Let's start with the presumption that your business is growing and the complexity of your financial transactions are causing you concern. Back when you started, you were able to do all the day-to-day accounting and posting of activities yourself, and maybe a local bookkeeper or accounting firm prepared your annual statements and tax returns.

Business is moving faster and faster these days, and you need more timely reports, most of which your internal bookkeeper may not be able to provide. Your friends suggest you hire an accountant or an accounting firm to help. The question you're asking is, "How do I select the best accountant or accounting firm for me?" It's not difficult to find a competent firm. What's difficult is to find one willing to work closely with you to help your business grow and prosper. Here are several steps you can take to ensure the best match.

TYPE OF ACCOUNTANT
Your accountant should be a C.P.A. (Certified Public Accountant), not just an accountant or a bookkeeper. I know! There are many competent accounting firms out there that are every bit as good as a C.P.A, but a C.P.A typically has considerably more accounting education past college, and is required to pass a rigorous and comprehensive test before he or she can use the letters C.P.A.. A C.P.A. also must maintain competency through regular continuing education attendance, accountants are not.

Begin your selection with a list of C.P.A.s in your community. Start by asking each firm if anyone on their staff is a specialist in your business. Second, check with firms similar to yours, asking which accounting firm they use. See if any names match.

EXAMINE CREDENTIALS
Don't just look at a business card and assume you have a qualified C.P.A. Check with your state accountancy board for disciplinary or licensing actions against the individual or firm. Ask for a resume, and call the graduating college to see if the individual really graduated from that school. Be wary of the new graduate. Although he or she may be full of vim and vigor, you need someone who has been through the ropes, someone who knows how to use the law to your advantage, someone who can work close to the wire without playing games that attract the attention of the IRS.

CHECK REFERENCES
As you narrow your search, ask for the name of six current clients approximately your size and industry. Call them and ask questions like: "Does your C.P.A. pay enough attention to your problems or do you constantly have to chase him down for answers?" "Do you receive clear and easy-to-understand answers or do you hear, 'It's a little too complicated to explain', or the worst, 'Trust me, this is the way to do it!'" "Did your C.P.A. simplify your accounting system, or has it grown to something almost totally dependent on the accountant?" If you don't like the answers, move on to the next name.

PERSONAL VISITS
When you have winnowed your selection down to three C.P.A.s, make an appointment to visit each at their office. Competent individuals should ask what your needs are. Be wary if your visit starts off with pat answers, package programs or proprietary software. You need someone who will adjust to your firm, not force you into a standard mold.

ASK WHAT'S INCLUDED
Ask what you will receive for the basic package. Will you receive analyses and explanations or will you just get the standard reports? Does the price include consultation time to explain the figures? Make sure the C.P.A. you select will not just 'do' your taxes, but will represent you in front of the IRS at his or her expense should anything be called into question by this agency. Get this in writing. Ask if the C.P.A. or firm is insured, and get this in writing at the final selection time.

MINIMUM REPORTS
Make sure you receive the following reports monthly, along with both an explanatory report and an in-person analysis: Balance Sheet, Income Statement, Retained Earnings Statement, and Change in Financial Position. These minimum reports should be keyed with industry standards of similar firms as well as your own past yearly, monthly, and budget comparisons.

DESIRABLE REPORTS
If you're growing, you need a series of analysis reports along with accompanying explanatory information. These should include reports on your liquidity (short-term survival), asset use (current activity), debt ratios (the financial leverage you have), and a return on equity (what you're worth). Other valuable reports would include a trend analysis (Where you're going) and a Z-Score analysis (bankruptcy predictor).

COSTS
Ask the cost of a basic package price and then find out the additional cost for extras. Compare your final three C.P.A.s. Since you are embarking on a long-term relationship, factor in the 'personality factor'. Finally, sit on it for a month. Hire the one you feel most comfortable dealing with.