Five Mistakes People Make When Choosing An Accountant
Did you know that you are legally accountable for everything on your tax return, even if another person made it for you? Did you also know that your tax return draws a different picture of your financial situation that you can utilize to make intelligent financial choices throughout the year? Those are a few of the many reasons why it’s crucial to choose tax preparers who know their work. You need to get the right match for your long-term business needs, but how do you feel sure you’re making the right choice?
Well, it depends on your company culture, your requirements, and what you want out of the agreement with your accounting firm. Some businesses are looking for a wide range of services, education, and collaboration with their CPA partners. Others want specific jobs done and done right promptly.
While there may be no universal factor that delivers a perfect match for everyone, some pitfalls could trip up any firm in its quest for the right accounting firm. However, know what mistakes to avoid ahead of time to make a choice you won’t regret.
1. Choosing an accountant that lacks experience
In terms of accounting, experience is a significant factor; hence clients must inquire about the professional’s educational background and years of practical experience. In choosing a preparer, ask how long they have worked with clients in situations like your own and whether they can advise on the financial issues on your mind. CPAs have hands-on experience supporting various clients to learn how to comply with tax laws and reduce their tax outlays. Such measures will keep you away from any trouble and problems.
2. Believing the promises of bigger refunds
Be careful of any tax preparer who claims they can get you a bigger refund than the other company or one who promises you a specific refund before analyzing your financial documents and prior tax returns. Be sure that you have earned your refunds legitimately. If the return includes deceitful deductions, there can be severe outcomes like being forbidden from taking the earned income tax credit in later years. Clients should ask the tax accountant to explain the tax return to them. After all, the client is eventually responsible for what is reported on the tax return. Also, note that a tax preparer can’t give you a higher reimbursement than you are entitled to.
3. Not asking about their professional fees
Many clients are so focused on the refund and negligence to inquire about the professional fees being assessed. To avoid surprises later, find out upfront how much the preparer will charge. Keep in mind, too, that you should pass going with someone whose fee is based on a percentage of your refund or on how much they can save you in taxes. The IRS has found that this generates an incentive for the preparer to take credits or deductions you aren’t entitled to. Also, ask whether the preparer can represent you before the IRS in case your return is audited and what additional charges might be required if they do.
4. Choosing an accountant who is only available during the tax season
One should select a tax accountant or bookkeeper that is available throughout the year. During the busy tax season, most people, especially business owners, are frantically contemplating how they can minimize their deductions. But unfortunately, by the end of the year, it is too late to change that. Having an accountant that is one call away can support you by quickly identifying these potential deductions throughout the year and guiding you to make strategic decisions for year-end deductions. Many business owners forget to track and estimate for reduction, out-of-pocket expenses, and home office space. Don’t leave money on the table!
5. Failing to verify their credentials
While no one can call themselves a “CPA” without proper education and testing, literally anyone authorized to sell financial products like insurance, mutual funds, etc., can call themselves a “financial adviser” or “wealth manager.” Similarly, specific credentials can be obtained by simply spending a few hours or a weekend taking a course. In contrast, others, including “CPA” (Certified Public Accountant) and “CFP” (Certified Financial Planner practitioner), require many months or even years of study, rigorous examination, and ongoing continuing education. Choosing a tax preparer that is a CPA or an Enrolled Agent is hence preferred. Preparers with these credentials can often represent clients before the IRS.
To avoid facing these and other mistakes, talk to our experts at Arrowpoint Tax Services, Inc. Our team takes pride in the detail and quality of their work. We spend time learning about each client individually to get a thorough understanding of their individual needs. We see ourselves not just as auditors but as an extension of our client’s team. We work with our clients to ensure they remain tax compliant and provide guidance in setting up and managing an efficient accounting system.
We serve clients across the Bronx, Mount Vernon, Queens, Brooklyn, New Rochelle, New York, New Jersey, Connecticut, Florida, and North Carolina. To learn more about the services we offer, please click here or get in touch with us by clicking here.