A knowledgeable, experienced, reliable accountant is a critical part of any small-business owner’s team. These professionals can provide advice and guidance in an area you may not be an expert in, allowing you to focus on what you do best: running your business.
By hiring an accountant, says Jennifer Warawa, vice president and general manager of Sage Accounting Solutions,"small-business owners can be freed up to do more of what they love--working on and in their business to achieve their vision, while having the peace of mind that their finances are being managed by someone with the right expertise and experience, a true, trusted advisor.”
Unfortunately, many business owners don't take the time to find an accountant who's the right fit for their business, and they end up with a mismatch that's not helping move the business forward—and may even be holding it back. If that's the case, it’s time to let the accountant go and bring in someone new who can really help.
Not sure if your accountant is right for the job? Here are six ways to tell if you need to fire your accountant:
1. They don’t explain your financial statements. One of the biggest issues many small-business owners face is that they don’t understand their own financial statements because they never learned how to read them. Unfortunately, some accountants don’t help. They would rather keep the owner in the dark on this subject, thinking it gives them job security. A trustworthy accountant will explain your financial statements to you in a way you'll understand, no matter what your level of financial education. They should also teach you how to use the reports in your accounting program so you can obtain and review financial information independently.
2. They don’t understand your industry. Alex Parker at Brand Strategix fired his accountants because of their lack of tax expertise. Parker says, “They didn't understand corporate tax code, which meant we were paying into ‘the system’ more than we should have been due to their lack of knowledge.” Before hiring any accountant, get references of a few clients of theirs that are in similar industries and check to see what type of job they've done and if there have been any issues.
3. They don’t help maximize deductions. When it comes to business tax deductions, some accountants are too lenient while others are too strict. No matter which route your accountant takes, you need to agree with them regarding the treatment of tax deductions for your business. After all, you're the one signing the tax return, so you need to be comfortable with all the deduction decisions. If you're not getting enough information from your accountant to make educated decisions, your accountant may not know enough about this topic or your industry to be able to really help.
4. You're getting better advice elsewhere. CPA Michael Kaplanidis, a managing partner at Water Street Associates, says that if an owner gets critical financial advice from another person or an article that they should have heard from their own accountant, it’s time to start looking for a new one. This is especially true if it happens on more than one occasion. If you can't rely on your accountant to stay up to date or implement essential financial management strategies, it's time to look around for someone you can count on.
5. You're afraid to call for help or advice because they charge by the minute. When evaluating your financial services provider, you need to look at the overall value you're getting for their accounting expense. If you're worrying about the cost of every minute, you're not getting the value you deserve. In most small businesses, accounting expenses should not exceed $10,000 a year.
6. They don’t return phone calls in a timely fashion. In addition, their customer service stinks, or they can’t get paperwork filed in a timely manner. Lisa Parmley, owner of Business Bolts, recalls, “I once waited about two weeks to hear back from my accountant after leaving a couple of messages. I was fuming over that one. My new accountant gets back to me the same day or, at the latest, the next day.” A timely response should be the case even during tax season.
If you've decided it's time to fire your accountant, the best time to do it is right after taxes are due in March. This will enable your new accountant to start with a new fiscal year.
But where should you look for a new accountant? You can get referrals from your local chamber of commerce, a Small Business Development Center, a SCORE chapter or peer groups like Entrepreneurs' Organization. Local accounting franchises, such as H&R Block, can also be a good source.
Read more articles on taxes.