So I'm finally ready to stop doing my own books in a shoebox and hire an accountant. But I don't want to just dump a box of receipts on someone without vetting them first. What questions would you ask before handing over your records? I'm thinking things like how they handle missing receipts, their turnaround time, and what software they prefer. Any red flags to watch out for?
Accounting
Questions I'd ask an accountant before handing over my records
First question: do they actually respond to emails? I once hired someone who took a week to answer a simple question. Drove me nuts. Also ask if they're comfortable with yuor industry specifically. A general accountant might miss deductions specific to, say, a bakery vs a consulting firm.
Ask ab out their process for missing receipts. Some will just estimate, others require you to sign a declaration. You want to know upfront. Also, do they use cloud accounting or do you have to drop off paper every month? That changes your life.
Red flag: if they say 'don't worry about the details, I'll figure it out.' Had a guy say that and then he 'figured out' a massive penalty for me. Ask for a sample engagement letter and read the fine print about liability.
Good point on the engagement letter. I hadn't thought of that. Also, @bean_counter_42, do you mean cloud accounting lirke QuickBooks? I'm currently using a spreadsheet and a shoebox, so I'm open to switching if it makes things easier.
Ask how they handle communication during tax season. Some go silent for months. You want to know if they have a portal or if they prefer phone calls. Also, ask about their fee structure - hourly vs flat monthly. Hourly can add up fastt if your records are messy.
If they don't ask you questions about your business before quoting a price, run. A good accountant wants to understand what you do before they touch your books.
Also, check if they're a CPA or just a bookkeeper. Not that bookkeepers are bad, but if you need tax advice, you want someone licensed. And ask if they outsource any work overseas - some do and you might not want your financial data leaving the country.
I'd ask for references from other small business clients. If they can't provide any, that's a red flag. Also, ask what happens if you get audited - do they represent you or just hand over the files?
References are often useless because they only give you the happy clients. Better to ask: 'Have you ever had a client get audited? How did you handle it?' And watch their face.
Yes, cloud accounting like QuickBooks or Xero. Most accountants prefer it because they can access your data remotely. Ask if they'll set it up for you or if you have to do it yourself. Also, ask about data backup - you don't want to lose everything if your laptop dies.
This is all super helpful. I'm making a list. One more more thing - how do you negotiate fees? Is it rude to ask for a discount if you're a small client?
Not rude to ask about fees, but don't expect a discount. Instead, ask if there's a lower rate for paying annually upfront, or if you can reduce costs by doing some of the data entry yourself. Some accountants offer a discount if you use their preferred software.
If you're a Small client, you're probably not worth a discount. But you can ask for a fixed fee instead of hourly. That way you know what you're paying.
Also, ask if they charge for phone calls or emails. Some do, and it adds up. And ask about their policy on amending returns if they make a mistake - do they charge extra?
One last thing: ask about their turnover. If they've had three assistants in a year, your work might get passed around. You want consistency.