Meet your perfect partner— for tax prep
Do you love your accountant? These five questions can help you meet your match.
Troy Hazard, a serial entrepreneur and consultant based in Fort Lauderdale, Florida, figured he needed a new accountant when he realized the advice was flowing the wrong way. “Come tax time, I’d say, ‘We haven’t talked about this sort of planning or that way to structure a family trust,’ says Hazard, who’s started and invested in businesses in real estate, marketing, and technology. “I’d hear, ‘That’s a good idea, Troy.’ And then I’d think, ‘I’m not supposed to have the good ideas.’ ”
Funny, but true. A good accountant is vital to the success of almost all businesses, advising on everything from tax strategies to cash-flow issues. Hire the wrong one, and you’ll be in deep trouble. “If your accountant isn’t on the ball, you don’t know how to steer your company,” says Jennifer Myers, a financial adviser and the president of SageVest Wealth Management in McLean, Virginia.
Almost half of all small businesses have changed accountants at least once over the course of their existence, according to a 2014 survey by Accountex. The most common reason for making a switch: the need for more proactive advice. So what questions should you ask to know if your business is in the right hands—or if it’s time to make a change?
DOES THE SHOE FIT? Many accounting firms—especially smaller shops—specialize in particular industries, or in companies of a certain size. So the accountant who handled your individual return might not be the best one to do your corporate taxes; the person who advised your startup in its early days might not be able to keep up if you hit a hot streak.
“Ask what size businesses your accountant works with, the range and the average,” advises Myers. “It’s critical to know if your accountant has the experience to grow with the business— or if you’re too small a potato to get attention.”
IS IT A FOREIGN AFFAIR? If you do business internationally, you’ll need an accounting firm with global expertise. When Hazard moved from his native Australia to the United States, he hired an accountant back home who claimed to be an expert in international business. Hazard soon learned otherwise—a mistake that helped cost him an estimated $60,000. “I need someone with clarity on international tax codes, how to deal with multiple countries, and how to manage the relationship between the IRS and the Australian Taxation Office,” he says.
DOES HE OR SHE WATCH THE NEWS? Keeping up with regulatory changes—and the most sweeping tax overhaul since 1986—is a big task for small-business owners, and one that you’ll need expert help with. Deborah Sweeney, the CEO and owner of MyCorporation.com, an online legal filing and incorporation service based in Calabasas, California, says that after the recent tax law passed, her accountant raised the topic at their quarterly meeting. “We had a lot of discussions about how we adjusted,” she says. If your accountant hasn’t raised this issue with you yet, you might want to think about a change.
HOW ARE THIS PERSON’S REFERENCES? Lynn Gastineau, the founder of Gastineau Log Homes in New Bloomfield, Missouri, says a former in-house accountant made such a mess of her books that another employee easily embezzled funds. She now hires only those accountants who have been vetted by other business owners. “Hiring someone you trust will make it easier for you to start delegating faster,” she says.
If you are using a certified public accountant—the highest designation—check on him or her with the national and local chapters of the American Institute of Certified Public Accountants, and look for any disciplinary actions taken by your state’s board of accountancy.
IS HE OR SHE A GOOD TALKER? Accountants should respond promptly when you reach out, and treat even basic questions with respect. If you’re walking on eggshells around yours, that’s a sign you aren’t a good match. Finally, there are no excuses and no second chances for an accountant’s missing a deadline or making other filing mistakes. After all, the IRS won’t give you one.