SIX QUESTIONS TO ASK WHEN SHOPPING FOR AN ACCOUNTANT

Small businesses are not what they once were. Many are led by young educated entrepreneurs who expect the same kind of energetic service from their professionals that they invest in running their own enterprise.

Unfortunately, most accounting firms persist in offering the same kind of service they have always offered which often does not come close to meeting the real needs of their clients:

Based on stories our new clients tell us, here are some of the problems small businesses encounter with their accounting firms and why they come to us:

DO THEY SUPPORT YOUR ACCOUNTING SOFTWARE?

Affordable accounting packages for small businesses have been around for about 25 years and these days, all small businesses use one or another of the packages available. In the post COVID era, web-based softwares like Quickbooks Online, Xero and Freshbooks are dominating the accounting space. While these softwares promote themselves as intuitive and easy to use, the reality is that it is you will need help with design, training and someone to contact when you encounter a knotty problem.

You should be able to turn to your accountant for help but most accounting firms do not offer that kind of service.

CAN THEY ASSIST YOU WITH BOOKKEEPING?

Strange as it may seem, most accounting firms do not offer accounting support. There are a couple of reasons for this odd reality. The first is that bookkeeping tasks entail long hours at low rates so they tend to be less profitable and more demanding than other types of work. The second is that there is no universally recognised bookkeeping qualification like the CPA for accountants, so finding qualified personnel is a challenge.

Bookkeeping is a difficult and time-consuming chore for a business owner and having your accounting firm do it allows you to concentrate on more important issues. We suggest you have your accountant train you to do the basics like preparing invoices and writing cheques. You can also use software protocols like “rules” in QBO to automatically post transactions to your books.

DO YOU ONLY HEAR FROM THEM ONCE A YEAR?

If all you get from your accountant is a tax return and a set of financial statements six months after the end of your year, they are providing nothing that helps you run your business. What you are not getting are real-time reports you can use to grow and manage your enterprise. The well-known statistic that 50% of small businesses fail within 5 years and 70% within a decade, is often due to poor financial management. Every business, big or small, should be using timely financial information to measure the effectiveness of their strategies and plan for the future. Most accounting firms are AWOL until it comes time to file your tax return and know very little about your business.

DO THEY CORRECT ERRORS IN YOUR ANNUAL FINANCIAL STATEMENTS?

Did you know that accountants who prepare a Compilation Report (Notice to Reader) are not required to do any verification at all of the numbers they receive from you? We have seen financial statements beautifully and professionally presented on accounting firm stationery, that make absolutely no sense. And in the cases where your accountants do make adjustments on your behalf, they often show no interest in following up to ensure that these adjustments are properly recorded in your system.

DO THEY CHARGE YOU FOR EVERY PHONE CALL?

Most accounting firms still charge you for their time – not the value of the service they provide. What they are doing is basing what they charge you on their cost regardless of the value to you. This may be valid when you engage them for a non-repetitive task but why are you being charged for them to ask a question about a tax return for which they have already been paid? In the end, you should only pay for the value you receive and you should pay only once. Many firms will refuse to give you firm quotes for repetitive work like tax returns or annual financial statements but you should insist on a single price with no hidden extras. Would you frequent a restaurant that billed you for the time the staff took to cook and serve your food and charged extra for every question you asked the waiter?

DO THEY CHARGE EXTRA WHEN CRA AUDITS YOU?

In many cases, the reason is because many accounting firms take no interest in whether the detailed transactions in your books agree with the sales and income tax returns they file on your behalf. If they do not agree, the accounting firm will charge you for whatever work they need to do to investigate the reasons for the differences. You may also be exposed to additional taxes and penalties – tax auditors can be ruthless if they cannot reconcile detail to filed returns. The answer is for your accountant to “lock” your detailed records once tax returns have been filed to ensure the detail will forever agree with the filing. Unfortunately, most accounting firms do not perform this simple task and will often blame the client for poor record-keeping. To add insult to injury, they will charge additional fees for the unnecessary extra work they are then forced to do.

 

 

 

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