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6 Signs You May Need to Look for a New Accountant

Estimated reading time: 7 mins

You must be able to trust your accountant since they’re handling your money and maintaining your books. However, accountants can be incompetent, overworked, unqualified for the work they do, or just downright criminal. Let’s take a look at some of the red flags that should let you know that you might need to start looking for someone else to manage your books.

Your Filings Are Always Close to the Deadline

No one wants to deal with penalties for filing their taxes late. It is a major warning sign for your accountant if they barely meet the deadline quarter after quarter. The only exception to this is if you’re the one showing up with your tax information right before the deadline. However, if you’re getting tax info to the accountant well before the deadline, something is wrong if they are unable to file in time.

They Can’t or Won’t Answer Your Questions

An accountant who can’t answer all of your questions or at least refer you to someone who is better qualified may not have the expertise you need. An accountant may not have the answer right away, but they should be able to commit to gettingback to you within a certain time frame with the answer.

If it is hard to reach them when you have questions, this is another red flag. While your accountant may not be able to answer the phone immediately, they should respond to inquiries in a reasonable time frame. Another red flag is reading an article or getting good advice from someone other than your accountant, advice that you should have gotten from them.

An accountant is a service provider. As such, it is their responsibility to be available to you as much as they can and respond to your calls or emails in a timely matter. And being “buried” or in “busy season” is not an acceptable excuse. Competent accountants are ready to face the busy months and will never bite off more than they can chew during this period. They will also have the sort of infrastructure needed to take on more work during this period.

An accountant who doesn’t know what you’d expect an accountant to know may not be able to file returns properly. While you may not be able to tell the difference between tax returns prepared by different accountants, the tax authorities will. If they review the tax return and find errors, you may owe more in taxes plus penalties. That cheap tax preparation service could literally cost you down the line if they make a major mistake.

A common problem for small business owners is not being able to understand their business’ financial statements. If your accountant won’t take the time to explain these statements for you, this is a warning sign. A good accountant will explain the financial statements to you in a languageyou’ll understand. The best accountants will take the time to teach you how to run the reports yourself, so you can check the state of your business whenever you think it is necessary.

You Find Out Your Accountant Isn’t Qualified

One thing that makes many afraid to hire an online accounting firm is the fear of being scammed, but the reality is that you may discover this is trueabout your current accountant. The gold standard for accountants is a Certified Public Accountant certification. There are industry standards and certifications for tax preparations and financial planning, as well. If someone has lied about their certifications, you can’t trust anything else they’ve done for you. A lesser issue is when they promise to do the work and hand it off to someone less qualified.

It isn’t uncommon to find out that an accountant doesn’t understand your industry, your end goals, or both. For example, an accountant can probably file your taxes based on the paperwork you give them, but you’re losing money if they don’t help you maximize your deductions.

When it comes to deductions, you often have either accountants that are too lenient or others who tend to be stricter. But whichever direction your accountant leans towards, it’s important that the both of you see eye to eye and agree on the treatment of deductions for your business. You’ll be the one signing the declaration at the end of the day, so it’s only right that you agree with any decisions regarding deductions. And if the accountant you’re working with cannot educate you on the subject, then they might just not be qualified to know what’s better for you or may not have the specific knowledge about your industry to help.

In other cases, you may find you’ve hired an accountant who can manage someone’s books but lacks an understanding of the corporate tax code. Again, you could end up paying more than you have to because they lack the expertise you need. Click here if you want to learn more about picking on an online accountant company that is familiar with both your industry and the type of work you need doing.

They Aren’t Keeping Their Promises

Whether you’re hiring an accountant to file quarterly and annual taxes or make payroll, a major red flag is when the accountant is not able to keep their promises. Have a list of tasks you expect them to complete and the time frame for doing so. If paychecksor reports keep coming in late, you need to look for another accountant. Or if they start ducking you during crucial moments, you should consider looking foranother firm.

If you aren’t sure about your accountant’s reliability, check their hours and when they say you can reach them. If you call during these hours and you still can’t get a hold of them, something is wrong.

You Don’t Know What You’re Paying or How You’re Billed

You should know whether your accountant is paid on an hourly basis or retainer. You should also understand what services you’re paying for. You should have an estimate of the accountant’s prices before you work with them. And don’t be afraid to call with a quick question or schedule a meeting to discuss something important since that could save you money down the line.

And should also think twice about hiring an accountant whose fees seem too good to be true. Some accountants just aren’t very good and have to offer their service at a discount since it’s their only chance at competing in the marketplace. However, just as anything else with life, you’ll get what you pay for.

You as an owner with a limitedunderstanding of tax returns might not see a big difference, but at the end of the day, if your returns are under review, you want to make sure that you have someone who’s knowledgeable by your side. Any errors made could lead to all sorts of issues, so make sure that you don’t cut corners and go with a discount accountant or you might end up paying for it later.

They are Reactive Rather than Proactive

According to a recent study by the Sleeter Group, the top reason why most businesses decided to switch accountants was that theyweren’t able to give them proactive advice. While most business owners may not exactly be tax experts, we also know that taxes could be easily handled with the proper software and a qualified staffer.

The sole goal of your accountant shouldn’t simply be to file taxes for you. They should also be able to provide you with proactive and sound advice on your taxes. Tax codes are very complicated, and all businesses have their own specific tax code quirks that only a skilled accountant will be able to identify. You want someone who’ll be able to reduce your business’s tax burden. And this should be one of their primary functions, not something you should be begging them for.

A good accountant will make the first move and won’t be hiding behind their office desk or the tax code. They won’t hide from problems or phone calls either. They will have multiple meetings with their clients throughout the fiscal year. And they won’t wait until the end of the year to ask for financial information either. This will allow you to spot issues faster and contact you with their recommendations.

And competent accountants are also great consultants and advisors. They won’t hesitate to give you advice on things other than taxes. They might be able to give you advice on things like insurance, personal financial planning or even help you with business management. Anyone could benefit from having a financial expert by their side who also knows the tax code in and out. So, if your current accountant is only concerned with crunching numbers and doesn’t appreciate your need for proactive advice, then you may have to go with another one.

Conclusion

A knowledgeable, experienced and reliable accountant is a critical component of any small business. If your accountant is falling short or failing to deliver as expected, find someone better.

 

About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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