It’s tax season again, which means it’s time to stuff all those old receipts into a shoebox and head to your accountant for your annual financial checkup. Just as you would tell your doctor about any important health matters during a checkup, you should also tell your accountant about any important financial matters at this time of year. We don’t need to know all your secrets, but we do need to know about any big changes in your life.
Since starting my firm almost a year ago I have had the opportunity to meet and work with so many amazing small business owners. Helping people achieve their goals and live out their dreams is one of the best parts about what I do. To help me help others I have created a routine series of questions I ask new small business clients when interviewing them. Among my questionnaire I specifically ask what they like and dislike about their current accountant (if they have one) or what they hope to achieve by hiring an accountant to help them on a monthly basis. For the purposes of this article, I’m going to use the term accountant in reference to a bookkeeper, degreed accountant, tax preparer, or CPA. Although the term is used interchangeably among most people in business, it’s important to note that each title brings a different level of experience and caliber of service to the table. In my opinion, all accountants should be versed in everything from taxes to bookkeeping, and be able to provide general advice on these subjects or point people in the right direction. Unfortunately, that’s not always the case. Below are the top 6 things your accountant should be doing to help you to grow your small business.
#1 Connecting Throughout the Year
This is the top complaint I hear from new clients. “My accountant never calls me” or “I only hear from my accountant once per year”. For all my peers in the industry, this just simply won’t do anymore. Clients deserve and expect to hear from their accountant more than one time per year. If you have retained an individual or firm to work with you throughout the year, they should be reaching out to you regularly to check in and see how business is going and offering to help however they can. They should also encourage an “open door” policy where you can reach out with “quick questions” without fear of being billed for a 10 minute conversation or simple e-mail reply. Be mindful not to overstep your contractual terms with whoever you work with and expect to be billed for additional services that may fall outside of what you are paying for. If you are unsure if what you need will be additional then try reading through your contract or asking your accountant if what you need is already billed in your current service plan.
#2 Asking Questions
It may seem silly but your accountant should be asking questions of you each time you interact. The questions should be probing for information so that your accountant may advise you to better operate your business. If all they are doing is putting your books together each month and collecting a fee then you need to seriously consider if you are working with the best person for the job. A strong partner will comment on results and ask clients their motivations behind decisions as well as challenge them to set goals to hold them accountable for results. Even having the ability to reach out to your accountant from time to time (see #1 above) is helpful to keep you on track and your accountant in the know for big decisions.
#3 Proper Accounting
Small business owners typically hire an accountant because they don’t trust themselves to keep up with their books or don’t want to do the books themselves anymore. Most business owners interview a few candidates and assume that because they have a degree or license they know exactly what they are doing. Based on some of the work I have seen from other “professionals”, I can personally attest that not everyone may know what they are doing. Despite hiring someone to do the books, business owners need to remain actively engaged in reviewing their financial information each month and asking for clarification when and where necessary. Some key indicators that business owners should review in their accounting software include:
- Excessive non-accrual adjusting entries – this can be an indicator of poor training or misunderstanding of accounting principles or accounting software platforms
- Unreconciled accounts – this can lead to incorrect information in the general ledger causing inaccurate accounting information and ultimately inaccurate tax reporting
- Negative general ledger account balances – this is usually indicative of an inaccurate account balance and can be caused by a poor understanding of accounting principles, and again, result in inaccurate tax and accounting reporting
If you find that even one of these key indicators are triggered consistently without a reasonable explanation from your accountant then you should be concerned. I would recommend you have your accountant review your books and make necessary corrections or start searching for a replacement ASAP!
#4 Educating You (the Client)
Educating clients is by far the one thing I enjoy most about what I do. It allows me to strengthen the trust clients have in me while also helping them understand the “why” behind the decisions they are encouraged to make. There is nothing more rewarding than when a client has that light bulb moment of clarity and it all just clicks for them. Many accountants are trained with a “one size fits all” mentality but just because something works for the majority of clients that doesn’t mean it is the best decision for you. Your accountant should be taking time to walk you through the “why” behind their recommendations. If yours is not willing to give you that courtesy then you should evaluate how solid your relationship is and consider moving on to someone who is more patient, able, and willing to help you.
#5 Understanding of Tax
Did you know that not all accountants prepare tax returns? In fact, many prefer not to. That doesn’t absolve them from understanding the tax implications of making certain decisions. If you have a bookkeeper who does your books and a CPA that prepares your taxes then your bookkeeper should be able to follow your CPA’s recommendations. Both parties should work directly with one another to ensure the books are prepared correctly. If your bookkeeper falls short of understanding even the most basic tax elections and strategies (including certain safe-harbor elections) then you may want to ask them if they plan to learn tax rules or simply find a more informed bookkeeper. You might find that you can get your books and tax work done for the same the same or less fees if you’re diligent in recruiting the right firm.
#6 Keeping up with Current Trends & Technologies
Technology is revolutionizing the accounting industry from top to bottom. Your accountant should be keeping up with current trends and new technologies that they can learn and recommend to make your life easier and ultimately more profitable. If your accountant is constantly focused on “paper-based” strategies or defaults to the SALY “same-as-last-year” mentality then it may be worth interviewing someone new. Progressive accountants are willing to coach clients into adopting new technologies and turn them on to leading trends relevant to their industry. Automation and mechanization will become paramount to success in the future and you want to be on the front of the wave rather than playing catch-up after they become necessary tools in business ownership.
In a world of options you no longer need to settle for the same rinse and repeat mentality that so many accountants love. You’re likely paying a considerable fee to have your accounting work done and nothing drives me crazier than when a new client comes along and I have to fix years of poor work for high fees. If, however, you find that you love your accountant and you have an amazing relationship with them, then there is no need to change that. Ideally you will develop a longer lasting relationship rather than changing firms every so often just to freshen things up.
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