Unless you are familiar with accounting, your company’s financial statements may be prepared by your in-house accounting department or an outside expert. For small businesses, hiring a full-time accountant is more expensive and may not be necessary for small businesses, so the latter option may be more appealing.
However, even if you outsource to a freelance accountant, it is important to choose the right accountant for your business. For example, when it comes to your annual tax return, someone else may prepare it, but ultimately you are legally responsible if there is an error there.
Well-managed bookkeeping is an important aspect of your business as it helps you understand your financial situation, avoid fees and fines, and even improve your cash flow to better plan for your business’s success. Nevertheless, finding a good accountant is important, as bookkeeping is a skill that is not taken for granted without education.
Some people are looking to DIY bookkeeping, but it is not recommended as it can lead to financial ruin for the business. Nevertheless, choosing the right tax accountant can be a minefield. Luckily, this article will provide some tips to help you make the right choice when choosing tax accountants for your business.
Here are some of the most common mistakes people make when choosing such professionals and how to avoid them.
- First, many people make the mistake of choosing the first accountant they meet. It’s easy to think that all trained accountants should be able to do the same job to the same standards, but that’s not the case. Accountants, like other professionals in any field, have specialties and can perform more or less specific tasks. This means you shouldn’t choose an accountant based solely on their proximity to you. Instead, look for accountants with specific business skills, qualifications, experience, and expertise.
- The next common mistake people make when looking for an accountant is hiring a company to do the job without a specific person doing the accounting. This is because, in large organizations, multiple people may be responsible for the account instead of one. Nothing wrong with that, per se, but it’s very important to have someone who is particularly knowledgeable about your situation, business, and accounts. Even when you need a query or question, it will be answered promptly.
- Another common mistake many people make is hiring a small business accountant because it’s cheaper. Again, bookkeeping is a real skill that many find difficult to master, and the best accountants may charge a little more for their services. This does not stop many people from paying for the services of an accountant, always looking for bargains and avoiding those necessary expenses. I’m not saying you shouldn’t look for reasonably priced services, but you should be wary of services that offer significantly lower rates.
- Also, avoid working with accountants who specialize in only one area and cannot advise on broader issues. Good accountants know different areas of the industry, even if they only work with small businesses, for example. Even if an accountant doesn’t know the answer to a question, they should be willing to find it and provide a specific and concise answer as soon as possible. Therefore, look for an accountant who is motivated, dedicated, and communicative when it comes to informing you about various financial matters.
- We all have friends with different career paths, and it seems like a great option to save a few bucks. The only right way to choose the right accountant is to perform due diligence. There’s a reason the adage goes on: Don’t confuse business with entertainment. A friend may not dig into your paperwork with the same determination as a first-time client, especially regarding discounts. Play it safe and hire a reputable accountant outside of your network.
- Expect more from accountants. Yes, accountants do the math all day and organize the numbers in your business, but don’t be fooled: Accountants are not mutually exclusive with accountants. Accountants track bills, pay bills, and enter data critical to their business. They do not provide necessary accounting and financial services to businesses that CPA can provide. It’s best to hire an accountant who specializes in your business niche to provide the support you need to maintain your financial account properly. Accountants are great for your business, but they should be limited to handling invoices, payments, and data entry.
Tips on How to Choose a Tax Accountant
- When interviewing or looking for an accountant, ask if they commonly perform tasks such as preparing tax returns when needed. For example, a particular accountant may specialize in real estate planning or financial forecasting and may be highly qualified but is more likely to make mistakes than an unqualified accountant who has prepared hundreds of tax returns.
There are walk-in tax preparation companies that offer very low fees to prepare your tax return. However, it is best to avoid these companies whenever possible and hire a tax consultant. This is because these companies use seasonal workers with only basic training to complete as many tax returns as possible in the shortest possible time. So errors are very likely and very common.
- Rather than rushing to pick a tax accountant, it is important to take the time to interview them and make sure they have the necessary qualifications and experience. Check their name online or check the name of the company they work for if they are not freelancers. Anyone who finds a complaint should ignore it and immediately ask about their qualifications and whether they belong to a professional accounting organization. It’s also a good idea to check references, especially from companies similar to yours, to see if the person is trustworthy and produces error-free returns.
- The question is to determine the fees and how they are calculated hourly or one-time pricing per tax return. A good accountant costs money, but your tax return gets more attention and attention. Using a cheap tax filing service just to face a hefty fine later won’t save you money.
- Once you’ve decided what type of accountant you need, you need to find it. If you know friends who have used accountants in the past, ask them for recommendations. If they’ve done a good job for your friend, they’ll do a good job for you too. However, even if you don’t know someone who has used accountants in the past, you can still find them online on sites such as LinkedIn, directories, or sites that specialize in matching businesses with qualified accountants.
From choosing an accounting firm based on price to choosing a tax accountant just because it’s the first professional you meet, there are a number of things you can do wrong in deciding whether to hire one of these professionals. There are many mistakes. However, avoiding these mistakes will increase your chances of finding a trusted and experienced accounting professional.