How to Work With an Accountant

Oct 24, 2011

Accountants can do more for your business than just file your tax returns. By building a strong relationship, your accountant can also become a trusted advisor and partner.

Bill MacKenzie has used the same accounting firm since 1979.

“It gives me a clear view of how I’m doing financially, not how much money is in my pocket one minute and what I’m spending the next; it actually gives me a solid view of where I am,” the owner of Greenway Auto Repair in Phoenix said. “I can also reflect on how I’m doing month-by-month versus year-by-year and [see] where the trend is.”

MacKenzie handles payroll in-house and relies on his accountant to handle Greenway’s sales taxes, quarterly financial statements, profit-and-loss statements, and tax returns. He and his accountant, a certified public accountant (CPA), meet at least once a month and talk on the phone about once a week.

“We have to bring him up-to-date every month on accounts receivable, inventory [and] work in progress,” MacKenzie said. “All these things have an effect on how the numbers fall.”

MacKenzie’s used an accountant since he founded his business in 1977 (the firm he uses now is the second he’s used in Greenway’s history) and believes using an accountant has had multiple benefits, including with tax issues, when hiring new employees and when investing in new equipment.

“I wouldn’t have it any other way,” he said. “I feel that it’s an excellent value as far as your credibility when you go to a bank and also, if the IRS ever gets involved, you can have representation which is a lot more weighty than if you were to try and explain how you did it yourself.”

A Multi-Service Provider

As MacKenzie has discovered, accountants can be used for more than just end-of-the-year tax filings. They can work with small businesses on local, state and federal taxes, a variety of financial statements, and financial planning.

“The accountant, from a compliance standpoint, really is an outside person hired by the business in order to make sure the business is doing things correctly,” said Jim Metzler, vice president of small firm interests for the American Institute of Certified Public Accountants, a New York City-based organization representing approximately 370,000 CPAs. “[An]other area where CPAs help is in growing the business [by] being a coach to the business owner. It’s beyond the numbers, it’s beyond filing a tax return, it’s really being that financial advisor.”

Hank Padilla’s accountant served an important advisory role during the start-up stage of Hanksville Hot Rods Inc.

“When we were originally starting this business, we were thinking about buying an existing company and we consulted with the accountant,” Padilla, lead fabricator of the Littleton, Colorado, shop said. “They [helped] us do the financial due diligence for that potential acquisition.”

Your accountant can become a valued advisor not just because of their financial expertise but also because of their relationships with other business owners in your community.

“Because accountants have a number of clients, they have much more information than the business owners do in certain cases so they can suggest, ‘You’re doing it this way, I just talked to another company and they have a much better way, a much cheaper way to do this and let me suggest that you start trying this,'” said Khalid Razaki, professor of accounting with the Brennan School of Business at Dominican University in River Forest, Illinois. “That is not information or advice that the business owner would have gotten from within the company.”

Selecting an Accountant

John Mickle has used just two accountants since he started Acme Trailer Works, parent company of his restoration shop Acme Car Co., 29 years ago.

Originally, the business employed a certified management accountant (CMA) but Mickle switched to a CPA at the urging of his bank.

“I used [the CMA] until the business grew to the point where I was doing a line of credit with a bank and they insisted the paperwork be signed off on by a CPA, not a CMA, so I had to switch from the fellow I had been using to the guy that we still use today,” Mickle, owner of the New Cumberland, Pennsylvania-based company, said.

The bank then recommended a CPA.

“The bank that I was dealing with at the time gave me his name and said, ‘This is a really good guy, he’s reputable, you might want to consider him,’ so I did, and they were correct,” he said.

Padilla was referred to his accountant by friends and neighbors.

MacKenzie’s accountant was a customer.

However you find an accountant, take the time to ask questions and learn if they’ll be a good match for your business.

“What the businessperson really needs to do is get in a conversation with that CPA and get a feeling that they can connect or have chemistry with that CPA,” Metzler said. “It’s far beyond just the numbers or filing a tax return, it’s finding a CPA who they can talk to, who they feel comfortable with and that understands the specialized nature of the restoration business.”

Mickle agrees. “The best way I can describe that is you need to have your CPA as somebody when you talk to him, you feel like you’re talking to your uncle,” he said. “You have to be comfortable with him. That’s [how] our CPA [is].”

Razaki offered a list of questions to ask a prospective accountant, beginning with requesting a client list to see if that accountant services businesses like yours and what their experience has been with that accountant. He also suggested asking questions about their professional designations, promptness, ethics and fees.

“I would have a long conversation about the duties and the responsibilities of the outside accountant because sometimes people just sign a contract with somebody without these specifics and later on problems arise because the accountant will say, ‘When I was talking about my fee, I wasn’t including this,’ so have a clear idea on both sides as to what services are to be performed and what the payments are going to be,” Razaki said.

A Successful Relationship

Once you’ve hired an accountant, an important early step to building your working relationship is to plan how often you’ll meet.

“A businessperson should be in contact, have a conversation, a phone call, a lunch, a coffee at minimum once a quarter just to find out how the business is doing,” Metzler said. “A CPA that only meets with their clients once a year is not a great CPA.”

MacKenzie meets with his accountant monthly.

Bob Bennett, business manager for Acme Car Co. and Acme Trailer Works, talks with their accountant on an as-needed basis throughout the year.

Padilla meets with his accountant several times a year.

“We meet with the accountant usually three to four times a year, and normally that’s going to be a couple of times around tax season and then if we have any specific questions,” Padilla said. “If we want to make sure everything’s classified and categorized properly, we might go ahead and ask him for any advice that he has.”

It is, of course, important to be prepared for these meetings, sharing the most accurate and up-to-date information you can so your accountant can do the best job possible for you.

MacKenzie uses Mitchell 1 Manager for his shop’s bookkeeping. Bennett uses Peachtree at Acme Trailer Works and Acme Car Co. Padilla uses QuickBooks.

Programs like these can track the information and create the reports your accountant can use to not just do your taxes but also provide additional financial services.

“An accountant, through knowing what creates a number, not just what a number is but what causes the number, accountants can provide the advice to make that businessperson much more profitable than they would without the accountant,” Metzler said. “It helps the businessperson weave their way through the complexity of being in business today.”