Choosing a CPA or accountant can be a difficult and time consuming process…
And in the end, there’s no guarantee that you’ll find just the right person to meet your needs.
I’m sure there are endless horror stories of bad accountants and CPAs who are…
- Not returning your calls,
- Missing deadlines, or
- Have taken countless months to get your business tax return prepared.
To be honest, as a CPA, there’s no good excuse for that sort of unprofessional behavior. But, just like any relationship, one thing we all must try to understand, communication is the key. Remember, business financials and tax returns are the business owner’s responsibility… The CPA’s role is to assist and advise in their preparation.
However, this article isn’t about passing blame (there’s enough to pass around to everyone, CPA’s and accountants included). This is about setting a defined plan and communication process when choosing a CPA that helps satisfy all parties involved.
Tips on How to Choose a CPA
Whether you decide to keep your current CPA or find a new one, here are a few tips you may want to consider:
- Request monthly financial statements; review those statements; ask questions.
- Request a deadline to be provided these monthly statements. (For example, the 25th day of the following month.
- Work with your accountant/CPA to develop a reporting package that works for you.
The Key Reports You Need from Your CPA
- Year-to-date Income Statement with a year-over-year comparison. This tends to smooth out some of the monthly fluctuations allowing a better year-over-year comparison.
- Income Statement for the month with a comparison over same month last year. Most businesses experience some cyclical effect. (i.e., Busy in the summer and slow in the winter.) It’s important that you’re comparing apples to apples.
- Income statement for the month comparing with the previous month. This the least useful of the income statement reports. It is usually difficult to determine if anything is going wrong or right on such a short time frame.
- You may also find it helpful to have a year-to-date income statement by month… This way, you can look for trends and more easily spot anything that looks out of place. (This is the key report I use to make sure all transactions are going into the correct bucket.)
- Balance Sheet with year-over-year comparison. Here we can see if our cash balance has improved and to make sure other balances have decreased over time… Such as loan balances.
- Balance Sheet with month-over-month comparison… This report serves as a check to see if any large, unplanned changes occurred.
While there are tons of reports that can be envisioned and created, I consider the list above the bare minimum. Different businesses, and owners, will require different reports…
Working with your CPA is the key to having the reports that really matter versus having report overload.
More Tips for Choosing a CPA
- Respond quickly to your CPA’s requests for additional information. This not only allows your CPA to finish up on-time, but also demonstrates how important this information is to you.
- If you haven’t already, consider moving your books to an online platform (e.g., QuickBooks Online). This allows your CPA to monitor your books throughout the month and to be proactive if a situation is spotted. It also allows the CPA and business owner to look at the same live information, at the same time, to ask and answer questions.
- You get what you pay for… But don’t get ripped off! The current industry trend is “value pricing” which means a flat monthly fee. This keeps both you and your CPA’s head in the game… Money tends to do that! (Also helps to eliminate surprise, usually large, invoices from your CPA.) While on the topic of pricing, if your books are a mess, expect additional charges for historical clean-up. Get an up-front estimate on hours required and the total cost of this clean-up.
- You may also be able to choose a CPA with a monthly fee for year-end tax planning and preparation. This can be rolled into your monthly fee for accounting services… Spread the cost of your tax return over 12 months! Again, this helps to keep everyone mindful of year-end tax consequences. As tax situations arise, they can be dealt with instead of waiting for tax time when your CPA is overwhelmed.
- Treat your CPA as a trusted advisor… You may be surprised at how much they can help no matter the problem you’re facing. CPAs that have been around the block a few times have seen a lot! A good CPA is worth much more than financial statements and tax returns.
CPAs are People Too!
As with most things in life, you’ll get out of it what you put into it. And, believe it or not, CPAs are regular people! They want to feel like their work is wanted and appreciated. The tips above are a great way to keep the lines of communication with your CPA open and to ensure you, the client, are getting the results you desire.