How to Find the Right Accounting Firm for Your Needs
Choosing an accounting firm to help you with your personal or business needs requires careful consideration. The right accounting professional could potentially save you thousands of dollars in tax deductions and could also help you plan for your business' financial future.
On the other hand, putting the wrong person in charge of your accounting needs could have disastrous consequences. The following are a few recent incidents that illustrate just how terribly things can go wrong if you don't perform your due diligence when hiring an accountant:
In April 2018, a 60-year-old woman in Georgia was arrested for running an illegal tax preparation business and also posing as a lawyer. She is believed to have scammed at least $1.2 million dollars from her customers through her various illegal activities.
A 34-year-old woman in Laguna Beach was arrested in 2016 for embezzling $1.5 million dollars from small businesses. According to police, the woman, who claimed to have an accounting degree from Pepperdine University, befriended the owners of numerous local businesses; many of whom then entrusted her with their accounting needs. In truth, the woman did not have a degree and had only taken a few accounting classes at a community college. Sadly, she wasted the money she stole from these small businesses on a slew of frivolous purchases, including plastic surgery and vacations.
Sadly, if the clients using these so-called "accountants" had performed just a bit of due diligence before hiring them, these situations may have been avoidable. The following are eight steps you should take when searching for the perfect accounting partner for your business.
Finding the Right Accounting Firm: Research and Verify Credentials
Everyone is hyper-aware of the dangers of sharing your personal or business' financial information on the Internet. Yet, a staggering 80 percent of those surveyed by NerdWallet admitted that they never checked the credentials of their tax preparer before hiring one and then sharing all of their important financial information with them. But as evidenced by the two stories mentioned above, it is very important that you verify that your CPA has the proper credentials. You can start by:
Asking for a Preparer Tax Identification Number (PTIN). Anyone who prepares federal tax returns for compensation is required to have a PTIN.
Looking up an accounting professional's credentials on the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This is a searchable database that lists preparers who hold professional credentials that are recognized by the IRS or who hold an Annual Filing Season Program Record of Completion.
Finding the Right Accounting Firm: Choose a CPA
Not all tax professionals are Certified Public Accountants (CPA). The ones that are licensed as a CPA have passed a rigorous exam and met certain work requirements. And while both an accountant and a CPA can prepare your taxes, only the latter can represent you before the IRS during an audit.
Finding the Right Accounting Firm: Ask Friends, Family Members and Business Relations for Recommendations
One of the best ways to find your future financial partner is by asking members of your social network if they currently work with an accounting professional they would recommend. One caveat: even if an accountant comes highly recommended by people you know, it's imperative that you still conduct your due diligence to ensure that they hold the proper credentials.
Finding the Right Accounting Firm: Check for Professional Memberships
Many of your better accountants will belong to professional organizations, such as the American Institute of CPAs or the National Association of Tax Professionals. These associations typically offer certification programs, online courses and events that keep their members informed of what is going on in their industry.
Finding the Right Accounting Firm: Don't Be Afraid to Ask Questions
Once you've narrowed your search down to a few qualified candidates, call or ask to meet them in person so that you can ask them a few important questions, such as:
Does their firm have expertise working with companies in your industry?
What are their fees? For example, do they charge by the hour or by the project?
How many years of experience do they and/or their firm have?
Who will actually be handling your account? Will it be the accountant or a junior staff member?
And if you're talking with a large accounting firm, you may also want to ask if they ever subcontract out their work to smaller firms. If so, it would make sense to skip the middleman and go directly to a more personal firm like Marek CPA & Associates.
Finding the Right Accounting Firm: Check References
If a CPA or accountant is reputable, they should be more than willing to offer you a number of references that you can call or email. Take the time to contact at least one or two of these references so you can get an idea of the type of relationship this particular firm maintains with its clients. For example, do they call their clients back promptly or are they difficult to reach? Is work completed in a timely fashion and as promised? Or is the firm often late in delivering completed projects?
Finding the Right Accounting Firm: Look Over Online Reviews, but Take Them with a Grain of Salt
Online review sites, such as Yelp, can be very helpful. You might, for example, discover an accounting firm that you've never heard about on one of these sites. Unfortunately, they can also be littered with misleading reviews from disgruntled clients or even fake ones placed by a rival firm. By carefully sifting through the reviews, though, you can usually get a general idea of what is true and isn't true about a particular firm's performance and whether or not their clients are satisfied with their work.
Finding the Right Accounting Firm: Determine the Size of the Firm You Want to Work With
Do you want to work with one of the Big 4 accounting firms, a sole proprietorship or something in between? Each has its advantages and disadvantages. For example, it's likely that a smaller firm will offer you more personalized service that is tailored to your needs than an accountant who works for a mega-firm. Marek CPA & Associates strives to provide personal and individualized attention.