Finance & Accounting

Choose the Right Tax Advisor

Choose the Right Tax Advisor

Not all accountants are created equal. Find the perfect tax professional for your company when you look for the right mix of experience, reputation and personality.

By Matt Alderton


If there's one thing that all small business owners have in common, it's their disdain for taxes. After all, nobody likes paying them, and even fewer people enjoy doing them. Still, hordes of entrepreneurs sit down every year, armed with a calculator, a pencil and some software, and they attempt the impossible: doing their own taxes.

As frequent do-it-yourselfers, small business owners will go to great lengths to save money, even if it means enduring a string of paper cuts and mental breakdowns at the hands of their Schedule C.

Eva Rosenberg, owner of TaxMama.com and author of Small Business Taxes Made Easy, likens taxes to teeth pulling. If you're tired of tugging at your own tax-induced toothaches, it's probably time to hire a professional. A worthwhile investment, a good tax advisor will keep you compliant with current tax laws, and save you money in the process with year-round tax advice and guidance.

Your Perfect Match
Although you won't be dating your accountant, choosing one is a lot like choosing a potential mate. You wouldn't pick your spouse out of a phone book, and you shouldn't pick your tax advisor out of one, either. Like a spouse, an accountant should be someone who's smart, sensitive and available.

"You want to have a person who can not only provide you the services you need, but who understands and can communicate with you," says Terri Jeter-McAvoy, a Chattanooga, Tenn.-based CPA and a board member with the Society of Financial Service Professionals.

Finding your perfect match starts with defining your needs. A tax preparer will put together your annual tax returns. But a true tax advisor can provide you with any number of services, including bookkeeping and payroll services, as well as ongoing financial counseling to help you pay your taxes, set financial goals, and make major purchases and investments, with an eye always focused on tax implications.

No matter your needs, look for someone you can trust. "We are not just tax advisors, we're not just tax preparers and we're not just tax planners," says James A. Smith, a Dallas-based CPA and chairman of the Texas Society of CPAs. "We see our role as CPAs as the key friend of the business owner, the person that he calls when he's up at night and just needs to talk. We ought to be the one he feels comfortable talking to."

Finding Candidates
Once you know what you require, you're ready to find someone who can give it to you. And the best place to look, according to Smith, is with your fellow business owners.

"The first and foremost thing you do is you talk to people you know," Smith says. Ask, "Who do you use, and what do you like about them?" Consider approaching your chamber of commerce, your banker or your lawyer for referrals, too, as all of the above are likely to have relationships with accountants in your community.

"You need to get several names," Smith says. "Then you need to check out the background of the individual and call them up. Any advisor ought to be willing to sit down and give you, on a no-obligation basis, some time for an initial meeting."

In that initial meeting, consider formally and thoroughly questioning your CPA. It's a job interview, after all, and you need to be certain that you're selecting the right candidate. Among the most important questions you might want to ask:

  • How much do you charge?
  • How quickly do you turn things around?
  • How many people will be working on my account?
  • Can I reach you by both phone and e-mail?
  • How many clients are you personally serving each year?

When you ask questions, don't only pay attention to answers, Smith advises. Pay attention to language. "This guy may be as smart as anyone else in the business, but if the way he communicates to an entrepreneur doesn't get the message across, the relationship's not going to be successful," he says.

Making Your Choice
Once you've narrowed your choices down, there are a few things you should look for to help you make a final choice. Among the most important, Rosenberg stresses, are knowledge and experience in your industry.

"If you have to explain your terminology — words that you use every day in your business — it's not the right accountant," she says.

References are also extremely helpful in making a final selection, Jeter-McAvoy says.

Smith agrees, and she suggests asking for references at companies of a similar type, size and situation as yours. "Two or three names ought to be enough," he says. "Ask them questions like, 'How timely is his response?' 'How long does it take him to return a phone call?' and 'How competent do you find his advice?'"

Finally, Jeter-McAvoy suggests looking for an accountant that has long-term potential. "Look for someone who can grow with your business," she advises. "As you get bigger and you're making bigger decisions — should I expand, should I hire employees, should I buy equipment — that's where your advisor can give you some really good advice."