CPAs are often trusted because of their accreditation, not because of what they can do. This sounds harsh but is simply the truth. Taxes for a business are not equivalent to personal taxes. Here are insider tips from a CPA on what to look for in a CPA:
- Knowledge about your area of business – A lot of CPAs are general practitioners when it comes to tax. They tend to know a little about a lot. Most business owners should rely on a CPA who processes multiple returns for the area of business they operate in. You wouldn’t go to a general practitioner for a heart attack. You would go to a specialist. It’s the same with your taxes. In Real Estate it is beneficial to look for someone who has either invested in Real Estate or processed returns for Real Estate investors. If you are having to explain to a CPA what a flip is, it is most likely not a good fit for you.
- Accessibility – Your business will be operating 12 months out of the year. You should have an accountant that does the same and is not just seasonal. The more tax planning that is done throughout the year, the better result there will be come tax time.
- Drop the friends and family – Having a friend or cousin or a cousin’s cousin do your taxes is common. Is it smart? Maybe or maybe not. A good CPA will always look out for you from a financial perspective first opposed to the personal relationship. This is shocking but is beneficial.
- Offers tax and audit – Planning for your taxes and planning for an audit should go hand in hand. Most business owners fear the IRS, and rightfully so. The fear usually stems from not knowing what can trigger an audit. You want to use a CPA who will at least have a defense for an audit in the back of their head while doing taxes. This is not to say you will be audited but sometimes with taxes it is not bad to plan for the worse.
- Offers tax planning – A lot of clients we deal with grow accustomed to only seeing a CPA come tax time. This is less than ideal. Once April hits, a CPAs creativity is almost depleted. Make sure you get a CPA that will offer tax planning and strategy opposed to only tax preparation. Questions such as “Why do I owe so much?” or “What could I have done?” are already too late for most accountants. The questions should revolve around what is projected to happen or what is happening. An ounce of prevention is worth a pound of cure.
- Someone you can communicate with – CPAs are known to be introverts. Make sure they speak your language before you commit. Communication is key. Some CPAs do not know how to communicate with regular people. This causes business owners to dread appointments opposed to enjoying them.
- Interview them and ask questions – Some questions that are pivotal for CPAs to answer are 1) are you up to date and stay up to date on the current IRS tax code for business owners? 2) are you looking for a long term or short term client? 3) What percentage of your database is business owners compared to just personal tax returns? 4) do you have referrals? 5) are there hidden fees such as billable hours? 6) what’s your normal game plan for an audit? 7) are you comfortable helping someone in my situation? 8) are you aggressive, moderate, or conservative when it comes to my taxes?
If your business is just starting, trending upwards, or has plateaued a CPA will be a vital part of your team. Taxes are one of the largest expenses a business will ever have. It is pivotal to plan, prepare, and prioritize that expense. An accountant is able to ask questions that will lead you down a correct tax path opposed to fumbling through it.