How to Select a Good Accountant
Selecting strong advisors is a difficult task. While the title of this blog is more aligned with current google searches (exasperated business people, I believe, frantically searching google for improvement on their current accounting advice), we as lawyers and tax practitioners often call the exercise of hiring a strong accountant (or any critical professional) the process of selecting a “trusted advisor”. The term “trusted advisor” means someone whom the owners and/or management of a business can call on for advice on a myriad of topics and trust that the business’ best interests will always be put first. Typically, one or two outside professionals are critical to the success of the business. These professionals are outsiders who have the owners’ ear and take the time to provide reasoned and calculated advice.
Hiring an accountant is one of the most important hires a business can make.
This blog is targeted to smaller businesses as larger businesses tend to have a different relationship with their professional advice. Typically, this is because both entities experience higher turnover but as some businesses grow, they often hire their favourite trusted advisors to create a family office (the misunderstanding of what a family office is will be a future blog topic).
In my experience, there are certain factors to keep in mind when hiring a new accountant or accounting firm. These are my collected thoughts but are certainly not exhaustive. If you have other factors that you consider valuable, please email me. I consider myself a lifelong learner.
The concept of trust is elusive, but there are some common indicators. It includes having an accountant that you are quite simply comfortable working with, and that you can ask honest questions to without risking the relationship. It is also important that you trust the accountant’s competency, and believe the person’s advice to be genuine and in your best interest.
This is the most obvious topic and yet the most difficult to test. How would one confirm whether you are good at your business without intimately understanding your business’ good and bad performers? Like all professional services, it is difficult to assess an accountant’s skill without having accounting knowledge yourself. The next factor, referrals, helps immensely in this regard. I would also recommend working with other trusted advisors to establish a working list of questions to ask about your business and your industry. For example, if you are in real estate, your accountant should ideally be relatively well-versed in property improvements and which can be capitalized and which must be expensed. This would make for a good “test question” for that industry. We like to assist in creating these interview questions, as discussed further under “Tax” below.
Perhaps no better advice for selecting a good accountant exists than asking other business owners or professionals such as tax lawyers for their referrals. I am surprised how little this step is taken. A lawyer, especially a tax lawyer, would be able to help assess which accountant or accounting firm would be a good fit for your business.
It is prudent for businesses to “right-size” their accounting firm, whether it is a sole practitioner or one of the Big Four. The relationship should be mutually beneficial; you should never feel like you are wasting your accountant’s time and the accountant should never feel like they cannot bill to their appropriate value, thereby cutting time to meet the client’s budget. For a mid-sized business with aspirations of going public, it is important to choose a firm with an audit practice, and possibly a corporate finance line of service as well. On the other hand, a family business may be underserviced by a large, global accounting firm.
This is a topic near and dear to my heart. Some accountants are absolutely fantastic at tax planning. Annual remuneration strategies, business tax reduction strategies, and identifying opportunities for additional tax advice to be sought are just a few ways that accountants exhibit strong tax planning expertise. In my experience, good accountants often assist dedicated tax planners like the lawyers in our Tax Law group in creating the best possible tax plan (after-all a plan is only as good as the facts and assumptions to which it is generated from and accountants are critical in conveying the facts of a business!)
As well, different businesses and individuals have different levels of risk tolerance for tax planning. It is important that your accountant has a solid understanding of your tax risk profile. Depending on the size of your business and the industry segment, I have likely developed a list of questions to assist in interviewing the accountant. Any member of Nerland Lindsey LLP’s tax group would always be happy to assist you with selecting an accountant.
Invitation for Discussion
If you would like to discuss this article in greater detail, or any other business law matter, please do not hesitate to contact one of the lawyers in the Tax group at Nerland Lindsey LLP.
Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.