With income tax filing season already upon us, some small-business owners are likely thinking of finding an accountant or other tax professional, or maybe changing over to a new one.
Ideally, the search for a new certified public accountant takes place long before tax season, but the sooner you do it, the better. Many small-business owners have found out the hard way that overwhelmed accountants can be hard-pressed in March and April to help new clients. Show up at a CPA’s office on April 1 hoping to have your Schedule C completed and you’re likely to hear that you’ll need to get an extension of the filing deadline.
Regardless of when you start looking, you need to consider issues that go well beyond tax preparation – you need to find a professional who understands your type of business and perhaps your personal financial situation as well. And someone you can feel comfortable working with.
“It’s probably one of the most important choices you’re going to make,” said Paul Gada, a senior tax analyst with Wolters Kluwer, a publishing firm whose products include tax information. “You’re entrusting everything that comprises your business, your assets, your problems even, to someone else.”
Therefore, you need to choose an accountant carefully. Many company owners start by seeking referrals from other businesspeople; particularly those in the same industry or profession who can recommend an accountant who’s familiar with their line of work. For example, if you’re a small manufacturer, your tax issues are likely to be vastly different from those of a doctor, and so you’ll want to find an accountant with a good amount of experience in your area.
When you’ve gotten some names, the next step is to interview them. Gada recommended that owners not be shy about asking probing questions about an accountant’s background and experience.
“It’s your financial security and all your assets on the line,” he said. “It’s not really out of line to ask them, ‘Has anyone ever sued you for malpractice, or have you ever been reported for malpractice?’”
Don’t be afraid to ask for references, either. You want to find out how an accountant works with his or her clients, and whether they’re satisfied with the service they get.
As in any other business deal, what services you can expect and how much you’re going to pay for them should be discussed. Will you pay by the hour as you go along? Or one lump sum for certain specified services?
Eric Rigby, a certified public accountant with The Rigby Group in New Orleans, noted that many small-business owners now seek a variety of services from a CPA.
“The years have passed where a CPA is just a tax preparer,” he said. “They’re using that resource not just to do taxes, but to advise them on their business.”
“They need a CPA who’s willing to listen and not dive down a rabbit hole, but to fly at 30,000 feet and find out what’s going on with clients, their lives and their business first,” he said.
These owners look for accountants who will meet with them quarterly, do business and tax projections and in general keep an eye on how the business is going. Along that line, you need to know if an accountant will be thorough in working with you – will you get a reminder that it’s time to send in the numbers for your year-end projection, for example?
Some owners want a CPA who is even more hands-on – they want an accountant who will handle their books and records for them.
Gada said owners who are interviewing CPAs also need to know about the what-ifs – such as if you’re audited by the IRS or state or local tax authorities. Will the CPA handle the audit for you? You need to know this up-front.
Rigby said that during an initial consultation, a CPA should be asking questions, too. “What areas do you need help in? Corporate taxes, individual taxes, business succession, estate planning, strategic planning?” are some of the topics a CPA should be asking a client about, he said. Such detailed questions show that a CPA thinks holistically about a client.
Rigby also recommended that owners look for accountants who are willing to say they might not know how to do something, but are willing to turn to a partner or another CPA for help.
And don’t forget that an accountant’s personality should also be a factor in your decision. “You could be comfortable with someone who’s all business, or maybe you want someone who’s more personable, where you get that feeling of ‘one on one,’” Gada said.
Consider that your accountant will be privy to not just your company’s financial numbers, but how you got them – how you conducted your business, including the mistakes you made. It’s not that much different from having a doctor or therapist know your personal secrets.
Joyce Rosenberg writes about small business for the Associated Press.
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