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Category Archives: Accounting Tips

How to Select a Good Accountant

The quick and easy answer to how to select a good accountant is to say, “Select me!” That, however, is not the purpose of this article, so we will provide you with some additional criteria for the selection of an accountant for your business. Before we discuss the attributes of a good accountant and accounting firm, let us review why you need the help of any accountant, good or bad.

At the very least, you will require an accountant to assist you in the preparation of your tax return. The tax department views your business as a series of taxable income and deductible expense transactions. The income tax return summarizes these transactions and calculates your contribution to the national revenue system. Unless taxation is a major hobby of yours, you will need an accountant to sort this out for you. Therefore, it is in the area of taxation that you need a good accountant.

The next reason to use an accountant is to prepare your monthly, quarterly and annual reporting to the government. Each report to the government, be it sales tax, payroll taxes or whatever, requires the completion of forms that are governed by strict regulations… regulations that, if not followed, will result in the taxing agency levying heavy fines. Again, unless you have an outside interest in this, it’s best left to people who work with it every day.

You may be thinking that the above reasons for using an accountant imply that you will be financially punished by the government if you do not do so. Partially, this is true. Inadvertently, the powers that have devised a tax collection and reporting system that places a large burden on the independent business owner. With few exceptions, the reporting required by a five-person operation is similar to the reporting required by an organization employing thousands of people. The difference is the resources available to accomplish the task.

Now let us turn to some positive reasons for using an accountant in your business. After handling your compliance issues with the various levels of government, a good accountant should go further and help you with the financial circumstances of your business. This leads us to the first major criteria of a good accountant. Will you and your accountant be able to fully understand each other? It is extremely important that the lines of communication are clear, and the accountant takes the time to review the financial information provided. A good accountant will drop the jargon and speak to you in a way that helps you better run your business. When selecting an accountant, select someone who appears interested in your business and someone with whom you feel you can develop a rapport. The second step is to ensure that this person is the one with whom you will talk. Is the person selling the service the one who will work with you? How will this contact be made? On what schedule and under what circumstances will your calls be returned? You cannot expect this accountant to be available 24 hours per day, but it is reasonable to expect a return call within 24 hours.

For your accounting information to be useful, it must be on time. Find an accountant who can set a delivery schedule that gets you the information within a few days of the end of your month. It still amazes me to find people who are accepting accounting information way past its useful life. If it is a monthly P&L, you need the information within ten days. If you are getting quarterly information, it can still be useful within 20 days of the quarter end. If it is annual work, we suggest that the information be available within 45-60 days. To truly run your business properly, get accounting information every 30 days. A good accountant will train you in what to have ready and when to have it, then will stick to the schedule.

In order for an accountant to meet the above deadlines, you will have to be important to him. A simple fact of the accounting business is that you serve your largest clients first, because they generate the largest fees. Find out where your organization will fit into this scale. If you are the smallest account your accountant will handle, can you really expect timely service? Look for an accounting company that has selected your size of company as their target client.

This leads to the next step in the selection. This has to do with the expertise your accountant will bring to your work. Certainly, there are a number of degrees for accounting and tax, and you should inquire into the education and the experience of your accountant. Formal education will not tell all, however. Look to experience outside of schools. If the person has a number of years experience either in your field directly, in your industry or in businesses of your size, this might be better than a string of college credits.

Experience and years in the industry cannot make up for the ability to answer technical questions. A good tax practice is based upon a good second opinion, and your selected accountant should have the ability to ask others for a second opinion. No one practicing taxation can ever claim to know it all, but a good accountant will have a formal procedure in place to refer your problems on to other “experts” in the field.

In selecting an accountant, be sure that you fully understand the services to be provided for the fee. You should ask exactly what will be provided and how often. Be skeptical of the following types of packages: 1) A person who says he will do everything. No one can do “everything” for you. Worse, “everything” can be defined as what an accountant thinks you will need, as opposed to what you really do need. 2) The accountant who wants to build your tax return into the price. This may mean that your return will be competing with cash returns when it is due. 3) An accountant who says he will do the tax return for free. In your own business, how much importance do you place on “free” work?

When speaking of fees, find out the basis for the fee. Part of the fee will be based upon the time necessary to complete the work. Look for someone who is willing to say that if you give him your information in this format, at this time, we will do the work for “this” much. Fees should be based on a combination of the volume and the condition of the accounting information. Many accountants will simply state their per-hour rate for doing the work. This makes sense when the person proposing to do the work has no idea of what to expect. It can mean, however, that any inefficiency on his part results in extra fees to you. While you may be satisfied with an hourly quote in the beginning of the relationship, you should establish the most likely fee, along with the conditions for meeting that fee. To leave this too open-ended results in too many surprises. Make sure that your accountant understands that you will not pay for extras that have not been discussed beforehand. While the extra work may be warranted, i.e., a unique tax situation or especially confusing information from you, you have the right to approve any increase in fee prior to the work being done and the bill presented.

Understand the pricing structure so that when a change in fee occurs, you won’t be surprised. Two factors will affect this increase. The first is simply rising prices. Like you, your accountant must absorb price increases and pass them along. The second reason is an increase in the volume of work. By understanding the basis of the pricing, you will be in a better position to evaluate the fee. Like any other expense, fees should be affordable to your business. For smaller companies there is not a set ratio for what you should pay. It will depend upon your part of the country and the volume of work that you have. Our company uses a formula based upon the number of entries and the number of employees. Shop for value, which translates into service for a fee. When comparing two different fees, make sure that you also compare the level of service you will receive.

In conclusion, to select a good accountant look for the following: 1) someone who you will be able to communicate with fully on a regular basis; 2) someone who can solve your problems either himself or through a backup system of support; 3) someone who will treat the servicing of your account as a priority; and, 4) someone who will give good value for the fee. Good luck!

Tax Planning 101


Undoubtedly you have been reading about tax ideas to reduce your tax burden. Some of these ideas are time sensitive such that you need to act before December 31. Just a few ideas and this is not a comprehensive list. The first item is “tax loss selling” such that the settlement of the investment transaction occurs before December 31. With holidays around Christmas this date should be noted. You need to talk to your investment advisor regarding the advisability of making these investment decisions. Once you have disposed of an investment you cannot buy it back for 30 days or the strategy of claiming a loss is defeated. The “stop loss” rules can become quite complicated in a series of transactions and contacting us would be a good idea. The second item is charitable donations. Make these before December 31 and you should get a receipt that indicates that it was a donation in the given year even though the receipt may be dated in the current year. Finally, contributions to a Registered Education Savings Plan need to be made before year end to qualify for the rebates for this year. All in all, tax planning should be a year-round exercise but don’t miss the deadlines or you will have to wait another year to realize the tax savings. Call us if you have any questions.

Choosing an Accountant Part 5: The Understanding Accountant


My final and most important comment on choosing the right accountant relates to the empathy or understanding of your accountant regarding your business and the challenges that you face on a day-to-day basis as a small business owner. At Padgett we specialize in helping all kinds of small businesses and this helps us to understand your business operations from the perspective of the thousands of other businesses we help. But more important to your decision is our ability to empathize with you as we are small business owners too. We can look beyond the administrative needs of your business and advise you
on other business challenges you have in operations and marketing as we have direct experience either in our own business or in the many businesses we serve. When you develop this trusted relationship with your accountant you will know you have made the right decision – Padgett Business Services.

Choosing an Accountant Part 4: The Reliable Accountant


The reliability is probably the key factor in establishing a trusted relationship with your accountant. If you want your questions answered, then you need someone who gets back to you or visits your business on a regular basis. Someone who is reliable will also promote that peace of mind feeling that is essential in developing trust in a relationship. There are several
factors that you can use to decide whether you will receive reliable service. The first is how often you are going to interact to make sure that your system is running smoothly. Your business needs a financial checkup on a monthly basis to make sure it is working well and to allow your accountant to advise you from a position of current knowledge. A second factor is the actual system that you are going to use and whether it delivers consistent, accurate and complete results. There are more factors, but these would be better understood if you met with one of our Padgett offices. Give us a call for a no charge presentation of what we can do for you.

Choosing an Accountant Part 3: The Good Looking Accountant


I am venturing into dangerous ground with the above caption for this blog. However, the appearance of your accountant can help you make the right choice. Let’s make the assumption that most business owners want to deal with successful people. Success will appear to you in different ways – how the person is dressed, what kind of car they drive, what kind of office they have and many other attributes. If you are hoping to have your accountant provide organization and peace of mind to your business, then determining if they “appear” organized in their presentation to you will help you. This “image” factor extends in today’s world to the technological solutions and does your accountant employ systems that meet your business requirements. Look for these successful attributes and you will be on the way to making a good decision about your accountant.

Choosing an Accountant Part 2: The Competent Accountant


Business owners expect that their accountant is “competent” in the financial and tax matters that effect their operations. Unfortunately this is a Catch 22 situation as the knowledge that defines competence is what the owner doesn’t have and is expecting to receive from their accountant. Therefore, where does knowledge and competence come from? There are several sources including the study of accounting and finance, experience, the organization they represent and professional development to name a few. As the body of knowledge in the accounting, payroll and tax business is extensive it is important that your accountant has access this knowledge to answer your questions. It is okay for the answer to depend on a second opinion of their organization. Find out about this organization and you will understand better the competence and knowledge of your accountant. Padgett Business Services was founded on these principles.

Choosing an Accountant

By Brian Austin, Vice Chairman, Padgett Business Services


After 40 years in the accounting profession, I have come to realize that the decision most people make when choosing an accountant is often based on a single factor or a referral. A seasoned veteran of our organization with more experience than me at the time explained to me that people just want an accountant who would CARE for them. Of course, the CARE translated into the attributes you should be looking for in an accountant or the organization they represent. So …. what does CARE stand for? Simply put,  it is COMPETENT, APPEARANCE, RESPONSIBLE and EMPATHY. Follow me on this as I explain what my learned friend meant by each of these terms. I will deal with each of these in the coming days.

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