Tips for Finding the Right Tax Accountant for You
Where to Look for a Tax Accountant
Some accountants are jacks-of-all-trades, while others specialize in certain areas. You don’t want to hire someone who has never handled an audit before if you’re being audited, but by the same token, you probably don’t need an audit expert to explore tax-advantaged savings for your new child’s education.
Beware of Red Flags
Be wary of an accountant who promises you a giant refund right from the start before even analyzing your personal financial situation. The same goes for someone who says that you can deduct an excessive number of expenses before really talking to you.
Those Retail Franchises
Retail tax franchises such as H&R Block, Jackson Hewitt, and Liberty Tax Service offer competent help if you just want to file a relatively straightforward tax return. Sometimes you can even find certified public accountants (CPAs) and enrolled agents (EAs) working in these offices.
Different Types of Tax Professionals: Enrolled Agents
EAs are the elite, at least as far as IRS credentials are concerned. They’ve passed rigorous testing and background checks administered by the IRS. The testing involves three parts.
Certified Public Accountants
CPAs have passed the rigorous Uniform CPA Examination and they’re licensed by the board of accountancy in the state where they work. They have accounting degrees from a university or college, and continued licensing requirements involve meeting certain character and experience thresholds.
How to Find a Good Accountant for Your Small Business
Referrals – ask other business people about their accountants.
Find out who other business people use and how satisfied they are with the services their accountant provides. If you don’t or can’t get any worthy referrals using this method, use the internet or yellow pages and choose several accounting firms.
Call the four or five accountants you’ve selected and ask to discuss their services.
Ask him or her about his education (such as whether he’s a CA or CGA) and about his experience with your industry. You can also check with their professional association to see if their stated qualifications are valid and there are no outstanding disciplinary issues.
Prepare a short list of questions you want to ask prospective accountants.
Don’t be shy about asking about billing. Ask about billing rates and how these are determined. Often you may have a quick question that can be answered via a short phone call or email – how do they bill phone or email advice?
Meet with the prospective accountant(s) you’ve chosen, and ask your questions.
There’s nothing like a face-to-face meeting for gauging how well you might work with another person. Besides assessing the accountant’s knowledge, see how comfortable you are with him or her and how well the two of you communicate with each other. When you choose an accountant for your business you’re going to be establishing a long term relationship, so feeling comfortable with them is important.
How to Find the Best C.P.A. or Tax Accountant Near You
Why you need to be careful when choosing a C.P.A.
Each year, the I.R.S. compiles a “Dirty Dozen” list of tax scams. Although the scams are wide-ranging, many of them include actions taken by shady tax preparers, such as promising inflated refunds, falsely claiming deductions and credits, or encouraging clients to avoid their tax obligations.
Compile a list of potential C.P.A.s and tax accountants
Like with most service providers, a great way to find a C.P.A. or accountant is to ask for a referral. But don’t just go with the first name you get — compile a list of three or four potential accountants.
Search the I.R.S. directory.
The one qualification every paid tax preparer must have is a preparer tax identification number, or P.T.I.N. Anyone can apply for a P.T.I.N. online for free, so a P.T.I.N. alone isn’t indicative of the person’s skill or experience.
Check with your state or national associations.
Many state boards of accountancy and state C.P.A. societies maintain online directories of members or can provide a list of tax pros in your area when asked. Not every C.P.A. prepares taxes, so you may need to do some research online or call to see if the people on your list provide the type of tax services you need.
Consider free tax-preparation resources.
If you make less than $56,000 per year or are age 60 and older, you may want to look into having your tax return prepared through the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (T.C.E.) programs.
TIPS TO FINDING THE BEST ACCOUNTANT FOR MY BUSINESS
Additional Services
What issues are most important to you? Where do you see your business going? If you anticipate some major growth for your business you may want to have an accountant who is familiar with business and strategic planning, budgeting, cash flow management, and estate planning.
Has Worked With the IRS
Having to face an audit is stressful enough. Having to rely on an inexperienced accountant who has never faced the IRS only adds to the grueling experience.
They Are Active in the Local Community
This was touched upon earlier, but accountants should be members of the American Institute of Certified Public Accountants (AICPA), state societies of CPAs, and other professional groups to help them stay current on accounting and tax changes. They should also be active members of the local community so that you can see what they value.
Firm is Right Size For Your Business
A smaller accounting would work best with a small business. It just wouldn’t make sense for an accountant who works with enterprises to work for a company that only has three employees.
Available When Needed
If you have an emergency, will the accountant make the time to take your call and handle the crisis when needed?
How to Hire an Accountant
Business advisory services. Since an accountant should be knowledgeable about your business environment, your tax situation and your financial statements, it makes sense to ask them to pull all the pieces together and help you come up with a business plan and personal financial plan. Accountants can offer advice on everything from insurance (do you really need business interruption insurance or is it cheaper to lease a second site?) to expansion (how will additional capacity affect operating costs?). Accountants can bring a new level of insight, simply by virtue of their perspective.
Accounting and record-keeping. These are perhaps the most basic of accounting disciplines. While it makes sense for many business owners to manage their day-to-day records, an accountant can help set up bookkeeping and accounting systems and show you how to use them. A good system allows you to evaluate profitability and modify prices. It also lets you monitor expenses, track a budget, spot trends and reduce accounting fees required to produce financial statements and tax returns.
Tax advice. Accountants that provide assistance with tax-related issues usually can do so in two areas: tax compliance and tax planning. Planning refers to reducing your overall tax burden. Compliance refers to obeying the tax laws.
Auditing. These services are most commonly required by banks as a condition of a loan. There are many levels of auditing, ranging from simply preparing financial statements to an actual audit, where the accountant or other third party provides assurance that a company’s financial information is accurate.