10 Steps for Selecting the Right CPA for Your Startup

Taxes are an inevitable aspect of owning a business, and one of the best ways to handle them is to partner with an experienced CPA. Choosing the right CPA for your startup can be a difficult task. Not every CPA or accounting firm is equipped with the resources, experience, and knowledge you need. Here are 10 steps to select a CPA who is an excellent fit for you.

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1. Experience in Your Company’s Industry or Field

Finding a CPA who is experienced in working with your company’s industry is crucial as they will understand the tax laws and opportunities available to your company.

If a CPA has limited experience in your industry, having experience in various sectors reflects positively on a CPA’s skill and ability to understand multiple business structures. Wide-ranging expertise can help a CPA effectively claim all tax deductions you are eligible for.

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2. Experience Working with Startups

Claiming tax credits for a startup can be more challenging than for a larger corporation and is difficult for many small business owners to do on their own. Choosing a CPA with a background in working with small businesses can be a great move to help you understand your tax responsibilities and help you navigate credits, exemptions, and loopholes. Moreover, a CPA with startup experience will be equipped to handle rapidly changing situations, such as onboarding employees and stock options that have additional reporting requirements.

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3. Do They Communicate with Their Clients Consistently and Promptly?

One overlooked aspect when searching for a suitable CPA is the importance of stellar communication. Many issues that arise between CPAs and clients result from miscommunication. Choosing a CPA who consistently reaches out to their clients for clarification and is available year-round to answer questions is a choice that can lead to a long-lasting relationship between you and your CPA.

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4. Does the CPA Use an Effective, Timely Process?

It is important to choose a CPA that is deadline-conscious while being efficient. During your search for a CPA, some things to look for include batch processing, strict deadlines, checking accounting systems regularly, and the ability to provide a detailed implementation for their strategy.

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5. Testimonials/Client Reviews

During your search for a CPA to work with, one of the critical factors to evaluate is their reputation and how they have worked with similar clients in the past. Testimonials allow you to get insight into a CPA’s achievements and characteristics. Client reviews showcase client experiences and may show the CPA’s tax preparation process from a client’s perspective. Furthermore, a client review can be the determining factor in deciding whether a particular CPA is right for you.

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6. Technological Competence

Being tech-savvy is an increasingly important skill for CPAs. There are several technologies CPAs should be familiar with, including cloud-based systems, specialized accounting software, and data visualization software such as Tableau. In addition, some CPAs may have additional certifications that let clients know what technological areas they are skilled in. A technically skilled CPA is more likely to have an efficient tax preparation process and can dedicate more time to reducing your startup’s tax burden.

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7. Payment Structure

Before you select a CPA, it is crucial to know how they charge their clients. Some CPAs charge by the hour, while others charge a flat rate. CPAs may charge separately for additional services such as filing extensions and expedited returns. You will likely be charged extra fees if you submit incomplete information or provide key documents later than requested. Rates also vary depending on where you are located and how in demand a CPA is. In-demand CPAs in high-cost-of-living areas are likely to charge more.

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8. Do They Provide Audit Defense?

While tax audits are rare, a CPA must be prepared to handle them, especially with a startup. Facing an IRS audit can be a daunting dilemma for a startup, and an experienced CPA can be a key resource for helping you pass an audit. CPAs should be able to formulate an audit defense strategy tailored to your business needs.

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9. Personality Traits

When searching for a CPA to work with, it is important to ensure they possess certain personality traits. Some excellent characteristics a CPA should have are attention to detail, integrity, and a collaborative mindset. Less-expected traits that can make a good CPA are the ability to think creatively and a desire to learn constantly. A CPA with these personality traits can be an asset to your startup and help you navigate the annual tax season.

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10. Expertise in Claiming R&D Tax Credits

Finally, you will want to ensure that your CPA is experienced in claiming R&D tax credits for startups. Here are some key factors to consider:

Have they worked with other startups to claim R&D tax credits?

Experience is often a good indicator of how effectively a CPA will secure tax credits for their clients. These CPAs can guide the client when filling out documents and understand the nuances of tax filing for a startup.

Knowledge of IRS tax regulations

IRS tax regulations can be complicated for a small business to understand and navigate. Partnering with a CPA who understands the tax regulations ensures that you comply with existing tax laws and any new ones that may be passed.

Expertise in state R&D tax credits

If you are in a state that offers state-issued R&D tax credits, it is ideal to have a CPA located in your state who can help you claim additional credits. Many states require a company to conduct R&D activities within their borders to qualify for their tax credits. States have different laws regarding how much R&D tax credit can be claimed and the criteria for eligibility.

Their ability to help you claim tax credits retroactively

Many businesses are unaware that their past activities may make them eligible for R&D tax credits. Fortunately, R&D tax credits can be claimed retroactively. Depending on when your tax return was filed, you may qualify to claim R&D tax credits for previous years. Some states allow you to claim tax credits going back five years.

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While most CPAs can meet many of the above criteria, finding one with R&D tax credit-specific experience can be challenging. MainStreet can bridge the gap between startups and CPAs by finding the credits best suited to your business. If you are looking for a simplified way to claim R&D tax credits, contact us today!