There are a number of services that a company may need to keep proper records: bookkeeping, payroll, sales tax reports, monthly and quarterly tax filings, tax returns, tax advice, generating financial statements, auditing financial statements and financial management advice.Some can be handled by a bookkeeper, others need the skills of an accountant.Decisions need to be made about services needed, budget, and how much to try to handle within the company.
Bookkeeper vs. Accountant vs. CPA
Bookkeepers tend to do the simpler, lower level record keeping tasks. Accountants, on the other hand, have a higher level of skill and knowledge, and can do higher level tasks, although they usually offer bookkeeping services, as well. Keep in mind, anyone can call himself/herself an accountant. On the other hand a CPA is an accountant who has been certified, through testing and education, to use the title “CPA”. “Because of stringent requirements for education, experience and testing, most CPAs do indeed live up to the higher level of respect they enjoy compared to other professionals, as research tells us. Their keen ability to analyze data, record it, interpret and compare it, make them a critically in many, if not most important personal and business decisions. They tend to be more objective and independent, as a result of their training as an auditor,” Frank Sisco, CPAdirectory.com.
Steps to Making a Choice
The following comments were excerpted from the CPAdirectory.com web site and were written by Frank Sisco, CPA, FPS. The suggestions he makes should be helpful no matter whether you choose a bookkeeper, accountant or CPA, or a combination of the three. Here are some steps that should be helpful in making your choice(s):
- Determine your needs and desires, immediate and narrow, and longer-term and broader and make an assessment of your own particular circumstances, quirks and preferences.
- Gather several candidates, using various methods such as:
(a) Referrals: talk to business associates, friends, colleagues in community activities, and other professionals such as your attorney or insurance agent.
(b) Directories such as this site’s referral list or CPAdirectory.com
(c) Searches among information sources such as industry publications, articles, Internet search engines, etc.
- Match what you need and want from step #1 with the candidates from step #2 for an initial short list of candidates to interview.
- Conduct interviews and use the article “Choosing the right CPA” for guidance as to particular questions and attributes to consider.
- Narrow the list based on subjective considerations such as chemistry, attitude, impressions, etc., and return to step #1 if not fully satisfied.
Choosing the Right CPA
(Courtesy of the author, Frank Sisco, CPA, PFS, Copyright 2003 Frank Sisco, For more information, contact him at www.LifeAndMoney.com)
Treat the decision of choosing the right CPA like you do choosing a good friend, business partner or a trusted companion. Be thorough, interview several candidates, explore common ground for values, integrity, and philosophies about life, check out the CPA’s listening skills as well as acumen to analyze and interpret data, and also trust your instincts on recognizing solid character traits.
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 – Evaluate the CPA as a person and an advisor. Ask the CPA, and others who know her or him, questions which help you to determine how well the CPA measures up to these “12 Shoulds”. Your CPA should:
- Excel at serving people. She should enjoy her work, and take genuine pleasure from helping people like you. Explain your preferences and what bothers you, and see her reaction. Ask her what are her preferences and what bothers her. It will be telling.
2. Be more honest than you with a higher level of integrity. You 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 emails and phones is great, but getting alone with an advisor in the flesh, looking face to face is a must if you want someone to really know you, understand your goals, and think of you during their day. And 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 she can tell you when she had made a mistake, and right away. And no matter how embarrassing, you need to be able to tell her about circumstances that arise which might affect your financial health or of your immediate family members who may need help.
6. Get along well with all kinds of people. Not only does she or he 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. She or he should be, as much as possible, a world citizen in this diversity-minded age.
7. Demonstrate being attuned to matters of the heart and soul as well as the mind. What matters most in life in the end are the relationships we’ve had and how we’ve shared our love with others. If the prospective CPA does not seem to care about her own family and friends and clients to the degree you care about people in your life, consider another person.
8. Do what she says she will do.
9. Charge fairly for services. Be flexible in billing and be willing to work on a “value basis,” charging you for value she delivers versus time she spends.
10. Have a great network of associates whom he can use as a resource to supplement his own knowledge.
11. Enjoy learning and being creative, always on the look-out for innovative ways to help you.
12. Conduct their own business and personal affairs in a reasonably efficient and sensible way. Ask questions about the CPA’s approach to getting and serving clients, the role of staff, the use of technology including computers, communications equipment and the internet, ways of keeping current, research methods, management of files and records, etc.
Step #2 – If you feel the prospective CPA excels at the “12 Shoulds”, the next step is to then delve into more specifics about doing the work. Here are 13 questions you can ask when interviewing a prospective CPA:
- 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 client’s 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 CPA’s 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 CPA’s fee structure. If the CPA uses a time-based system, discuss the hourly rate of the accountant and staff, overhead expense reimbursement (what is the cost of a fax?) and whether certain time is not billed. Discuss alternatives such as value billing which could base the fees on a percentage of certain value realized from creating and helping to implement strategies (e.g. cost reductions from restructuring operations; the present value of estate taxes saved)
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 CPA’s 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? A great deal of your accountant’s time can be saved by preparing information beforehand. Find out if your CPA is willing to work with you to offload this work to your firm.
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 any of your direct competition is represented by the firm. 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 CPA’s 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. Does she have her own website,and if so check it out and ask questions about the resources available on it. Find out how you can interact with her and her computer systems to make work flow more efficiently and enable you both to stay in better touch.
12. Will you need to overhaul our current system ? Your internal bookkeeping and cost-accounting systems are expensive to alter. Find out up front whether you can integrate with the firm’s 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 to a two-hour 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!