"There's no business like show business, but there are several businesses like accounting."David Letterman, comedian
Several years ago, the American Institute of Certified Public Accountants (AICPA) noted that in nationwide surveys, CPAs were one of the most trusted advisers, and they continue to be. Although their reputation may have been tarnished by a very few individuals in the widely publicized corporate accounting scandals of late, the fact of the matter is the vast majority of CPAs are honest, ethical and conduct their business with the highest sense of integrity.
Most of us know one or two accountants, probably practicing in public accounting. Our chances are good because according to the Minnesota Board of Accountancy, slightly more than 14,000 licensed certified public accountants live or work in the state. Approximately 9,500 actively work as public accountants, with the remainder employed in corporate, nonprofit, educational and governmental work.
Annually, many of the nonaccountants among us seek out the talents of a CPA or tax professional to complete our annual personal and business tax filings. But there are many other times to seek the counsel of a CPA. Need help to determine the estimated tax payments you'll need to make now that you landed that new job? How about writing a business plan or a financial projection? A good accountant also can help you figure out the best way to make contributions to your IRA, Roth IRA, 401(k), Roth 401(k) or health savings accounts.
In fact, choosing a CPA is akin to choosing a health care insurer. You want to ensure that you have adequate expertise, sufficient coverage for all your foreseeable needs (and unexpected needs), prompt attention when needed and all at a reasonable cost for services provided.
So, how do you choose the CPA that is right for you? Here are seven things to consider:
1) Know what you want in your CPA. You are seeking services from a professional. All CPAs have virtually the same education, training and have met licensing standards, but they do not all provide the same range of services.
2) Prepare a prospective list of CPAs. Ask others about their accountants. Whether you have a business or personal need, seek out the guidance of those you know who have used a CPA. If you do not know anyone who has used a CPA, you can inquire of your other professional service providers, such as your attorney, banker or broker. They generally are familiar with many CPAs as a result of their businesses.
3) Interview four or five CPAs and discuss their services and fees. Do they listen intently? Do they understand your needs? You are entrusting this individual with your financial concerns; they need to be highly competent and respectful. CPAs generally charge by the hour. Find out about their fees and how they charge for services. Ask about other "hidden" charges. If you are interviewing a firm, inquire about who would be performing the work. Find out their hours of operation and if they can be reached after hours or on the weekend when necessary.
4) Determine the level of experience they possess in the areas you are most concerned. Ask the CPAs about their background, their training, and if they possess any specific designation in the field. Obtain their business resume. Ask about the number of years they have been practicing, and seek references from clients that they have worked with in areas you are most concerned. Be wary of CPAs who will not provide a referral list.
5) Call references. It is one thing to have the CPA provide you with a short list of clients, but you should take the next step and actually get an unpaid endorsement from them. This is the one step that I find few clients tend to do. But for those that do, I believe it to be an invaluable tool.
6) Obtain assurance that the CPA is in fact licensed. You can check with your state's State Board of Accountancy, which is charged with regulating the certificate holders. In Minnesota, you can research CPAs online through the board at www.boa.state.mn.us, or you can call its office, (651) 296-7938.
7) Finally, inquire about their ongoing commitment to you. Will your CPA provide a proposal for services, and an engagement letter for the responsibilities he or she will adhere to and fees expected for the services? Also, if they are to prepare your tax return and a notice should be received from the Internal Revenue Service or state Department of Revenue, what assistance will they provide on your behalf? Are they proactive in your industry and will they communicate with you throughout the year when issues pertaining to you or your business arise?
The process of choosing and retaining a CPA should result in selecting the best adviser for your needs. As David Letterman understands and the Board of Accountancy confirms, several CPAs are available for your services. Many are capable of fulfilling your financial and tax needs, but there is more to the relationship than just the CPA designation.
About the author: Tom Alagna is the founder of Thomas James Alagna, LLC. He holds a master's degree from St. Thomas and is an adjunct accounting instructor in the College of Business.
