May 13, 2018

5 mistakes to avoid when choosing an accountant

#1 – Choosing an accountant based on price

This is #1 for a reason!  Do you know how much you are being charged?  Are you being charged a low fee, only for them to charge like wounded bulls later on?  Are you being charged by the hour or a fixed fee?

There is the old adage of, you get what you pay for, which is true! And works both ways. You can pay too much or too little!  Pay too much and the accountant may see you as a gravy train for fees or pay too little and they cut corners which may be risky for you in the future.

You need someone who you can pick up the phone to if you need tax or business advice as well as provide the compliance services that accountants are so well known for and you want without being charged extra.  A good accountant will bundle all the services that you require into a fixed monthly fee, so you always know where you stand.

#2 – Viewing your accountant just as a service provider

The traditional view of accountants was that they prepared the end of year accounts and tax returns, may do some bookkeeping along the way and were basically just another supplier.  This should be a thing of the past.  In fact, I’d be worried if your accountant let you treat them as just another supplier.

What you need is an accountant who acts as a trusted business advisor – someone who understands your business and your objectives and who proactively offers you support and advice.  Your accountant will have invaluable knowledge and experience which is of immense value to you. In most instances your business will benefit from you investing a little bit more with your accountant in order that they can give you this level of advice and support.

#3 – Not considering their full range of services

Of course, the bread and butter of any accountant is the stacks of compliance work that any small business must deal with in any given year, but that is just today, how about tomorrow?  Will you want to sell or grow your business? Buy another business? Retire? Need expert tax advice for something unusual?  You do not want to engage with an accountant and then a couple of years later find out that they don’t provide a service that you may need.

No one has a crystal ball to predict what they might require in the future but ensure the accountant that you engage with is well qualified and experienced and can provide a wide range of services and not just one or two that you need now.

#4 – Using a firm that is the wrong size for you

The big accounting firms are almost household names in Australia, there is not a day goes by where one of them is not mentioned in the media for one reason or another.  They have a wealth of knowledge that is invaluable to industry at large.  But to your small business, and you personally, you will probably not have the access to the partners as much as you think.  Your business affairs will invariably be handled by different people who move on after a couple of years and therefore the knowledge that they have gained about you and your business is lost.

We would recommend choosing an accounting firm of similar scale and focus as you.  These firms should have the appropriate skill level and focus to assist you in your business growth and not hold you back.

As you grow, you may even have to consider changing accountants if you outgrow them.  You’ll need to forget history and the friendships developed as the lack of experience of your long-term accountant may hold your business back.

#5 – Picking one that looks backwards instead of forwards

An accountant inevitably is using historical data to produce your business’ yearly set of financial statements and then identifying areas that could have been done differently.  This approach has some benefits but most of the time, is not very productive, given the tyranny of time.  What you really want your accountant to focus on is your business’ future and make sure you are getting the best outcomes.  You need sales targets, budgets, plans & cash flow forecasts to assist you reach your goals.  Accountants should be there to assist you with your business to become successful and ultimately make you money.  Your accountant should identify ways to increase sales, reduce costs and increase your bottom line.  If your current accountant doesn’t support you, then maybe you should consider finding a new one.

Filed Under: Advocacy

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