After the turn of the year I decided to ask my followers on social media a simple question: What are some of your shareable financial plans for the new year?
The typical answers came in: fund my retirement account, pay down debt, buy a home, invest in real estate, and more.
Then one not so typical answer appeared: Find a new/better accountant.
I’ll be honest. I was a bit concerned and checked my client list to make sure it wasn’t one of my people I let down. It wasn’t.
Within a day the theme played out. More and more people were dissatisfied with their tax professional. Deep down I understand why.
There are not enough tax professionals left anymore and of those remaining not all are of high quality.
Case in point. I picked up a new local client after a consulting session with the man. I outlined several strategies he could use to lower his tax bill. He took some of the ideas, the ones that interested him, back to his regular accountant. The accountant agreed all the strategies were legal and not pushing the envelope, but he didn’t want to do them and refused. So I ended up with one more client.
The Mark of a Good Accountant
It is understandable that some accountants would not want to get involved with borderline tax strategies or strategies that are often times fraud and the accountant may be unable to determine if this is legitimate or not.
What is not acceptable to the author is when a very traditional tax strategy is not mentioned by the accountant that will benefit the client.
Take the client mentioned above. He has a fishing guide business. He wanted to trade in his boat for a larger boat (and at a much larger cost) so he could handle larger groups instead of turning them away. Why would any accountant deny a deduction or depreciation in such a situation? It makes no sense. Why would any accountant refuse a successful business the opportunity to move to the next level? But it unfortunately happen.
Let’s build a couple of lists. First list:
Mark of a Good Accountant
- Good accountants bring tax strategies to you.
- Good accountants listen to ideas you have to grow your business and/or wealth and provide input to accomplish your goals.
- Good accountants listen to tax strategies you discover and guide you to a good decision on the idea. Not all tax strategies are good ideas, but deserve a hearing to certify the value it will bring to you.
- Good accountants talk with their clients. I know tax season is busy. Still, it is vital to review the tax return and the results with the client in detail. If involved issues arise a consulting session can be scheduled after tax season. Tax accountants work all year round, or at least they should. This is not your grandparents’ seasonal job.
- Good accountants never mock their clients! The idea may seem silly, but you still have to ask. Tax law can also be silly. Tax professionals never should laugh off what is an obvious tax no-no. Clients don’t know that because they don’t practice tax law. A good accountant will explain why a strategy will or will not work and any pitfalls or issues involved in the strategy.
- Good accountants are good listeners. Accountants need to know their client. This requires listening. Small talk is really a fact gathering conversation, at least in my office. We could fill a book on all the things uncovered because I had a casual conversation with a client. Listening includes asking active and probing questions.
- Good accountants never make you feel small or stupid.
Poor Reasons to Fire Your Accountant
If there are good reason to fire your accountant there are also poor reasons for doing so. And that will take a list.
- Price: Fees should not be an overriding factor in firing an accountant. Costs are climbing for all businesses and if a tax office doesn’t increase their fees to cover the costs and retain qualified employees they will go out of business. Or take shortcuts. Either way, that is no good for you.
- Fees again: Whiles fees are not an overriding factor, they are still a factor. If the fee is unconscionable then it might be a time to start shopping. Some accountants choose to use extraordinary fee increases as a way to wean the flock. I don’t like the idea, but it is a possibility. If fees are the only issue then it might be time for a short conversation with your accountant to see if there is a way common ground.
- Nixing scams: There is a lot of bad tax advice out there. While writing this post I was interrupted over a new client thinking something I mentioned is illegal because a bookkeeper said so. If the accountant listens and responds with appropriate answers it is a poor reason to fire an accountant. Good ones are interested in protecting you.
- Availability: The tax and accounting profession is very understaffed. While it is imperative your accountant listen, it is also imperative they manage their time well. If an answer is more involved (they often are) then expect your accountant to set an appointment for a consulting session where your questions get the full attention they deserve. Don’t expect your accountant to drop everything if you just pop in.
- Level of expertise: No single accounting or tax professional can know everything in the field. Sometimes they need to call in a specialist or tag-team with another professional to perform their duties at the highest level or look stuff up. This is not incompetence; it is professional responsibility. If you have a complex issue, do not feel bad if your accountant needs help on that project. For the record, I often consult other professionals when writing posts for this blog. It is often a reason why I don’t publish more. I like to cover as many bases as possible.
Reasons to Fire Your Accountant
There are some behaviors that make firing your accountant or tax professional a necessity. Often times there are borderline cases in which I suggest speaking with your accountant to see if the engagement is worth continuing.
Separating from an accountant is not a bad thing. However, the reason for the separation will affect your ability to find a quality replacement accountant.
It is often a red flag when a potential client is shopping for a new client. Is the client only interested in price? Are they a PITA? Is the other accountant firing them (for a good reason)? Is there a reason the prior accountant is non-responsive?
The best new client in my opinion is one that says, “I was with my current accountant 22 years and he is retiring. Are you accepting new clients?” At minimum I am willing to listen to see if it is a good fit. The last thing any accountant wants, with their limited resources, is a problem client. Nobody is happy then.
Still, there are valid reason to start searching for a new accountant.
- Fees again! Fees shouldn’t be an issue, but at some point they have to become so. It all depends on the complexity of the return and how much interaction and input the accountant is providing. There is no absolute rule on where a fee becomes unacceptable. I recommend speaking with your accountant first if fees are the only issue to see if there is room to keep the relationship active. If not, then be cordial in the disengagement.
- Lack of communication: Communication is a wide road with lots of opportunities to save money on your taxes. If your accountant does not review your tax return with you it might be time to find another accountant. The review process is where mistakes or missed information is discovered. It is also the place where the accountant can help you make small tweaks to your finances with a large payoff. If your accountant refuses to go over your tax return with you it is time to start looking.
- Consulting: An accountant should be open to consulting outside tax season. Yes, the accountant will charge for her time, but you want that. You want to incentivize your accountant to help you rather than move you out as fast as possible. Business owners especially need face time with their accountant. Unless all you want is a data processor, your accountant needs to be open to consulting or it is time to find one that does.
- Tax scams: What I am talking about here is the accountant promoting a tax scam. Yes, there are plenty of tax strategies that can get complex. But there comes a time when it steps into fraud. Tax protesting would be an example. It is tough for a non-tax person to know the fine line in situations where the strategy is valid in limited situations. If your accountant steps over the line and puts you at risk, time for a new accountant. In complex situations a second opinion is a smart move.
- Responsiveness: Most accountants in the current environment suffer from this periodically. If your accountant is drowning in clients and paperwork you may wish to wait and see if she can right the boat. If not, time to start looking. I know I have had times, especially during tax season, when I am not as responsive as I want to be. It is a time thing. Lots of demands and limited time. However, if the lack of responsiveness extends beyond tax season you may wish to seek a change in accountants. Getting professional guidance in tax matters is too important to be swept under the rug.
- Ideas: This one really irritates people. Clients expect their accountant to provide ideas for saving on taxes and with financial matters. Your accountant sees more money issues in a week than you probably see in a year. That experience needs to be put to work helping you. I try to provide at least one idea during a tax return review. It might be the same idea as in the past, but at least a reminder on what is possible. If an extended discussion is needed your accountant should offer you a consulting opportunity. It is then your call if you want to invest the time and money. Still, at a minimum, your accountant needs to be an idea machine or it is time to interview other tax professionals that are.
There are other reasons to fire your accountant, of course. Stealing, misappropriating client monies, abusive behavior all come to mind. The six points above sometimes can be resolved with a conversation with your accountant. Some things are deal breakers, period. Stealing, etc fall into this category. Abusive behavior, includes verbal abuse, is an instant firing for the accountant. Name calling has no place in the accountant/client relationship either.
A personal no-no for me is politics. If you expect me to waste time discussing politics when we meet during tax season I am not the accountant for you. You don’t care what your accountant’s political leanings are! You are paying them to do a job and that is what they need to stay focused on. (By the way, I have elected officials as clients and they might want to discuss tax policy, but rarely delve into politics. If they can put politics aside, you can as well when in the accounting office.)
Before we close this post, a word of caution. A recent Wall Street Journal article reported that 300,000 accountants quit or retired in the past two years. This is at a time when the industry is already massively understaffed.
It is a good idea to work building a relationship with your accountant as finding a quality replacement will be no easy task. And you definitely do not want to take a step down! The exception is fraud, illegal activities and abuse. There are a few things that require an immediate disengagement, but these will do it.
Most accountants are extremely professional and take pride in their work. Some accountants, however, are introverts or take time to come out of their shell. The work kind of encourages turning inward. Get to know your accountant. Talk with her. Let her know something about you because that is how they can help you. It is a relationship. Nurture it. It can be worth a lot of money to you.
Finally, your accountant does not need to be local. Modern technology makes it easy for an accountant to serve your needs even from a distance. You can start your search for an accountant here.