Finding someone you trust with your books is, in a way, like finding the right doctor for you. You want someone who is going to make decisions you can trust even though you might not completely understand these decisions. That said, this person should be able to explain the choices they’re making to you in a language you can understand, so that you can make a competent evaluation of their performance and, if needed, choose someone else.
So you might be asking yourself, who is this trusted accountant?
The answer is: one of us at TL;DR Accounting!
But seriously…while we’d be glad to start working on your books, there’s a chance that we are not the right fit for you. What we can do is give you some guidelines for how to choose someone who is the right fit for you while also secretly hoping that we fit your needs. After all, even a really good accountant might not be the best for you if your communication styles or expectations aren’t compatible.
Let’s look at three major aspects of an accountant that are important when it comes to making a selection: personality, risk tolerance, and service level.
Personality
“He’s a real jerk and we get along terribly, but…well…he’s pretty good at keeping my books clean!”
How often do you hear that statement? Maybe you have heard it before, but what’s the point of needlessly suffering by working with an accountant you don’t like? There are plenty of competent accountants out there, and life is really too short to spend a chunk of each month hashing out important financial information with a person whose voice you’ve grown to dread.
Just keep this in mind: as accountants, part of our job is to sometimes be the bearer of bad news. You should be able to trust your accountant to give you candid information and advice, and to not sugarcoat things if there’s a real problem. If you feel like you dislike your accountant, and coincidentally they’ve just given you bad news, then give it some careful thought before giving them the boot.
Exception: if some bad news happened but your accountant did not deliver it to you in a timely fashion, that can be a legitimate reason to let them go. You are not served well by someone who is afraid to give you bad news because they’re afraid of losing your business.
Risk Tolerance
When discussing taxes, have you ever heard the phrase, “More likely than not” or “Reasonable basis?”
Terms like these are what we call terms of art. Let’s introduce an example. You would like to claim a tax deduction that will save you $1,000 on your taxes. Your accountant warns you that if you are audited, the IRS may reject your deduction. If your deduction is rejected, you will lose the $1,000 savings and instead have to pay a $200 penalty.
If you’re squirming already, then chances are you have a low risk tolerance.
Now, if there was a 0% chance that the IRS accepts the deduction, then it’d be foolish to attempt it. If there was a 100% chance of acceptance, then anyone would naturally take the deduction.
But what’s more interesting, and what relates better to your choice of accountant, is to ask this:
What chance of success is the lowest you would accept?
If your accountant says it’s “more likely than not” that you will succeed, then of course it means that there’s at least a 50% chance of successfully taking the deduction. If you were a robot and you were confronted with this choice you’d probably take the risk — the expected value at a 50% chance of success would be $400 cash in your favor.
But you aren’t a robot (at least, I don’t think you are). Maybe you’re uncomfortable with a 50% chance of the IRS slapping you with a penalty, and that’s perfectly fine. Maybe you need at least an 80% chance of success, or even 90%. If that’s the case, talk to your accountant about it. They should be able to adjust the decisions they make for you in order to match your risk tolerance. Remember, your accountant is an expert, but they are working for you.
Service Level
Since you clicked on an article about finding an accountant, we’re guessing that you don’t have the time or aren’t interested in running your own books. Or perhaps you simply want an expert to do the tougher stuff, leaving you to carefully curate your own books and just get a quarterly review and have your business taxes done by the pros.
But which is it?
If you don’t have any interest in running your books, then chances are that you want more of a full-service treatment, someone who will (assuming you use QuickBooks) update your bank feeds, reconcile your accounts, give you an overview of your profit & loss, and perhaps make suggestions about which expenses you ought to consider cutting back on.
If you would like to run your books but simply don’t have the time to do everything, then think about what you do have time to do. You are probably in the market for some kind of mid-level accounting service, where perhaps you run your own payroll but your accountant does the rest.
But what if you are a full-on DIY bookkeeper? Then more power to you! Consider having an accountant review your books quarterly and perhaps do your taxes, because business taxes are probably still more trouble than they’re worth. Towards the end of the year, consider hiring someone (like us!) to do a clean-up of your books, making sure things are ready before the end of the year so that you’re not giving your tax preparer a heart attack at the last minute on April 14th.
We have good news for you: We at TL;DR Accounting provide multiple levels of service to match your needs. Check out our website or just give us a shout!
TL;DR: Choose your accountant carefully! You want to go with someone who has a compatible personality and who can accommodate your risk tolerance and offer you service at the level you need. Keep in mind that as your business grows, your desired service level may change.
