NOTE: This is a reprint of the article Greg Freyman wrote for Angie’s List.
Consider three criteria before hiring a CPA to file personal or business tax returns.
Maybe you’ve always completed your business returns by hand, or maybe you’ve used off-the-shelf tax preparation software to file your personal taxes. However, when your tax situation becomes too complicated for you to handle, it’s best to call a certified public accountant. How do you know what to look for, though?
There are many types of CPA firms to meet your needs — from small businesses with a single CPA to large international firms with hundreds of locations. There are a number of factors to consider when selecting an accountant. Here are the three most important.
1. Determine your needs before hiring a CPA
The type of accountant you need depends on the work you need them to perform. If you need a CPA to prepare and file your annual tax return, your local accountant may be your best bet. If your company recently expanded its operations to another state or country, your accounting requirements will be greater.
You may not even be sure how much help you need. Fortunately, an experienced accountant can review your financial situation with you to determine your filing requirements.
2. Hire a CPA with plenty of experience
It is essential that you find an accountant with experience in your service area. If you’re looking to have an individual tax return prepared, you should meet with potential accountants to discuss their backgrounds in individual taxes. Due to the sensitive nature of a CPA’s work, accountants generally cannot discuss clients or provide samples of work, but by talking to a potential accountant you can gain a good understanding of their knowledge in an area. Some CPAs will review prior tax returns to show you where you missed tax opportunities. This provides you with the chance to see the tax savings the CPA can provide.
When meeting with accountants, pay attention to the questions they ask. By asking about your background and finances, an accountant demonstrates that he or she is invested in you as a client. It is important to find a CPA who is willing to tailor his or her work to meet your needs, rather than trying to fit you into an existing template.
If you are looking for tax work related to a business, it is essential that the potential CPA has experience in your industry and with your entity type. If you run a machining company that is organized as a corporation, an accountant who regularly handles corporate returns will be well versed in all potential issues and able to provide important insight into how to reduce taxes.
Some tax incentives apply only to certain activities or industries, so it is important to ask the CPA whether he or she has worked with clients in your industry before. Natural gas extraction, domestic manufacturing and investment companies, for example, all have very specific tax rules. An accountant who regularly works with clients in your industry will be able to request necessary information from you and will be able to best meet your accounting needs.
3. Review the accountant’s services and costs
Cost of services may be the main factor in your decision of whom to hire as your accountant, but you can’t always compare apples to apples when deciding between firms. Some firms may offer a flat fee for tax return preparation but will charge you for any additional inquiries, such as phone calls or requests for materials. Other firms may offer hourly rates or a retainer.
As previously mentioned, having a good understanding of your own needs will help you choose a CPA. If you have a straightforward return, a lower fixed fee may be the best fit for you. If you would prefer to communicate regularly with your accountant throughout the year, an hourly rate may be more appropriate. Oftentimes, accountants are flexible with their billing arrangements, so it never hurts to ask whether your CPA would be open to a different fee plan.
Finally, you should consider whether the accountant is able to provide all of the services you require. If you need to file quarterly estimates, personal property tax returns and handle payroll taxes in addition to regular business tax filings, try to find an accountant who can perform all of this work, rather than finding different providers to handle each task. If you’re looking for tax projections or financial planning, a CPA may be able to assist you, so bring this up when you’re meeting with a potential CPA.
Find the right CPA for you
A positive working relationship is key to having a positive experience with an accountant. If you don’t feel comfortable asking questions or requesting information, you may want to consider finding a new accountant.