Tax time is coming. You need a tax advisor. Where do you do? Whom do you trust? It’s not like there’s a directory of trustworthy tax advisers out there on the Internet. If it were that easy, all the dishonest, incompetent, and ignorant ones would be out of business already. No, your best bet is to follow simple guidelines for choosing a tax professional that will get your taxes done right the first time and save you boatloads of cash.
Some of the best tax franchises out there have only mediocre tax professionals. So, don’t rely on a big name only for your tax needs. Make sure the person you’re working with has been doing this for a while, has more than just letters behind his or her name, and is at least as good as an independent CPA. And don’t feel pressured to go with a big-box outfit.
Check out local CPAs, ask about their credentials, and ask about their education. They shouldn’t be shy with you about any of that information.
Checking referrals is also a good idea. Ask for at least 4 or 5 different referrals. Those referrals should be people who are in a similar situation as you (perhaps in the same industry). Call them up. Ask them how they feel about the service. Now, realize that an accountant or tax firm isn’t likely to give you names of people that aren’t happy with their service, so be prepared to ask specific questions other than “were you happy with their service.”
For example, asking someone “What exactly did this firm do for you?” or “If you don’t mind my asking, how much were they able to save you in taxes this year?” will help you determine whether the outfit you’re planning on working with is any good. If tax savings are in-line with the averages for the industry, then it’s not a stellar tax firm. It’s not bad, but it’s not great either.
How much time will the tax professional be able to devote to your taxes? Sometimes, accountants and tax advisers take on a lot more work than they can reasonably do. So, they may outsource some of the work to interns and then just rubber-stamp their name on it – this is usually common when you’re a small business with somewhat simple perceived needs.
But, sometimes, you want or actually need, more complicated tax planning. In many cases, there is more than one way to prepare a tax return. Make sure you’re working directly with the accountant you’re hiring, and not an intern or a junior staff member.
Costs for tax preparation vary greatly depending on the skill and expertise of the tax professional. You’re used to getting a good deal on products and services, but this is one area where you don’t want a good deal. Your first consideration for hiring a tax professional should be quality of work first and price second.
Even if everything else about the tax pro seems legit, you still might not be a good fit for each other. Why? Because you might be incompatible. Personality conflicts, poor communication or miscommunication, and even conflicting values or approaches to financial planning can all hinder progress on your tax return and make the entire ordeal barely tolerable. Make sure you’re compatible with the person who is handling all of your company’s finances.
Jeremy S has a passion for small businesses. He loves writing about the tips and tricks to smart money management.