When looking for an accountant, bookkeeper, or tax professional, many small business owners start by searching for someone in their area. That makes sense. Historically, working with an accountant meant visiting their office, dropping off documents, and meeting in person to discuss your finances or taxes.
Today, most of that work is handled remotely, even if the accountant is local. You can share documents securely, review financial statements, meet over video calls, and even sign and file tax returns without ever visiting an office.
But just because you can work with someone remotely doesn't mean there aren't advantages to working with someone local.
There are several factors to consider when choosing an accounting or tax professional, including their experience with your industry, their knowledge of your state's tax laws, and the services your business actually needs.
The important question isn't necessarily whether your accountant is local. It's whether they have the right expertise for your business.
How Important Is Industry Experience?
One of the first things to consider is whether your business requires specialized accounting or tax knowledge.
The answer depends on your industry, the size of your business, and the services you're looking for.
For example, a solo physical therapist operating a cash-based practice may have relatively straightforward accounting needs. Their financial records might consist primarily of patient payments, operating expenses, equipment purchases, and owner transactions.
A competent accountant or bookkeeper with experience working with small service businesses should generally be able to handle these needs, even if they've never worked with physical therapy practices.
However, for a group practice that accepts insurance, it can be extremely valuable to work with an accountant who is familiar with similar practices. Insurance reimbursements can create additional complexities when it comes to financial reporting and cash flow planning. Understanding the relationship between services provided, insurance payments, and outstanding receivables can help an accountant provide more meaningful financial reports and forecasts.
The more complex your business's accounting needs, the more valuable relevant industry experience becomes.
Industry Experience May Matter More for Bookkeeping Than Tax Preparation
This is an important distinction that often gets overlooked.
Your bookkeeping and financial reporting processes are heavily influenced by how your business operates.
A construction company, retail store, and therapy practice may all need very different accounting systems to produce useful financial information.
However, their federal income tax returns often follow many of the same general rules.
For example, the basic principles governing deductible business expenses generally don't change just because you operate in a different industry.
Office supplies, business insurance, professional fees, and many other ordinary business expenses are subject to similar federal tax rules across industries.
You may have seen accountants advertising their knowledge of special tax deductions available to businesses in a particular industry.
While there are certainly industry-specific tax provisions, I think the importance of finding someone who knows your industry's deductions is often overstated.
Any competent tax professional should understand the difference between legitimate business expenses and non-deductible personal expenses, regardless of the industry.
In many cases, keeping accurate financial records and separating business and personal finances will do more to ensure you're claiming the deductions you're entitled to than hiring someone who advertises knowledge of industry-specific write-offs.
That doesn't mean industry experience is irrelevant to tax preparation.
Some industries have specialized tax rules that require additional expertise. However, most therapy practices are taxed under the same general principles as other service-based businesses. While individual circumstances can create more complicated tax issues, those complexities aren't necessarily unique to therapy practices.
The takeaway is that industry-specific tax expertise becomes more important when your business has industry-specific tax complexities, not simply because you operate in a particular industry.
Does Your Tax Professional Need to Be in Your State?
While industry experience can be important, state-specific tax knowledge is another factor that deserves consideration.
Federal income tax rules generally apply consistently across the United States. State income tax rules, however, can vary significantly.
States have different approaches to taxable income, depreciation, business credits, entity-level taxes, and other reporting requirements.
Some states offer tax benefits that are particularly relevant to businesses operating within their borders.
Some states have unique tax credits, deductions, or elections that can significantly affect a business's tax liability. For example, states have different rules for pass-through entity taxes, which can create additional planning opportunities for S corporations and partnerships. States may also calculate depreciation differently from federal tax law. A tax professional who rarely prepares returns in your state might overlook some of these differences.
These aren't necessarily issues that require an accountant who physically lives in your state. They require someone who understands the state's tax laws and knows how to research unfamiliar requirements.
Local presence and local tax expertise are not the same thing.
When considering a tax professional outside your state, ask about their experience preparing returns for businesses in your state and how they identify state-specific tax requirements.
A professional doesn't need to have every state's tax laws memorized. They do need to recognize when additional research is necessary and have a reliable process for ensuring the return is prepared correctly.
What About Your Bookkeeper?
For bookkeeping and financial reporting, geographic location is often less important than understanding how your business operates.
A therapy practice in Wisconsin generally has the same fundamental accounting needs as a comparable practice in another state. While payroll and other compliance requirements may vary, routine bookkeeping and financial reporting are largely independent of location.
A bookkeeper who understands therapy practices can help ensure your financial reports provide meaningful information about your business, rather than simply producing financial statements with correctly categorized transactions.
What Are the Benefits of Working With Someone Local?
There are legitimate reasons to prefer a local accountant or tax professional, even when the work could be performed remotely.
Some business owners prefer meeting face-to-face, particularly when discussing complicated financial decisions.
Local professionals may also have established relationships with attorneys, bankers, and other service providers in the community.
For businesses that regularly need in-person assistance, such as help organizing physical records or working directly with office staff, geographic proximity can be particularly valuable.
These are reasonable considerations.
However, they should be weighed against the professional's experience, qualifications, and ability to provide the services your business needs.
Being nearby doesn't automatically make someone a better accountant, just as working remotely doesn't automatically make someone a better choice.
Communication Matters Too
Even when your business doesn't require specialized accounting or tax expertise, working with someone who understands your industry can make communication much easier.
An accountant might prepare completely accurate financial statements without having much familiarity with how your business operates. But being able to explain those numbers in a way that's meaningful to you is a different skill.
For example, a therapy practice owner may want to understand why revenue increased while profitability declined. An accountant familiar with therapy practices may know to ask about changes in clinician utilization, reimbursement rates, or staffing costs.
Someone without that experience might still identify the issue, but it could take more explanation and back-and-forth to get there.
Industry familiarity also makes it easier for your accountant to understand the terminology you use, recognize common challenges, and ask relevant questions.
This doesn't mean an accountant without experience in your industry can't communicate effectively. A good accountant should be willing to learn how your business operates.
However, industry experience can help bridge the gap between accurate accounting and financial information you can understand and use.
That can be valuable even when the underlying accounting work is relatively straightforward.
So, Should You Hire a Local Accountant?
There isn't one answer that applies to every business.
If your business has straightforward bookkeeping and tax needs, a competent local generalist may be an excellent choice.
If you operate a business with complicated financial reporting requirements or need help understanding your business, finding someone with relevant industry experience may be more valuable than finding someone nearby.
If you're hiring a tax professional, make sure they understand the tax requirements of the states where your business operates, whether they're local or remote.
And if you're considering a professional who doesn't have extensive experience with your particular industry or state, ask how they approach unfamiliar issues and ensure their work is accurate.
Ultimately, I'd focus on three questions:
Does this professional understand the accounting or tax issues relevant to my business?
Do they have the experience to handle issues they aren't already familiar with?
Can they communicate financial information in a way that's meaningful to me and my business?
You don't necessarily need the closest accountant. You need someone who understands your business and can communicate financial information in a way that helps you make better decisions.