Choosing The Right Accountant
Choosing the right accountant can be the most important decision an individual or small business can make. In the end, a good accountant is not just a bean counter with green shades but a valuable financial advisor. They can help you maximize your revenues and minimize expenses by uncovering key success factors in your business.
Your accountant gains detailed knowledge of your business and its operations. Over time they can quickly analyze your business and provide you with professional insight. It is this familiarity that makes changing accountants difficult. This causes many businesses with run-of-the-mill accountants to keep with them year after year instead of finding a better accountant.
Knowing the logistics involved with changing accountants, it is surprising how many people don't spend the effort to find the right accountant for them. They assume a little about accounting and think one is like another.
The truth is- not all accountants are created equal.
So how should I decide who is the right accountant for me? Start by considering what accounting services you need and whom you would work best with:
Using an accounting firm will give your business accurate and timely financial reports. This is not only tax filing for the business but also monthly profit and loss reports (P/L) and a balance sheet. These reports help management chart the course of the business.
Good accounting begins with good bookkeeping. It can be done in-house or by your accountant. In either case an accountant should verify the work being done. This will provide an independent opinion
There have been several changes recently that might make the IRS appear friendlier than before but it is strongly recommended that no business owner or entrepreneur must fall behind when it comes to what is owed in taxes. Remember that no matter how friendly the IRS may seem in the end it is charged with collecting all due taxes from the population and there are still some strict penalties on back taxes and the interest rate on due taxes can be an unbearable 24% a year. It is always a good idea to make sure that you never fall behind or you will pay a very high price to catch up.
There are two types of businesses that are always in danger of getting into tax trouble. First off are the independent contractors who procure the 1099s but then neglect to make the necessary arrangements to pay in quarterly installments and they also do not set up a savings account that can keep their tax money separate from their main checking account. The second businesses are the small to midsize firms that are growing rapidly and are in need of capital to sustain that growth. It often happens that these businesses will take from money from employee withholding intending to pay it back soon but when the time for taxes comes around they are still short on cash.
Then there are times when circumstances may cause someone to fall behind in taxes. For example an unexpected job loss or sudden illness could be the reason. In such cases it is possible by creating the right case to get the penalties for late tax submission to be removed. You will of course need to know the right laws and regulations that apply and the circumstances that are acceptable for pardon from penalties. Do not expect the IRS or other government agency to actually suggest ways and means by which you can beat them at their own game. You will need a tax accountant.
In case you are offered deals for long-term installment plans then look them over carefully. IRS agents will often offer such plans but the interest rate and penalties will rapidly accrue and make repayment cumbersome. You might actually find yourself going deeper into debt while you are paying the IRS. It is strongly recommended that you never enter into any long-term installment plans. **Your accountant and CPA may be willing to accompany you to the IRS. In any case, they will also be able to help you deal with the maze of complex paperwork that one will have to deal with in the likelihood of being summoned for the dreaded Federal or State audit.
Finally, always seem eager and willing to take responsibility as that creates the right impression with the IRS in that you are determined to make up and are not looking for an escape.