Posted by James Cooper
How To Check You Are Getting The Most Out Of Your Accountant...
When discussing business vs personal expenses and deductions or leasing vs renting vs owning assets and all manner of other tax and structure issues, I quiet often hear business owners say "my accountant never told me this", "or my accountant isn't very proactive, they just do my end of year accounts and I see them once a year and they tell me how well or badly I'm doing".... Does any of this sound familiar? If you've felt like this before, then I've got a solution for you, learn how to quickly resolve this issue...
What Accountants Have Told Me
I've put this feedback to different accountants before and they have come back with the same response.... "we don't know that they want more from us" or "they never said they want this information" or "they didn't ask us to do that" or "they didn't tell us they were doing that".
So, the challenge here is we now have two parties who aren't communicating and have a lack of knowledge about the other person's situation. The Accountant doesn't know about the business owners' most up to date situation or scenario so can't offer any advice. And the business owner believes that there is no value to be had in talking with their Accountant about what is currently happening, so they have a lack of knowledge about the different ways things can be setup and what the impacts have now or in the future.
So Whose Fault Is It?
Get off that train of thought for a start, if you're on it. Both parties can do better for sure; Accountant's could communicate more regularly with clients; a quarterly phone call to see what's happening, bi-monthly newsletters with case studies of the value they have added with advice in the typical areas, situations and scenarios business owners face. And you, what about you the business owner, what can you do......?
Get Smarter and Get More Knowledge!
No, this is not what you pay the Accountant for. You pay your Accountant to provide you with a solution that fits your current and future needs... and to do that you need to be aware when there is or could be a situation they can add value to... then share with them everything that is going on and most importantly ask them the hard questions!!!!
Where Do These Questions Come From?
Knowing the right time to speak with your Accountant and what questions to ask them is all about... Getting a solid basic knowledge in Accounting! About money, about financial statements, about structures, about taxation and about deductions. I'm not talking about going to University. What I'm talking about is not hard, trust me if you really wanted to, I mean actually cared enough to do something about this and valued this enough you could get a basic knowledge over the weekend, this weekend even. How?
I'm not an Accountant so I'm not going to tell you this "solid basic knowledge in Accounting", and besides I'm too lazy to do that when all you need to do is go to the local book store or online and pickup some basic Small Business Accounting books. The following 3 books are easy to read, I repeat very easy to read, and have great content...
Where's the money? - By Craig Rust (ISBN: 9780476016439)
Pay Zero taxes - By Peter Sibbald
Slash your taxes now - By Peter Sibbald
Note:
- Peter Sibbald's books are based on NZ Tax laws (so find an equivalent in your country or state)
- Craig Rust's book helps build a solid understanding of Money Management in a Small Business
Purchase from whitcoulls.co.nz or go to the local book store or amazon.com to see what else suits.
Disclaimer! Caution!
If you are thinking about selling your business in the next 2 years don't go mad with some of Peter's ideas on deductions, in fact do the opposite in some cases, as you will want Net Profit to be as high as possible to get the highest possible sale price, right?
As Always Seek Professional Advice
What I'm getting at here is that in order to get the most out of your Accountant, you need to challenge them, ask them the hard questions "Why aren't we doing this?" "How can we get this out come?" "I want to do this, what do we need to consider?" "I've made a list of the things I believe we could do to improve my situation, what are your thoughts?
Getting a proactive Accountant (and with it the best advice for you and your situation) is about having a basic knowledge of the possibilities and challenging your Accountant to make those possibilities happen. Many Accountants are conservative in nature, and that's ok, I mean, the IRD/IRS/HMRC/ATO are all scary and none are someone (something?) you want to mess with, but remember your Accountant should be helping you to reach for those possibilities... you shoot for the stars, your Accountant pulls you back to the Moon, the result is still better than been stuck on the earth's surface with everyone else. And of course if you really don't like the answers you get back, start interviewing Accountants with the same questions, you'll soon find one who's a fit. I know heaps of Great Accountants.
This week's Action Points...
Buy the books, read them with a highlighter and a note pad. Take your notes and questions to your accountant to get a better solution. Good luck!
