Most businesses and individuals with complicated tax returns require the help of a certified public accountant (CPA). A good CPA not only files your taxes, but also analyzes your financials and gives you advice on how to minimize your bottom line.
Unfortunately, not all CPAs are good, nor are they all trustworthy. Being able to identify when it is time to fire your account or CPA, and knowing how to go about doing so, is crucial in keeping your personal taxes accurate and/or helping keep your business afloat. If you are not receiving everything that you need and deserve from your CPA, it may be time to let him go.
You deserve high-quality assistance from your CPA, which includes all of the following services:
- Communication – Since your accountant knows a lot about your finances, you should feel comfortable around him. He should respond to your calls and emails in a timely manner and provide you with answers that you can understand. Your CPA isn’t much use to you if you’re unable to talk to him, and it’s simply not possible for you to use information that you cannot understand.
- Honesty – There are several routine bookkeeping tasks that you may be able to perform on your own in order to keep your CPA bill down; however, if he is unwilling to teach you how to do them, then you are over-paying him for his services. You should limit the amount of money that you spend on a CPA to tax filing services, as well as general finance and tax advice. In fact, if your taxes are simple enough, you may not need an accountant at all.
- Knowledgeable Advice – Your CPA should know your business and personal financials well in order to best advise you. A CPA who knows your business inside and out can discuss buying decisions with you. For example, when it comes to obtaining company vehicles or expensive office equipment, leasing is frequently a better option than buying, and your CPA should be able to you which is a better option for you and why.
- Access to Industry Resources – Does your CPA leverage his contacts and knowledge to help you run your business better? He should be able to help you get capital and determine if your rates are competitive with other companies in your field, because he has access to industry standards reports.
Lack of Proper Tax Advice
Because your CPA has a better understanding of tax law than you do, he should be a useful resource in helping you make decisions on how to structure your business or proper methods for taking tax deductions on your personal tax return. If you run a business, a good accountant will be able to determine whether your business should be a sole proprietor, C Corporation or S Corporation, and explain to you all of the reasons why that is the best structure for you.
It goes without saying that your CPA must file an accurate tax return on your behalf and inform you of your tax obligation. Any dishonesty on his part may land you in a great deal of trouble. Since the IRS will come after you if your return is not filed or if you under-report your tax obligation, your CPA must comply with the law, while at the same time making sure that you either receive the best return possible or owe the lowest tax bill possible.
Tax laws are constantly changing, and it is the responsibility of your CPA to stay abreast of these changes and to ensure that your business is in full compliance with the IRS. If your CPA is behind the times or does not inform you of any changes that may affect your business, it is time for you to say goodbye.
How to Fire Your CPA
When firing your accountant, it is typically best to write a letter informing him that you no longer need his services and requesting that he hand over all of your original documents. Avoid giving reasons, at least until after you have received your documents; otherwise, he may lack the motivation to move quickly, especially if he feels that you’ve just insulted him.
The caliber of CPA that you choose to work with should provide you piece of mind that taxes are done accurately, while taking advantage of all tax laws out there. Some accountants provide great advice and help make sound financial decisions, while others do nothing except cash their clients’ checks. If you are not receiving all of the services mentioned above, then it is time to fire your CPA.