Three Steps to Choosing The Right CPA

Overview

Okay, your CPA just told you that he is moving two thousand miles away. Or you survived until now without a paid CPA, but now with complexity of your small business you know you need someone with good analytical skills and tax acumen to help you navigate through. Or you just moved here from the other coast and you know you need help, and soon.

Although its not as important as choosing a spouse or a business partner, choosing the right CPA to help you is quite important. The right one could get you out of a mess, or keep you from one, make your life simpler, be a great sounding board for key financial decisions. The wrong one could get you in trouble with the IRS, SEC or worse, or steer your financial ship way off course, which could take years and many thousands of dollars to make right.

Treat the decision of choosing the right CPA as you would choosing a key employee. Choosing a CPA to prepare a relatively uncomplicated tax return is a lot different from choosing one to help you plan your financial future, or selecting a CPA to help you transform your business into an e-commerce powerhouse. And choosing an individual CPA, or small CPA firm, is miles away from selecting a worldwide CPA firm of hundreds of partners and scores of specialties. But certain common factors apply about the particular CPA with whom you will have contact.

Step 1: "The 10 Shoulds"

Evaluate the CPA as a person and an advisor. Ask the CPA questions which help you to determine how well the CPA measures up to these "10 Shoulds". Your CPA Should:

1. Excel at serving people. They should enjoy their work, and take genuine pleasure from helping people like you. Explain your preferences and what bothers you, and see the reaction. Ask the CPA what are their preferences and what bothers them. It will be telling.
2. Be more honest than you with a higher level of integrity. You may need someone to hold you back from crossing the line.
3. Have an office location within a quick car ride so you can meet personally whenever needed, including early mornings, evenings and weekends. The convenience of e-mails and phones is great, but meeting with an advisor in person is a must if you want someone to really know you, understand your goals, and think of you during their day. Availability during off hours is a plus.
4. Be well experienced in the areas you need, but also a good generalist. If you need help with sophisticated personal financial planning strategies, do not hire a CPA who spends 90% of his time preparing financial statements for small businesses, and visa versa. Check not only his credentials and references, but evaluate him by discussing examples of situations like yours. Avoid being a CPA's on-the-job training.
5. Be a good communicator, both listening and speaking. It's also important for your CPA to know they can tell you if they made a mistake, and right away. And no matter how embarrassing, you need to be able to tell your CPA about circumstances that arise which might affect your financial health.
6. Get along well with all kinds of people. Not only does your CPA need to get along with you, but also with your spouse and your other advisors, and perhaps your children, parents and others who get included in family planning matters. Your CPA should be, as much as possible, a likeable person.
7. Follow through and do what they say they will do. This is a very important aspect for any business professional. Your CPA should be the first person you count on to follow through and do what they say they will do.
8. Enjoy learning and being creative, always on the look out for innovative ways to help you.
9. Conduct their business and personal affairs in a reasonably efficient and sensible way. Ask questions about the CPAs approach to getting and serving clients, the role of staff, the use of technology including the Internet, research methods, management of files and records, etc.

Step 2: 13 questions you can ask when interviewing a prospective CPA

1. Have you helped a client in a similar situation? It saves time to work with a CPA who has already dealt with similar situations. Probe to discover exactly how he has dealt with problems similar to yours.
2. Will my company and/or I be serviced by you, a partner or by junior accountants? Many CPA firms train new associates at the clients expense. Be sure that you get what you pay for.
3. What are the nature, scope, and timing of your work, and what will it cost me? Often, a CPAs work plan can be more extensive and more expensive than you might expect. Get the accountant to be specific about what he or she will do, and get a detailed written letter and cost estimate.
4. How are your fees calculated? Will you be charging me for every phone discussion? To avoid friction later, it is essential to discuss the CPAs fee structure. If the CPA uses a time-based system, discuss the hourly rate of the accountant and staff, overhead expense reimbursement and whether certain time is not billed.
5. Can you give me two or three quick ideas on how you might be able to save our company money or me personally? A good CPA should have sharp business acumen and be creative. A question like this can show whether the CPA can call on his or her many skills to truly help your business to increase profits, improve productivity, trim costs, enhance return, and lower taxes, or in a personal planning context to achieve financial goals, partly through enhanced investment returns, lowered taxes, reduced costs, and coordinated and simplified budgeting and planning.
6. Can you tell me a little about your practice, and your success and failures? Open-ended questions can elicit a wealth of information. Let the CPA talk. You will also learn a lot about the CPAs priorities, risk-tolerance levels, and various personality characteristics, all of which can be helpful in gauging compatibility.
7. What can I do to help you with your work and keep your fees to a minimum? Preparing information beforehand can save a great deal of your accountant's time. Find out if your CPA is willing to work with you to offload this work to you or your employees thus reducing your fee.
8. How will you be communicating the results of your work to me? The results of an audit usually take the form of an audit report, and tax return preparation yields tax returns. But this work also can lead (and should lead) to many suggestions by the CPA on how to cut taxes, increase income, restructure investments, build business, and improve information. Some CPAs are more comfortable with interactive discussions and others prefer written action reports. In addition, specialists such as Personal Financial Specialists should be able to provide you with financial planning memos and reports to organize the many ideas on improving your financial health. Ask to see examples.
9. Do you perceive any conflicts of interests? CPAs work for dozens of firms and scores and sometimes hundreds of individuals. You should inquire if the firm represents any of your direct competition. If so, inquire as to how this conflict is handled.
10. How long have you been a Certified Public Accountant, and what other licenses do you hold? You should inquire with the state CPA organization to discover if there have been any disciplinary actions entered. Some accountants also have credentials as financial planners (PFS), securities representatives, business valuation experts, even lawyers.
11. How well have you integrated computers and the Internet into your practice, and has it enabled you to do more for clients at less cost? Integrating your computer files with those of your CPAs files can save time and money, and increase accuracy. Doing so over the Internet makes it even simpler. Find out how your CPA uses the Internet.
12. Will you need to overhaul our current system? Your internal bookkeeping and cost-accounting systems can be expensive to alter. Find out up front whether you can integrate with the firms systems.
13. Are you conservative or aggressive in interpreting tax laws and regulations, and accounting and auditing standards? Save yourself the hassle and be certain that your accountant approaches your books in the same way you would.

Step 3

Take the CPA out to dinner and talk about your lives, your personal sides not the business sides, and then see if the person across the table is the one whom you would choose. If so, raise a glass to toast a new important relationship!