Hiring A CPA
What You Should Know
If you are an individual or a business and you need to choose a CPA, there are many guidelines which might be helpful. They fall into these categories:
1. Determine your needs and desires, immediate and narrow, and longer-term and broader and make an assessment of your own particular circumstances, quirks and preferences.
2. Gather several candidates, using various methods such as (a) referrals from close associates (b) directories such as CPAdirectory.com (c) searches among information sources such as industry publications, articles, Internet search engines, etc.
3. Match what you need and want from #1 with the candidates from #2 for an initial short list of candidates to interview.
4. Conduct interviews and use the article Choosing the right CPA for guidance as to particular questions and attributes to consider.
5. Narrow the list based on subjective considerations such as chemistry, attitude, impressions, etc., and return to step #1 if not fully satisfied.
Choosing The Right CPA
Treat the decision of choosing the right CPA like you do choosing a good friend, business partner or a trusted companion. Be thorough, interview several candidates, explore common ground for values, integrity, and philosophies about life, check out the CPA’s listening skills as well as acumen to analyze and interpret data, and also trust your instincts on recognizing solid character traits. If you don’t think you could spend a weekend at the beach, or at least a two-hour dinner with the prospective CPA, then she or he is probably not right for you.
As a CPA for over 25 years, having worked for a big CPA firm like PriceWaterhouseCoopers and in my own practice with associations with many other CPAs, I’ve had hundreds of clients whom I’ve served in many different capacities. I think this gives me a reasonably good perspective on the matter of choosing the right CPA. Also, I think I can offer insight from the failure side as well as the success side of the equation. I’d like to think I’ve served all these clients very well, but actually I know I’ve fallen short in more than a few instances. In some cases, I did not have the specialist experience required but was driven to try to help the client and so I learned on the job, disappointing myself and the client. Never hard feelings but disappointing nonetheless. In other cases, our personalities were so at odds it made it quite difficult to communicate. Now I believe I’m a better communicator, especially at the outset of the relationship when the client and I explore our mutual expectations. I’ve learned from these mistakes and I take solace in the popular saying of Thomas Watson of IBM that “the surest way to success is to double your failure rate.” You need to find a CPA who has made mistakes but has grown from them.
How do you develop a good short list of candidates? Talk to business associates, friends, colleagues in community activities, and other professionals such as your attorney or insurance agent. Review the field efficiently by checking the internet. Websites such as CPAdirectory.com greatly help the search process by enabling you to search on key data such as location and specialty, and then view websites with detailed info for those CPAs who have enrolled.
What’s A CPA?
CPA stands for Certified Public Accountant, although the term is much narrower than the role many CPAs fulfill. Certified Professional Advisor, as a leading CPA once proposed, is probably more apropos. Because of stringent requirements for education, experience and testing, most CPAs do indeed live up to the higher level of respect they enjoy compared to other professionals, as research tells us. Their keen ability to analyze data, record it, interpret and compare it, make them a critical ally in many if not most important personal and business decisions. They tend to be more objective and independent, as a result of their training as an auditor.
Most successful companies have CPAs within the top inner circle of management or advisors. Some large CPA firms have very large influential worldwide business consulting practices, helping companies to retool themselves in a quickly changing world. The CPA’s role is also changing rapidly. Some changes make a lot of sense for the CPA and consumer alike, such as the CPA’s role as personal financial specialist. After all, CPAs are good at relationships and serving clients, recognizing needs and developing strategies after careful analysis and consideration of many interrelated aspects of a client’s financial life. Many CPAs are specializing in serving individuals (who are often professionals and small business owners) in the many facets of personal finance. In my own case, back 17 years ago I felt that in order to serve clients well in personal finance including financial planning, I needed to become a licensed (Series 7) stock and bond broker, a registered investment advisor and a licensed insurance agent. Now the choices are wider and perhaps less time-intensive for the CPA, such as the designation of Personal Financial Specialist by the American Institute of CPAs following certain additional training and testing and a lot of hands-on experience. All in all, the changing roles have been welcomed by both CPA and clients.
When A Need Arises For A New CPA
Okay, your CPA just told you that she is moving two thousand miles away to be CFO of an internet start-up. Or, your CPA succumbed to the temptation of a liquidity event, sold his practice and plans to be the operator of a small for-hire fishing boat. Or you survived until now without a paid CPA, but now with all those stock options and complex partnership arrangements in your small business which is finally getting large, you know you need someone with good analytical skills and tax acumen to help you navigate through. Or you just moved here from the other coast and you know you need help, and soon.
So why do you need help in choosing the right CPA. After all, you’ve been a pretty good judge of people up until now using your instincts and interview skills. Well not counting that computer engineer you hired who took twelve days to just set up your network properly. And you would rather forget about that ring-on-each-finger lawyer who Uncle Bill raved about. Luckily, you did not go into a comma while that faulty no-tax-ever revocable trust was still in effect before you revoked it. Thinking about it, you should have at least spoken with your gatekeeper primary physician before picking her. And your dentist could do a much less painful job if he upgraded his equipment and did not get so aggressive with that metal pick looking for cavities. Also, if he turned down the air-conditioning, he would probably sneeze much less while drilling, and your gums would be quite thankful. And what about that real estate agent who helped you buy your first house. She must have known about the cracked pipe to the septic tank and the county parkway that created a 95 decibel torrent of sound within nine months of your purchased home. What did you do wrong in selecting those professionals?
Although it’s not as important as choosing a spouse or a business partner, choosing the right CPA to help you is quite important. The right one could get you out of a mess, or keep you from one, make your life simpler, be a great sounding board for key financial decisions like buying a house, starting a business or retiring, etc. The wrong one could get you in trouble with the IRS or SEC or worse, or steer your financial ship way off course, which could take years and many thousands of dollars to make right.
Choosing a CPA to prepare a relatively uncomplicated tax return is a lot different from choosing one to help you plan your financial future, or selecting a CPA to help you transform your business into an e-commerce powerhouse. And choosing an individual CPA, or small CPA firm, is miles away from selecting a worldwide CPA firm of hundreds of partners and scores of specialties. But certain common factors apply about the particular CPA with whom you will have contact.
Step #1 - Evaluate the CPA as a person and an advisor. Ask the CPA, and others who know her or him, questions which help you to determine how well the CPA measures up to these "12 Shoulds".
Your CPA Should:
1. Excel at serving people. She should enjoy her work, and take genuine pleasure from helping people like you. Explain your preferences and what bothers you, and see her reaction. Ask her what are her preferences and what bothers her. It will be telling.
Step #2 - If you feel the prospective CPA excels at the "12 Shoulds", the next step is to then delve into more specifics about doing the work. Here are 13 questions you can ask when interviewing a prospective CPA:
1. Have you helped a client in a similar situation?
It saves time to work with a CPA who has already dealt with similar
situations. Probe to discover exactly how he has dealt with problems similar
Step #3 - Take the CPA to a two-hour dinner, and talk about your lives, your personal sides not the business sides, and then see if the person across the table is
the one whom you would choose. If so, raise a glass to toast a new important
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