The first set of questions should be answered satisfactorily in order to continue the relationship, and the second set ensures you are getting quality advice.
1. What certifications and training do you have?
If you own a business, you need a preparer who is knowledgeable in both business and individual tax laws to ensure that you are getting the right advice. An accountant who has the credentials to prepare business tax returns is not necessarily qualified to handle your individual tax return and planning, especially if there are complex variables involved.
In order to be competent, tax preparers must keep current on the ever-changing tax laws through education and continually hone their skills.
A tax preparer who doesn’t keep up will quickly become rusty. Ultimately, knowledge and experience are the best credentials.
2. Does your process ensure accuracy?
Anyone can make a mistake. Make sure your return will be checked for accuracy in both math and theory by a tax specialist other than the preparer. How many accountants are a part of the tax preparation process? If only one person is processing your return from beginning to end, there is a greater chance that mistakes will be made or deductions missed. Does your accountant have updated software? Computerized processing of tax returns by a knowledgeable tax preparer helps ensure thoroughness, accuracy and avoids mistakes.
3. What happens if you make a mistake?
If the IRS comes knocking at your door because of an error, or you’re one of the lucky ones chosen for an audit, what is your tax preparer willing to do on your behalf? If the errors your tax preparer made incur penalties or interest, what responsibility will your tax preparer take in paying for those errors? Find out now, before the bill is due.
4. Are you available year-round?
If your tax preparer only hangs a shingle between January and April 15, it is time to look for a new one. If a letter comes in July from the IRS, you want to be able to reach your preparers immediately, not wonder how to find them. Make sure your tax preparer will be available year-round to provide assistance with any tax problems or questions you may have.
5. How long has your firm been in business?
Even if your tax preparers meet all of your criteria, do you think they’ll still be around to help you this summer, or next year or five years from now? Also, if a firm has been able to retain its talent, that’s a good sign it will be around in the future.
Now that we’ve established if you need a new accountant altogether, take it a step further and be sure your current or future accountant is giving you and your business all the benefits you deserve. Look for an accountant who will listen to you and someone who can provide guidance, education, tax planning and long-term strategies.
6. How familiar do you become with your clients?
Your accountants can’t do the best job for you if they don’t have detailed information about your personal financial situation and business. Knowing you and your business means they understand what questions to ask and the information needed to minimize your tax burden. Are they updated on new tax law changes that will impact you now and in future tax planning? Keeping the IRS at bay is done only when your accountants are current with you, your business and the tax laws.
7. How do you work with your clients?
There should be no question as to whether or not all your concerns are addressed and your best interests are being served. The best tax preparers are not tax technicians, they are knowledgeable professionals who have empathy and genuine concern for the best interests of their clients.
8. Are you familiar with estate and gift tax?
Some of the most costly mistakes in estate planning occur when income tax aspects are ignored. A good estate plan encompasses your personal wishes and goals. It also accomplishes good legal, estate tax and financial outcomes and has a positive income tax result as well. Your accountant has a full understanding of your income tax issues and should be able to transition that knowledge into your estate plan while guiding you through the process.
9. How do you assist your clients with business succession planning?
Does your accountant coordinate estate as well as business succession plans? Business owners need to look toward an exit strategy years before leaving the business and start building value to optimize its worth. Your accountant should help guide you through the process.
10.? Do you work with your clients to achieve an overall financial plan?
While taxes are an important part of your financial plan, they need to be looked at in the context of how they fit into your overall business and personal financial plan. If your tax preparer is offering advice solely to provide deductions or defer income, then your overall financial goals may not be met.
Don’t let your tax preparer minimize current year taxes to the detriment of your overall financial plan. Also, from a personal perspective, you should look to have a diversified portfolio of investments that coincides with your risk tolerance profile. Does your accountant assist you in this regard?
If your relationship with your accountant meets all of your needs,congratulations. But if you’re losing any sleep over your financial situation or aren’t getting the answers or benefits you think you should from your accountant, start looking. Your accountant should be a major part of your overall financial advisor team. Make sure you have the right team in place.