It might be one of the most important and critical decisions for the success of your business - to choose the most competent professional who not only acts as your tax accountant but also has the experience and ability to help you in making strategic decisions and coping with upcoming financial challenges. It’s better to spend some time and do proper due diligence before committing to just any accountant. In this post, I have tried to compile some information based on my experience and discussion with our clients as to what one should consider when hiring an accountant for the ultimate success of any business.
Who are you really hiring? An accountant or co-op student
Be very skeptical of the firms that will charge you the fees of a Chartered Professional Accountant (CPA) but in reality, you meet the CPA only in the first meeting. Afterwards, your file will be transferred to a junior/volunteer accountant and you will never get to meet the CPA. All communication will be done by a junior and your taxes will be prepared and filed by the junior without even a single review by the CPA accountant. The Chartered Professional Accountant (CPA) might attend the meeting for few minutes and then hand you over to a junior. Remember you pay a premium for professional services and it is unethical and unprofessional if your file never gets reviewed by your Chartered Professional Accountant (CPA). Your file should always be filed by a Chartered Professional Accountant (CPA) otherwise you have a classic case of bait and switch. You are paying for top-notch accounting and tax services and receiving the expertise of a volunteer or co-op student.
Are you getting an external CFO or just paying the fee to know how much taxes you owe?
About 90% of businesses fail and one of the main reasons for this failure is the inability to handle cash flow. You need sound advice and financial planning in order to make your business a success. Your accountant & advisor needs to review your financials on a quarterly basis in order to guide you in making informed decisions sooner rather than later. Your accountant must play a key role as an active external CFO of your firm. The accountant must be able to provide you with sound business advice and question your strategic decisions, operational controls and most importantly financial sustainability. Visiting your accountant once a year to know your tax bill and pay the accountant annual fee will not help you in making your business a success. Make sure your accountant agrees to act as an external CFO and not just a tax preparer.
Are you being offered a tax plan or just compilation services?
A tax plan utilizes the expertise of a Chartered Professional Accountant (CPA) to not only reduce your current but also future taxes, both personal and corporation. An accountant must look at your current financial situation and future goals to carve out a tax strategy that is in line with the future vision and mission of your organization. Through tax planning, you can make sure that you pass on the wealth to your children and not pay a lion’s share to the CRA just because of your accountant’s negligence. Make sure that you ask your accountant for an individualized tax plan and do not settle for mere tax compliance work.
Is the accounting firm making you do the work or is taking responsibility of your books?
A lot of accounting firms push bookkeeping on to the client or to an outside bookkeeper as its the most time-consuming and not very rewarding due to lower fees. 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 the in-depth knowledge of your books and will not be able to provide you with advisory services. 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 exposed to higher risk during CRA audit resulting in huge penalties, interest, and fines. As the saying goes “Garbage in … garbage out” Make sure that either your accountant is able to provide you bookkeeping services or 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.
Does the firm have an experienced staff?
Meet the seniors in the firm and ask how many CPAs are there in the firm. You need to know if the staff has adequate experience and knowledge to handle your business. Do not rely on firms which are run by one man show as no one can be a master of everything. Make sure the firm you choose has a diversified experience poll. Can it provide you the full scale of services? A lot of firms only provide Tax services like simple Notice to Reader or compilations based on the information provided by you. Make sure that the accountant you choose can take care of payroll, bookkeeping, reviews, HST as well as provide advisory services. It must be ONE STOP firm for all your accounting, tax and business consultancy.
Does the firm have proper procedures in place to keep on top of due dates?
Make sure that the accounting firm that you choose has a process to keep on top of your due dates. The firm must be well organized and able to provide you heads up for the upcoming deadlines and follow up with you in a timely manner to get the data from you to finish the job on time and within your prescribed budget. Discuss with your accountant about these procedures.
Do you want a quick and dirty tax filling and only focus on cheaper cost?
One of the biggest mistakes done by business owners is to focus on cost and not quality. Your 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 which 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 is strongly advised to look for an accountant who won’t compromise on quality in an attempt to reduce the price. If an accountant is charging you for just punching in the numbers provided by you then it’s better if you do so by yourself and save all the fees. It's been observed that clients making bad decisions in an attempt to save few bucks ended up paying huge amounts in penalties and going through an enormous amount of stress which is priceless. An accountant is your business advisor and trusted partner in the success of your business. Make sure you chose your accountant wisely and with great thought as he can make a difference in your business success.
A visit to the office will give you a good feel of the firm's capabilities?
It is advisable to physically visit the office in order to avoid being fished by individuals working form the basement of the home. Many accounting firms have fancy websites but when you walk into the office, you will see only a one-man show. The visit to the office will give you a clear idea about the staff level and the size of the firm. The way you are greeted at the reception, and the whole process of setting up the meeting will give you a better idea of the firm’s professionalism.
The most important part is meeting with the accountant in order to put a face to the voice. It is important to see if there is a personality as well as knowledge fit. The expectations and deliverables should be clearly discussed in this meeting. You will also be able to gauge if the accountant has taken time to know about your business in advance. If the accountant is not prepared for the meeting or asks you to refresh his memory, then this is a clear sign that that accountant is non-professional or swamped already and does not have an eye for detail and is suffering from a lack of time or the required skills.
Do not let the accounting firm's reputation get you into trouble?
CRA is cracking down on many accounting firms who cook their client’s books based on standardized expenses of similar businesses. There’s no cookie-cutter approach which can be used for every business, not even for similar nature of business as every business is unique. 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. The likelihood of CRA auditing your books sometimes might depend on the reputation of your accounting firm. Make sure you pick a professional accounting firm to represent you gracefully and in a professional manner during CRA audits/reviews.
Is your accountant equipped with the latest technology and software?
It is advisable to ensure that your accountant is fully equipped with the latest IT tools and should not be old school still juggling with pen, paper and filing methodology. You also need to understand his way of getting things done. If you need to spend days and days in his office to get your financial statements completed and filed, then you really need to sit back and think if it's worth doing so. You will end up diverting your attention from your core business and wasting a lot of your precious time sitting and watching your accountant doing your work. You must understand the time value of money and plan to use your resources in an efficient and effective manner. Give us a call at 416 900 3826 to discuss how we can help you in making your business a success. We are committed to growing your business and not just doing compliance. It’s time to hire an accountant, not just a tax filer who you will see once a year to know your tax bill.
DISCLAIMER: The information provided in this Blog is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. All statements made in this blog are based on personal experience and are used for example purposes only. GTA Accounting Professional Corporation will not be held liable for any problems that arise from the usage of the information provided in this Blog.