When You Should Fire Your Accountant
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Genista Having an accountant can help you keep track of finances, reduce your tax burden, and make more efficient use of your money. If you own a small business, it’s especially important to hire an accountant, but even individuals can benefit from their services. Those advantages, however, only happen when you have a professional accountant who can do the job well. If you have had some doubts about your accountant's abilities, then you should know when it makes sense to fire your accountant and find someone else. Here are some reasons to consider firing your accountant. (See also: 3 Things Your Accountant May Not Be Telling You)
Dishonesty and Over-Billing
Your accountant's job isn't to scam you out of money or find ways to make your bill larger. Dishonest accountants can cost you thousands of dollars in fees every year.
Typically you can gauge an accountant's honesty by asking him to teach you some basic accounting and bookkeeping skills that you can do on your own. Your accountant shouldn't have any problems teaching you these simple methods to help you save money. If he's unwilling, and you think it's because he wants to earn more money by performing menial tasks, then you should consider letting him go.
Poor Communication
Few people will ever know as much about your life, especially your financial life, as your accountant. Without such intimate knowledge, your accountant couldn't make educated recommendations that will help you do more with your money.
Good communication based on trust, therefore, is incredibly important. If you feel uncomfortable talking to your accountant or you just don't like his communication style, then you should feel free to move on to another professional. You shouldn't expect an accountant to become your new best friend, but you should expect him to provide good information in a manner that you can understand.
Vague Advice
Your accountant needs to give you specific advice that will help you save money. Vague advice like "you need to save more money for retirement" doesn't get the job done. You need specifics.
A reliable accountant should be able to give you advice that considers the advantages and disadvantages of:
- Buying or leasing equipment for your business
- Saving money in IRA, Roth IRA, and other specific retirement accounts
- Reducing your tax burden by finding more deductions
- Choosing accounting software for your business
Outdated Advice
Tax laws, tax filing, and business regulations change all the time. Accountants have to keep up with those changes to offer their clients quality advice. Unfortunately, not all accountants are good at learning the evolving tax code and regulations.
If you suspect that your accountant is giving you outdated advice, then you might want to make an appointment with another CPA to see what suggestions she gives you. If you find that her advice is much better and up-to-date than the advice provided by your current accountant, then it's time to move on. Getting outdated advice not only costs you money, it could get you in trouble with the IRS and regulatory agencies.
The vast majority of accountants do their work very well. Occasionally, though, you will find one that doesn't meet your needs. When this happens, you should know the warning signs so you can fire him and move on to someone with better skills.
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This is very sage advice.
It's been tough finding the right one for us - a small business that does QucikBooks bookkeeping, asks a lot of questions and isn't bamboozled/intimidated easily.
The first CPA lasted one year and was replaced for aggressive over-billing and communication so poor it bordered on lying. Second one, again mumbo jumbo talk to hide the fact they were refusing to work with us at our level.
So we abandoned CPA's completely and stepped down to a fairly credentialed (we checked) and recommended tax accountant who turned out to be insanely in over his head. Broken deadlines and outright failure to solve problems created by previous accountants despite being prepaid got him not only fired but extremely poor reviews in our professional network and on all the relevant consumer sites (we got a refund on his fee but we are having to redo his tax returns - ugh).
Now we're using an "enrolled agent" and not only is the price less than half what we previously paid but the peace of mind has doubled for how all the ego crapola is gone, the communication clear and we've already had a few problems created by previous accountants solved. I only wish it hadn't taken three disasters to find them as this has been both painful and costly.
The only thing I might add to the advice offered here is to consider others besides a CPA.
Great idea about the "enrolled agent"! Thanks for commenting and sorry you had to go through such a nightmare!
As someone who works on the other side (for the IRS)*, some advice: google is your friend when hiring an accountant. It absolutely shocks me when I have people come in with an accountant/representative who has already been convicted of tax evasion! Not a good choice.
Also, the words "tax shelter" should be a red flag. If it sounds shady, it probably is.
*Disclaimer: from me personally, not in an official capacity, blah blah blah.