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How To Find The Right Accountant Seven Ways to Avoid Making a Costly Choice

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The relationship between you and the person you choose to do your accounting and taxes is far more important than you may realize. In a small business like yours, the right accountant functions almost like a partner. Chances are you look to your accountant for advice and help with business decisions, so it’s crucial the relationship is comfortable and trusting, particularly in today’s volatile and complex economy.

“CPAs are more than just individuals who do your yearly taxes,” said business consultant and author Maria Marsala. “The right accountant can advise you on a long list of other services, which may include advice on your accounting system, financial performance, estate/tax planning, retirement, and payroll management. CPAs are a crucial part of a business owner's professional team along with a banker and a lawyer.”

Here are seven tips to help you find the right person for you and your business:

Carefully Search for Prospects

While you may be lucky in going with a recommendation from a friend, you should do your homework first.

“The best way to locate a compatible accountant is to ask around the community,” said CPA and tax advisor Genevia Gee Fulbright. 

Ask bankers, insurance agents, small business owners and even other lube shop owners.

“If it is not a direct conflict,” Fulbright said, “consider using the same CPA. The information you share with your accountant is strictly confidential, and licensed accountants are bound to strict non-disclosure requirements.”

One of the most important factors in selecting an accountant is the quality of the customer service he or she provides.

“This is reflected in everything the accountant does from how quickly the client gets a return telephone call to the accuracy and reliability of the advice provided,” said Vincent G. DiAntonio, CPA, J.D. at Hass & Co. “Sometimes a recommendation from a friend is the best way to find a good accountant, since some do not advertise. Many, in fact, acquire new clients solely through word of mouth. That gives them a strong incentive to provide quality customer service.”

Verify Your Prospect’s Credentials

“Some individuals working as bookkeepers or accountants have no formal license or education in accounting,” cautioned Navin Sethi, CPA and tax manager with Rothstein Kass. “That’s why you should do a thorough investigation before you hire an accountant. The best way to protect yourself is to hire a certified public accountant (CPA). 

“To earn the CPA credential, an applicant must meet the requirements of the state or jurisdiction in which they practice. The CPA applicant must also pass the national CPA exam and, depending upon the state, have some actual practical work experience before receiving their license. Finally, a CPA must adhere to requirements to take specified amounts of continuing professional education courses annually to retain their license to practice. Your benefit is you will be working with a professional who is required to keep up-to-date on the latest and best accounting methods.”

Be Sure To Check References

Checking an applicant’s references is one of the most important steps in the hiring process. While it may be rare, even professionals can misrepresent their backgrounds and credentials or simply leave out important information.

Checking references takes a little time, but human resource professionals know it’s a simple step that could save you from hiring someone who is woefully unqualified.

Find Out If You’re Comfortable with the Person

Fulbright emphasized the importance of the chemistry between you and your accountant.

“Make sure you have clear goals for your business and that your prospective accountant understands them,” she said. “Go to lunch and have a conversation. That will help you to decide if you’re both on the same page.”

Every expert interviewed for this story agreed with the need to have an at-length personal interview before hiring an accountant.

Use the 60-Percent Rule

Keep in mind that there is a wide range of specialties open to CPAs, from individual taxes to large corporate clients, to small businesses, and everything in between.

“Look for a CPA who has 60 percent of his or her business coming from small business owners like you,” Marsala said. “They're more apt to keep up with the laws regarding clients they deal with most often. Your business is probably incorporated or is an LLC, so you want to make sure the person specializes in corporate accounting, including financial statements and audits.”

Consider Your Special Needs

If you have or are anticipating unusual accounting problems in your business, you should look for an accountant with specialized training or experience.

“If you are in need of an outside audit for your business, additional designations such as CFE (Certified Fraud Examiner) would be helpful,” Fulbright said. “If you need a business appraisal/valuation someone with an ABV (Accredited Business Valuation) designation or CVA (Certified Valuation Analyst) designation would be an advantage.”

Perhaps you have limited experience in personal financial management and would like to explore the possibility of increasing your investment portfolio.

“An accountant who is also a Certified Financial Planner (CFP) would be a good choice when you need investment/portfolio advice,” Fulbright said.

The biggest problem many small business owners have is stepping back to take the time to evaluate their business.

“They are so busy running the business and keeping up with the paperwork that they do not allow enough time to plan ahead,” said CPA Carol Katz. “You should always consult with your accountant before entering into any significant business or financial transaction. Undoing a poorly thought-out transaction or removing assets from an entity without causing unnecessary taxes can cost much, much more than the time spent on a planning meeting and document review.”

For some, the planning may span to the next generation.

“The nature of small businesses requires owners to consider succession planning,” DiAntonio said. “Generally succession planning consists of either transferring the business to the next generation, selling the business outright to a third party, or, perhaps, to an employee.”

This will often be one of the most significant life events of a business owner and should be planned appropriately by a trusted advisor.

“Typically, a CPA who knows the business and its assets can bring additional value to a potential sale or transfer. Also, once the business is converted into cash or a revenue stream, a financial planner can assist the client in maintaining and growing the client’s wealth,” DiAntonio added.

Don’t Be Afraid to Make a Change

Despite your best efforts, it’s always possible you will find yourself working with an accountant who simply isn’t right for you and your business. If you should find yourself in that position, our experts said, don’t hesitate to look for a replacement. Your accountant is too important to your success for you to compromise.

Business owners should continually review where they are in the life cycle of their professional careers.

“They may need to change the business form of the entity as their business grows,” Katz said.

Some entrepreneurs may need tax-savvy ways to bring in family members to whom the business will eventually be transferred. If there is no succession planned, there probably should be a proposed structure for eventual sale of the business, including buy/sell agreements among partners.

“If the accountant used when the business was small no longer seems effective, then it may be time to move to another with more expertise,” Katz said.

Finding the right accountant for your business may take a special effort, but the time you spend on that job may well prove to be among your most profitable investments.  S

Is It Wise to Use Your Business Accountant to Do Your Personal Taxes?

Because some business owners feel using the same accountant to do both business and personal tax work may not be appropriate, we asked our experts for their opinions.

“I would advise only one accountant be used for both business and personal purposes,” said CPA Carol Katz. “This is because the two are invariably intertwined. Year-end planning for a business impacts personal tax situations and vice versa. In addition, as a business grows, the accountant can advise and assist with additional services, such as pension planning, estate planning and buy/sell planning.”

“There are very real economies gained by having one accountant serve as both the business accountant and the owners’ personal accountant, especially if the business is operated as a sole proprietorship, S corporation, partnership or LLC,” said CPA Vincent DiAntonio, Jr. “Since the income tax burden for these types of entities is usually borne solely by the entity owners, decisions made at the business entity level almost always have consequences (especially tax consequences) on the personal level. It is extremely important to coordinate such business decisions with the owner’s personal situations and having one accountant definitely simplifies this process.” 

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