Before you hire a CPA for your small business, ask five things: Is your license active (check CPAverify), do you work with businesses like mine, do you offer year-round tax planning or only tax preparation, who will handle my file and how fast do you respond, and exactly what does the monthly or annual fee include? The answers tell you whether you are getting a proactive tax advisor or a once-a-year filing service, and they surface red flags before you hand over your books.
Below is the full checklist, grouped by topic, with the official tools you can use to verify what a firm tells you.
Short answer: Before hiring a CPA for a small business, ask whether the license is active, whether the firm serves businesses like yours, whether it offers year-round tax planning or only preparation, who will handle your file and how fast they respond, and exactly what the fee includes.
First, understand who you need: CPA, enrolled agent, or bookkeeper
Not every small business needs a certified public accountant for every task. Knowing the roles helps you hire the right person and avoid paying CPA rates for work a bookkeeper can do.
- Bookkeeper: records day-to-day transactions, reconciles bank accounts, and runs invoicing or payroll. Essential for clean books, but usually not licensed to give tax advice or represent you.
- Enrolled agent (EA): a tax specialist licensed by the IRS with unlimited rights to represent taxpayers. A strong option if your main need is tax filing and IRS issues.
- CPA: licensed by a state board of accountancy after passing the Uniform CPA Exam and meeting experience and continuing-education rules. A CPA can handle tax planning, financial statements, reviews and audits, and broader business advisory work.
Many growing companies use a bookkeeper for monthly work and a CPA firm for tax strategy, year-end filing, and big decisions. For a local comparison, see our guide to the difference between a CPA and an accountant.
Questions to ask a local CPA about industry-specific expertise
- Do you specialize in businesses in my industry? Construction, e-commerce, restaurants, medical practices, and real estate each have unique challenges, from sales-tax nexus to inventory accounting and job costing. An accountant who already serves your industry knows the deductions and benchmarks.
- What size clients do you typically serve? A firm built for startups works differently from one serving companies with $10 million in revenue. Ask where most clients are and whether they can support your business growth over the next three to five years.
- How many years of experience do you have with businesses like mine? Ask for an example (without confidential details) of a problem they solved for a similar client.
Questions about tax planning vs. tax preparation
- Do you offer year-round tax planning or only tax return preparation? Tax preparation looks backward and reports what happened. Tax planning looks forward: timing purchases, retirement contributions, and owner pay to legally reduce the bill. Ask how many strategy meetings are included annually.
- Can you advise on my business structure? As the business expands, moving from a sole proprietorship or LLC to an S corporation can change self-employment tax. The IRS overview of business structures is a good primer before that conversation.
- Who handles estimated tax payments, sales tax, and payroll filings? Missed quarterly deadlines cause many of the penalties a business owner pays. Clarify which tax filings are the firm’s responsibility and which are yours.
Questions about audits, IRS notices, and compliance
- If my business is audited, will you represent me? CPAs, enrolled agents, and attorneys can represent clients before the IRS, usually with a signed Form 2848 (power of attorney). Ask whether the person you are interviewing handles audits personally or refers them out.
- Is responding to IRS or state letters included in the fee? Routine notices happen. Find out whether they are covered or billed hourly.
- How do you keep up with compliance changes? Licensed CPAs must complete continuing education, and many follow AICPA professional standards (see the AICPA).
Questions about communication, cash flow, and financial management
- Who will be my main point of contact? At larger firms the partner you meet may delegate work to staff. Ask who prepares, who reviews, and who answers your emails.
- How often will we review my financial statements? A good small business accountant should help you read your profit and loss, balance sheet, and cash flow report monthly or quarterly, not just at tax time.
- What is your response time during tax season? If you need help making a quick decision in March, you want to know the answer is days, not weeks.
- Can you help with budgeting, margins, and forecasting? Some firms offer fractional CFO and finance support tied to your business goals; others stick to taxation.
Questions about software, bookkeeping, and data security
- Which accounting software do you support? If you run QuickBooks Online, Xero, or an industry tool, the firm should already work in it.
- Do you offer bookkeeping, or should I keep my own bookkeeper? Some accounting firms bundle these services; others prefer to review the work of your in-house staff.
- How do you share and store documents? Bank and employee records should go through an encrypted client portal, not email attachments.
Questions about pricing and what’s included
Pricing is where most misunderstandings happen. Common models include:
- Retainers for ongoing bookkeeping, advisory, and tax work, with predictable costs
- Flat fees for defined projects such as an annual business tax return or an entity change
- Hourly billing for audit defense, IRS notices, or one-off consulting
Ask: “What exactly is included, what triggers extra billing, and how do you handle scope changes?” Then get it in a written engagement letter. The cheapest quote is rarely the best value if it excludes planning and notices you will need anyway, so negotiate scope, not just price.
How to verify CPAs before you choose a CPA firm
- Check the license. Search the free NASBA database at CPAverify.org, or your state board directly, such as the Texas State Board of Public Accountancy or the Arizona State Board of Accountancy. Look for an active license and any disciplinary history.
- Confirm the PTIN. Anyone paid to prepare federal returns must have a current Preparer Tax Identification Number.
- Read the IRS checklist. The IRS page on choosing a tax professional lists credentials and warning signs.
Red flags when you hire an accountant
- Promises of a specific refund or tax savings before reviewing your records
- Fees based on a percentage of your refund
- Refusing to sign returns they prepare, or asking you to file as “self-prepared”
- No written engagement letter
- An inactive or unverifiable license
Need help? Find the right small business accountant near you
Use these questions in a short consultation with two or three candidates, and compare the answers side by side. A local CPA who understands your state’s tax rules, your industry, and your goals is usually the right fit for your business.
To compare local options, browse CPAs in Austin, TX or accountants and CPAs in Phoenix, AZ on Top Service Providers, then verify each firm’s license before you sign. Accounting professionals can also browse the directory and claim a listing.
Frequently Asked Questions
Ask whether their license is active, whether they work with businesses in your industry, whether they provide year-round tax planning or only tax preparation, who will handle your account, how fast they respond, and exactly what the fee includes.
Watch for guaranteed refunds, fees tied to the size of your refund, refusal to sign the return, no written engagement letter, and a license you cannot verify on CPAverify or your state board.
Many owners hire an accountant at formation to choose an entity and set up books, and most should have one once they run payroll, collect sales tax, or have more than a few hundred transactions a month.
Not always, but a local CPA often knows your state and city tax rules and is easier to meet. National firms may offer more specialized services. Compare scope, responsiveness, and price.
It depends on complexity and scope. Many firms charge a monthly retainer for bookkeeping and advisory work, a flat fee for annual returns, and hourly rates for audits or special projects. Ask for a written quote.
Yes. Give notice under your engagement letter, request copies of your returns and workpapers you’re entitled to, and share access to your accounting software with the new firm.
This article is general information, not tax or accounting advice. Consult a licensed professional about your situation.
