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Everything you need to know about choosing an accountant during tax season

By February 20, 2024No Comments

(This column originally appeared in The Inquirer)


It’s tax season and many small-business owners are probably spending more time with their accountant than they do all year. Like others, you may be using this time to reevaluate your relationship with your accountant. Are you happy? Are you getting the service you expected? Could your accountant be doing more? If you’re thinking of potentially choosing a new accountant, here are a few things to consider.

For starters, you should know the difference between an accountant and a certified public accountant or CPA. Anyone can hang up a shingle, call themselves an accountant, provide financial advice, and prepare your tax returns. There are many competent professionals who do this.

A CPA, however, is licensed by the state and required to fulfill certain requirements to hold that certification, including getting a minimum number of college credits, sitting for an exam, and working for at least a year for a public accounting firm. CPAs are also required to complete 80 hours of continuing professional education over a two-year period to maintain their license.

You’ll need to be specific about the services you desire. Many small businesses just need an accountant to prepare their taxes.

But as your business grows, your bank or investors may also require that you have an external accountant compile (putting your numbers into financial statement format), review (asking questions about your financials), or even audit (inspecting the documentation behind the numbers you provide) your financial statements. These types of services are almost always performed by a CPA and vary significantly in cost with an audit being the most expensive. Dayna Carr, who owns an accounting firm in Doylestown, also recommends asking about bookkeeping and part-time controller services.

“More firms are offering these types of services, particularly if independent financial reporting isn’t required and the rates can be affordable,” Carr said. “The more familiar your accountant is with your books, the better service can be provided at tax time.”

The best strategy is to ask. Because your accountant will be dealing with your most personal financial information, it’s best to find someone who is referred to you by a friend or business colleague. The next best option is to reach out to the PennsylvaniaNew Jersey, or Delaware state CPA Societies, which are professional organizations that can recommend their members.

“A lot of business owners probably don’t know about the PICPA [Pennsylvania Institute of CPAs], but it’s a wonderful resource,” said Jerry Maginnis, CPA, a former managing partner at KPMG in Philadelphia and the author of Advice for a Successful Career in the Accounting Profession: How to Make Your Assets Greatly Exceed Your Liabilities. “These organizations know firms all across their state and can match a business with a firm that caters to their specific needs,” he said.

Remember that not all accountants are expert in taxes. Like doctors, the accounting profession has many specialties, from audit to financial planning to business advisory services. Make sure that the accountant you’re considering has the right qualifications for the job. It’s become more important for an accountant to know your industry as well.

“If I’m a construction company, I don’t want somebody coming in who’s never seen percentage of completion accounting, or it’s their only construction client,” Maginnis said. Carr also agrees strongly that industry experience is critical.

“Not all accountants are familiar with nonprofits,” she said. “Not all CPAs understand forensic audits. Some people who have complained to me about their accountants have pointed out the lack of understanding about their business.”

When it comes to fees, it’s important to be up front and consider the competition. Many accountants charge by the hour or by project such as completing your business tax returns. It’s not unreasonable to ask about fees up front and understand how hours and rates are broken down. It’s also not uncommon to share your tax and financial information with multiple candidates and ask them up front for their recommendations on saving taxes or generally doing things better. Their answers may influence your decision and even help justify the fees they’re proposing. Maginnis says that it’s not just about compliance services. It’s about the value added. A mix of small and large firms as well as independent accountants should be considered because they each bring something to the table.

“It’s good to challenge,” he said. “Ask them to take a look at your financial statements and tax returns and give their observations and recommendations. What did you see? Am I missing anything? Are there tax planning opportunities? What could I do to accelerate my cash flow? And then during the interview with that prospective outside accountant I would really drill down on what they do besides the fundamental compliance work.”

Finally, pay close attention to your prospective accountant’s behavior. The best financial professionals are always putting their clients’ interest first and always proactively thinking of ways to help them grow their businesses — and not just filling out a tax return once a year. Do they respond to your e-mails promptly? Do they spend enough time answering your questions? Do they treat you respectfully, and do they offer meaningful advice? Great accountants have a year-round relationship with their clients, not just during tax season. They provide financial advice that’s oftentimes over and above just preparing tax returns.


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