Your Taxes Are Done but Are You Getting Your Money's Worth From Your Accountant?
Now that tax season is over, you're probably asking a question that many business owners ask: should I fire my accountant? It's not an unreasonable question.
Just to be clear, and to prevent my fellow Certified Public Accountants getting all up in arms at me, there are many, many good accountants. The accounting community is, for the most part, ethical, professional and competent. I believe that every business owner should have a close relationship with a good CPA.
But I also believe that we CPAs should always be striving to do a better job for our clients. The world has changed. The demographics of our client base has changed. Expectations are different. We cannot sit back and just assume that our clients are going to keep coming back to us. If you run a business you shouldn't just assume that you're stuck with your accountant. You're not. You should be demanding the same high standards of your CPA as you demand from any partner working with your business. You should expect your CPA to be doing at least these five things.
1. They give you a timely response.
Sometimes I hear from business owners who say it's difficult getting hold of their CPA, particularly during tax season. That's nonsense. In 2018, 50 percent of the workforce is from the millennial generation and these people, now aged between 18-36, are rising through the ranks of companies. They have grown up watching on-demand movies, having food delivered to their door in minutes and getting fast responses from companies via text messaging, social media and email. This is a generation that expects their accountant to do the same. If your CPA is slow to respond, or you find yourself repeatedly reaching out to get an answer to a question, then this is a CPA performing a sub-standard service.
2. They watch out for you year-round.
Do you only hear from your accountant around tax time? That's bad. Today, smart accountants are tying themselves into their clients' cloud-based accounting systems, engaging with them on Facebook and keeping a steady stream of conversations throughout the year. The best ones make it a point to either speak or visit their clients mid-year to get a sense of what's going on so that they can strategize the best approach for tax savings with enough time to take actions.
If your accountant is surprised at tax time when you explain a big transaction that happened months ago, then that's a red flag. You, as the client, have a responsibility to keep your accountant apprised of all goings-on within your company. But your accountant has a responsibility to be proactive too. Otherwise, he/she is not doing a very good job.
3. They realize keeping you out of trouble with the IRS is the minimum.
I hate it when accountants act like they're an extension of the IRS. I know some business owners who are literally afraid to speak to their CPA because they'll get scolded for doing something risky. You know you have a great CPA when you feel completely comfortable tossing around ideas -- no matter how ludicrous -- for saving on taxes...and you're not being laughed at.
Of course, a competent accountant will steer you away from doing anything illegal. But your accountant should be working with you - hand in hand - to innovate and be creative about ways you can minimize your tax exposure. Otherwise, it's like having an auditor as partner and that's not the kind of relationship I'd like to have. Would you?
4. They keep you current on emerging best practices.
It’s very likely that your CPA is running a practice that has dozens - maybe hundreds - of other clients. As a business owner, I find that there are few things more valuable than being compared to what other businesses are doing so that I can learn from and even copy their best practices. Good CPAs know this. They know that they're a conduit between their clients. Without giving away any trade secrets, a good CPA will tell you when certain financial ratios or metrics are better or worse than similar companies in their stead. Or he/she will recommend certain procedures, internal controls and policies that are working well at other like-minded companies. That's a huge value that a CPA can bring to a client and if you're not getting that then you're missing out.
5. They keep trying to sell you additional services that are worth buying.
Finally, good CPAs are good business people. They want to grow their practices just like you want to grow your business. To that end, I love it when CPAs are always pitching additional services to their clients. Why not? Who isn't looking for better financial planning advice, an audit of travel and entertainment expenses, a recommendation (and implementation) for better software? Many CPAs do this but, unfortunately, some are shy about selling their services more. That's a shame. You want a CPA who is as hungry as you are to make more money. To do that he/she needs to help you with more worthwhile services. If your CPA isn't doing that then that's a bummer.
There should be no question that your accountant is good at what he or she does. CPAs have stringent professional requirements to keep them up to date on all the rules and most are very competent. But that doesn't mean that your accountant is truly doing the best job for you. If you don't think so, then have a talk. Maybe things can change. If not, consult your local CPA society, ask some friends, search around and get a few others to offer proposals. It could have a big impact on your business.