Picking the right accountant is a critical decision for your business’s financial future. Choosing an accountant is like choosing a new business partner. The right accountant will become a trusted colleague you can depend on, who offers advice and guidance as your business grows. For the average person, accounting and taxes often go hand-in-hand. If that sounds like you, you might be surprised to learn that tax-related matters are often just a fraction of an accountant’s responsibilities. A good accountant should possess a wealth of skills that are necessary to make money with the most complicated accounting systems. The decision about where to find your accountant comes down to what suits your business best.
An accountant manages your finances and can have an impact on the trajectory of your business. Before hiring an accountant, you should conduct a thorough search, ask thoughtful questions of potential candidates and be sure to screen those you think could be the right choice. Based on my experience and discussion with our clients I am sharing some information one should consider when hiring an accountant for the ultimate success of the business.
Ask the firm to identify and provide biographies of the partner, manager, and main accountant who will handle your work. It is altogether a different world to deliver what clients expect as a service. The accounting firms claim to offer the services of a Chartered Professional Accountant (CPA) but in actuality, you will only meet the CPA at the first appointment, and your file will be transferred to a junior/volunteer accountant afterward. You will rarely get the chance to meet the CPA again. During the entire process, a junior will handle all communication and prepare your taxes without even a single review by a senior accountant.
Chartered Professional Accountants (CPAs) charge a premium for their services, and it is unethical and unprofessional if your file never gets reviewed by them. It is always best to have your file filed by a Chartered Professional Accountant (CPA) otherwise you have a classic bait and switch situation. It is unfair to pay for top-notch accounting and tax expertise and instead receive the services of a student intern or volunteer.
You should know about the advisory role of an accounting firm. Instead of meeting you once a year and helping you file a tax return, your accountant and financial advisor should meet you regularly and provide you with tax advice along with good counseling on strategic business planning, financial sustainability, and operational controls. Make sure that your accountant understands the role he is taking up– he should work with you as an external CFO instead of merely being a tax filer. He is not being paid an annual fee to just file your tax return, he should also guide you in planning things that you can do in your present situation that will benefit you and your business today and, in the years, to come.
Many filers are often confused about the differences between tax planning and tax preparation services. For taxpayers, an accountant should look at the entire picture and determine ways in which a taxpayer could minimize the tax burden, not only for corporation income taxes but for personal income tax purposes as well. A professional accountant must look at your current financial situation and consider tax implications before crafting a business strategy. Financial advisors are available to help taxpayers achieve their financial goals and proper tax planning is one way for this to be accomplished. A tax plan utilizes the expertise of a Chartered Professional Accountant (CPA) not only to reduce taxes but also to assist taxpayers in tax planning and advising on strategizing tax implications. This will enhance the tax efficiency within legal parameters. Ensure your accountant goes beyond tax compliance and proactively recommends tax-saving strategies to maximize your after-tax income.
Bookkeeping is the first step in the accounting process and arguably the most important one. Bookkeeping on its own is fairly straightforward, but it requires a great deal of time and attention to be done properly. This is why it is not considered very rewarding as it does not add that much value for the firm. Although tax accounting and bookkeeping go hand-in-hand, most accounting firms know, one of these services is far more valuable than the other. In other words, bookkeeping is a “loss leader,” while tax accounting is often the money maker. Although they claim and charge to offer a wide array of services to complement a business’s needs, their main focus is on compliance requirements of the CRA, banks, and investors – taxes, audits, and advisory services. Rarely are they focused on bookkeeping instead tend to push bookkeeping on to the client or an outside bookkeeper.
This leads to disconnection and problems down the road as the accountant will blame the bookkeeper and vice versa when CRA comes knocking. Without in-house bookkeeping, the accountant will not have in-depth knowledge of your books and will not be able to provide you with proficient advisory services. Poor bookkeeping is likely to hurt your business in several ways regardless of whether the business is profitable or not. Besides the missed opportunities, your business can incur more running expenses or plunge you into a legal situation. If your bookkeeping is incorrect, then there’s a higher probability that your tax return will also be wrongly filed. You might end up paying more taxes or being exposed to higher risk during a CRA audit resulting in huge penalties, interest, and fines.
Accounting firms offer a myriad of services that help business owners stay financially organized, tax compliant and that help prepare for business growth. It is much better to select a hybrid accountant that can cater to your bookkeeping and accounting needs reducing the need for duplication of work and communication errors. Otherwise, train your staff properly to ensure that your books are in order. Accounts should be properly categorized to provide you information on cost controls and help you in making other business decisions based on accurate data and you only pay a legitimate share of taxes. The CPA and bookkeeper relationship is an important part of your team to make YOU more profitable.
The experience of the accounting firm is of primary importance. A good accounting firm has owners and staff with years of experience and whose business work experience covers multiple industries. Make sure that the accounting firm has worked with your industry and has received good feedback.
Make sure that all the professionals that would be working on your account are professional certified accountants. You need to know if the staff has adequate experience and knowledge to handle your business. Do not rely on firms that are run by the one-man show as no one can be a master of everything.
The accounting firm you consider should provide more than tax preparation and basic financial statements. A strong certified public accounting firm will have the experience and skills to offer transformative growth. Whether you need someone to handle weekly payroll, you’re just looking for some reliable tax advice, or you need someone who will go the extra mile when it comes to your finances; Make sure that the accounting firm you choose be ONE STOP firm for all your accounting, tax and business consultancy.
Indeed, failure to meet deadlines is a common issue with most accounting firms. Failure to meet deadlines can have serious consequences for you and your business.
It could invite the imposition of tax penalties and even legal penalties. Delays can lead to serious loss of business. An accounting firm that sets a reputation for being late all the time is unlikely to survive for long in this business.
An ideal accounting firm has a properly planned process in place to handle your accounting records. Ask your accountant for the process they have in place and make sure they are sufficient to meet your needs on time within your prescribed budget.
Do I go for the “nicer,” more expensive option or choose the cheaper one to save some money? At the end of the day, what you’re really debating is quality vs cost when choosing an accounting firm. It may be tempting to choose your accountant based on price and go for the cheapest option. But remember, there is nothing more expensive than a cheap accounting firm.
On the surface, it may seem that hiring a cheap accountant is saving money, yet if they are not prompt with updating your records, mismanaging your cash flow, and are not advising on best practices to save tax, the compromise could prove quite costly. A good accountant may seem a higher cost initially, however in the long run you will see how worthy the investment is. An inexpensive accountant can do a quick and dirty tax filling based on the data provided by you without assuring any compliance which will keep the fees low but remember that it is your business that is on the hook for data integrity and accurate tax filling. You will be audited by CRA not your accountant and you do not want to play the lottery game with CRA.
It’s worth remembering this quote “ if you think it’s expensive to hire a professional; wait until you hire an amateur”. An accountant is your business advisor and trusted partner in the success of your business. A professional accounting firm will ensure your records are kept up to date and your spend is correctly categorized, can identify opportunities to help your business grow, help to secure funding, ensure your business is legal and compliant, is abreast with all the ever-changing tax laws and could even save you money on tax. It can also know what expenses are deductible and can alert you to missed opportunities that would lower your tax bill.
Hiring a suitable accountant isn’t always a simple task. Are you wondering if the location of your accounting firm really matters? With technology and cloud accounting, does it matter where your accountant’s office is located? The answer is: Absolutely. While the accounting practice does NOT need a retail location with walk-in traffic, the physical location does matter in today’s digital world. You may prefer in-person contact and find it useful to have someone who’s able to go to business meetings with you. Regular face-to-face meetings are still valuable and can be much more productive in terms of getting added value from your accounting firm. t is easier to discuss your business in broader terms and benefit from general business advice. Sometimes, you need someone to walk you through what the reports mean. And for that, nothing beats the immediacy of a face-to-face conversation The expectations and deliverables should be specifically discussed in this meeting. Therefore, if you want more than basic accounting services, it’s good to be within easy traveling distance. The visit to the office will give you a clear idea about the staff level and the size of the firm.
To ‘wow’ the client, a professional accountant will come prepared for the meeting. He must frame out an agenda to direct the conversation while being nimble enough to let it flow where it finds a fit. The accountant who shows up unprepared or needs you to refresh his memory is clearly unprofessional or swamped already and doesn’t have an eye for detail or lacks the necessary abilities.
Accounting firm’s reputation significantly matters to prospective clients – You are known by the company you keep. Your business reputation can take a hit when the accounting firm you hired is caught behaving illegally or unethically. The likelihood of CRA auditing your books sometimes might depend on the reputation of your accounting firm. The accounting firm must have a significantly high reputation for honesty and integrity so that investors, customers, suppliers, and others who might come in contact with the business must have confidence in the financial condition of the business. Hiring a well-reputed accounting firm sends a signal that the company is not cooking its books. Accounting firms’ reputations must be sufficiently established such that the CRA rationally believes that it would be irrational for the accounting firm to cover up any financial shenanigans. This means that the reputation of your accountant with CRA might play a key role in CRA’s decision of rejecting or accepting the tax credits and deductions claimed by your firm. Make sure you pick a professional accounting firm to represent you gracefully and in a professional manner during CRA audits/reviews.
Gone are the days when accountants were cranking out figures and calculations from dawn till dusk. To no one’s surprise, dramatic increases in technological innovation and investment have continued to occur in recent years. Therefore, embracing innovation and automation in accounting is key to streamlining everyday operations. Now, more than ever, accountants need to be working at optimum efficiency. Digital innovation and automation can help them manage these busy times by working smarter, not harder. In a world that is becoming increasingly digital, accounting is quickly following suit. You should hire an accounting firm that has embraced technology in a way that allows for better operations, improved service delivery, and client satisfaction.
At Filing Taxes, it is our primary goal to set our clients up for success. We offer a variety of traditional and specialized accounting services to keep businesses aware of their current financial situation and help them move in a forward direction. Send us an email or give us a call, we would love to learn more about your business and where you could use a helping hand.