tell you this business is in trouble?
Why ask it
You are asking for the warning lights before you need them: tax money being spent on running costs, customers taking longer to pay, sales rising while the bank balance falls. Find out which of them they would want a phone call about.
Before I sign a lease or a large contract, would you look at the numbers with me?
Why ask it
A long lease is a fixed cost the business carries whether or not sales arrive. An hour of an accountant's time testing it against your forecast is small beside several years of rent, and the terms themselves need a lawyer's reading.
If I want a business loan or a mortgage in a couple of years, what will a lender want to see?
Why ask it
Lenders often want more than one year of accounts or tax returns, though the requirement varies by lender and country. It is worth raising now because arranging your pay to show as little income as possible can also make you look less able to repay.
If I hire, what is the real difference in cost and paperwork between a contractor and an employee?
Why ask it
The comparison to request is the full cost of an employee, with employer taxes and insurance on top of the wage, beside a contractor's invoice. The tests for who counts as an employee differ by country and state, and a worker classed wrongly can mean back taxes and penalties, so have those tests explained before you agree terms with anyone.
What level of sales would the business need before it can afford a first hire?
Why ask it
An accountant can add employer taxes, insurance, equipment and your own hours spent training to the wage, then show what extra revenue has to come in to cover it. That turns hiring from a feeling into a threshold you can watch for.
Once I have staff, what do I file and pay each pay period, and can you take that on?
Why ask it
Payroll usually means withholding tax from wages, paying it over on a schedule and reporting it, and the forms differ by country and state. Establish who presses the button each pay day, who checks the payment went through, and the price per employee.
Which decisions should I call you about before I make them?
Why ask it
Having the triggers named turns a vague offer to stay in touch into something you can act on. Crossing a registration threshold, selling into a new state or country and bringing in a co-owner are common ones, each far cheaper to plan for than to discover late.
If I close or sell the business in a few years, what should I be doing now to make that easier?
Why ask it
Clean books, clear ownership records and assets held in the right name are what a buyer or a final tax return will call for. Keeping them in order from the first month costs very little, and rebuilding them at the end costs a great deal.
Making the First Accountant Meeting Count
Practical guidance for the conversation itself
What to Bring
A plain description of the business
What you sell, to whom, in which places, and roughly at what price. Structure and registration advice depends on all four, and guessing wastes the meeting.
Your numbers, however rough
Expected revenue for the first year, your startup spending so far, and what you need to draw personally each month. Approximate figures are fine; no figures are not.
Anything you have already done
Registrations filed, contracts signed, money spent from a personal account, staff already helping you. Advice changes once something has happened.
Your two worries
Say plainly what you are most afraid of getting wrong. It focuses the conversation better than working through a generic checklist.
Keeping the Relationship Cheap and Useful
- Batch your questions into one monthly email rather than sending five separate ones if you are billed hourly.
- Send documents in the format they ask for; any hour the firm spends reformatting your records is an hour on your bill.
- Reconcile your bank feed monthly, so questions are asked while you still remember the transaction.
- Ask for the engagement letter to spell out which filings they handle and which remain yours.
- Tell them about a change before you make it, not in the following tax year.
Signs You Have the Wrong Accountant
- The recommendation on structure is the same for every client they describe.
- You cannot get a straight answer on fees before work starts.
- Questions during the year are treated as interruptions rather than as part of the service.
- They discourage you from understanding your own books.
- Deadlines are met at the last minute, with documents requested the day before.
Before You Leave and the Week After
Leave with four things written down
The structure they would set up and the reason for it, the list of registrations with a name beside each one, the filing dates for the year, and the fee with what it covers. If any of the four is still vague at the end of the hour, ask for it by email before you decide.
Put the same five questions to a second accountant
Fees, who does the work, the structure they would choose, what they expect from you each month, and what new owners bring to them too late. Two sets of answers side by side show which firm asked about your business before advising on it.
Do the setup jobs before the first sale
Open the business account, switch on whichever bookkeeping system you agreed, and file the registrations that are yours to do. Each one is quick when the business is new and slow to backfill once there are three months of transactions behind it.
Send a recap and book the next call
A short email listing what was agreed gives the accountant a chance to correct anything you misheard, and gives you a record to check the first invoice against. Put the next conversation in the diary then, ideally a couple of months into trading, when you have real figures to look at.