How a small business should choose a CPA firm

Deciding what help you need, shortlisting from the state record, questions to ask, commissions, peer review, the engagement letter and red flags.

Choosing an accountant is one of the first professional decisions a small business makes, and one of the longest-lasting. This guide is a practical way to decide what kind of help you need, shortlist firms from the state's records, and set the relationship up well. It is written for California and Illinois but most of it applies anywhere.

Decide what you need

• Tax returns only. Individual and business returns, estimated payments. A CPA, an enrolled agent or another paid preparer can do this; the IRS notes that anyone with a Preparer Tax Identification Number can prepare returns for pay (IRS).
• Bookkeeping and payroll. Recording transactions, reconciliations, payroll filings. Often done by bookkeepers, with a CPA reviewing.
• Advice and planning. Entity choice, tax planning, cash flow, budgeting, financing.
• Financial statements for others. A compilation, review or audit for a lender, surety, landlord, investor or grant. Audits and other assurance work are restricted to licensed CPAs (Illinois: 225 ILCS 450/8.05).
• IRS problems. Notices, audits, collections. CPAs, enrolled agents and attorneys can represent taxpayers before the IRS (IRS: enrolled agents).

Other credentials worth knowing

CPAs aren't the only option for tax work. The IRS explains that "enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights", meaning no restrictions on which taxpayers they can represent, what tax matters they handle or which IRS offices they appear before (IRS: enrolled agent information). Enrolled agents specialize in tax. For a business that needs tax returns and IRS representation but not audited financial statements, an enrolled agent can be a good fit; for assurance work, you need a licensed CPA firm. The IRS also publishes a directory of federal tax return preparers with credentials, linked from its choosing a tax professional page.

Shortlist from the record

Use this directory to find licensed or registered firms near you, then check each one against the state's lookup: DCA License Search for California, IDFPR License Look-Up for Illinois. Look up the individual CPA who will do your work as well as the firm. In Illinois, read any disciplinary entries we show; in California, the DCA record shows any Board action.

Questions to ask

1. Which services do you provide, and who will actually do my work? A partner, a staff accountant, an offshore team?
2. What clients do you serve? Ask about businesses of your size and industry.
3. How do you charge: fixed monthly fee, per return, or hourly? What's included and what costs extra?
4. What software do you use, and will I have access to my own books?
5. How quickly do you respond, and how do you handle deadlines and extensions?
6. For attest work: your latest peer review report and acceptance letter.
7. Do you receive commissions or referral fees from any product or service you might recommend?

Ask for references from two or three current clients similar to your business, and call them. Ask how responsive the firm is in the weeks before filing deadlines, and whether fees matched the estimate.

Commissions and referral fees

California generally prohibits a person in public accountancy from paying a fee to obtain a client or accepting one for referring a client to a third party; commissions on a third party's product supplied with the CPA's own services are allowed only with disclosure and not while the CPA performs certain attest work for that client (Business and Professions Code § 5061). Whatever state you are in, ask about any commission and expect it in writing. For the same reason, featured listings on this site are a flat monthly fee, never a payment per client or referral.

Peer review

Both states use peer review, an outside review of a firm's professional work. California requires a firm to have a peer review report of its accounting and auditing practice accepted at least every three years to renew in active status (§ 5076). Illinois requires it, as a condition of renewal, of firms that perform audits and other assurance work on financial statements (225 ILCS 450/16). The report tells you whether the firm's work met professional standards. A firm that only prepares tax returns may not have one.

The engagement letter

Before work starts, get an engagement letter. It should cover the services, what each side is responsible for (you for complete and accurate records; the firm for the work), deadlines, fees and billing, how records will be returned if you part ways, and who owns the files. Read it; it is the contract for the relationship.

Red flags

• Fees based on the size of your refund.
• A preparer who won't sign the return they prepared.
• Pressure to buy investments, insurance or software alongside the accounting work, without disclosing any commission.
• A firm name you can't find in the state's records, or a "CPA" who can't give you a license number.
• Promises about audit outcomes or refunds before seeing your records.

Working well together

Keep business and personal finances separate, close your books monthly, keep receipts and send documents early. The best-value accounting relationship is the one where the accountant spends time on advice rather than on reconstructing your records. Review the arrangement each year: as a business grows, it often moves from returns-only help to monthly bookkeeping and planning, and eventually to reviewed or audited statements.

A listing on this site shows the state's record only. It is not an endorsement or a recommendation of any firm.

Updated 2026-10-16.

General information only, current as of the date above. The information on CPA Firm Check is not a recommendation or a guarantee of anyone's work. A license record shows registration status on the date shown, not workmanship, insurance coverage at the time of your job, or suitability for your project. Confirm license, insurance and permits directly before you hire. Rules and programs change; check the official sources linked in this guide.