7 tips to hiring the right accountant
By William J. Lynott

The relationship between you and the CPA you choose to do your accounting and taxes is far more important than you may think.

In a professional practice, the right accountant functions almost like a partner. Many chiropractors look to their accountants for advice and help with business management and personal financial decisions, so it's crucial that the relationship be comfortable and trusting.

"CPAs are more than just individuals who do your yearly taxes," says business consultant and author Maria Marsala, Poulsbo, Wash. "The right accountant can advise you on a long list of other services, which may include advice on your accounting system, financial performance, estate/tax planning, and retirement. CPAs are a crucial part of a business owner's management team along with a banker and a lawyer."

Jay Berkowitz, DC, in Atlanta, agrees. "Our accountant helps us with such things as plans for growing the practice and managing personal investments."

"I'm in a very large practice now," says Paul Duffy, DC, Coordinated Health, Lehigh Valley, Penn., "but when I was on my own and just getting started, I relied heavily on my accountant for management advice as well as personal financial planning."

FINDING THE BEST FIT

Here are seven tips to help you find the person with the qualifications that will make the best fit for you and your practice:

1. Do a careful search for prospects. While you may be lucky in going with a recommendation from a friend or associate, do your homework first.

"The best way to locate a compatible accountant is to ask around the community," says CPA and tax advisor Genevia Gee Fulbright, Durham, N.C. "Ask bankers, insurance agents, even other professionals in practice. If there is no direct conflict, consider using the same CPA. The information you share with your accountant is strictly confidential. Licensed accountants are bound to strict non-disclosure requirements."

"Obtaining referrals from satisfied clients is certainly a good place to start," says CPA Ellen Rogin, Northfield, Ill. "However, when interviewing accountants it's also important to find out what types of clients the accountant works with. You don't want to be the smallest fish in the pond, nor the largest. Of course, it's also important to understand how the accountant charges and to see whether he or she will provide an estimate of fees."

"One of the most important factors in selecting an accountant is the quality of the customer service he or she provides," says Vincent G. DiAntonio, CPA, JD, Hass & Co., Media, Penn. "This is reflected in everything the accountant does, from how quickly the client gets a return telephone call to the accuracy and reliability of the advice provided. Sometimes a recommendation from a friend is the best way to find a good accountant since some do not advertise. Many, in fact, acquire new clients solely through word of mouth. That gives them a strong incentive to provide quality customer service."

Duffy feels that "availability" is a very important consideration. "You need to know that your accountant will be available to you when you need him," he says. "I also prefer an accountant who is capable of providing solid financial planning advice."

2. Verify your prospect's credentials. "Some individuals working as bookkeepers or accountants have no formal license or education in accounting," cautions Navin Sethi, CPA and tax manager with Rothstein Kass, Walnut Creek, Calif. "That's why you should do a thorough investigation before you hire an accountant. The best way to protect yourself is to hire a certified public accountant (CPA).

"In order to earn the CPA credential, applicants must meet the requirements of the state or jurisdiction in which they practice. The CPA applicant must also pass the national CPA exam and, depending upon the state, have some practical work experience before receiving a license to practice.

"Finally, a CPA must adhere to requirements to take specified amounts of continuing professional education courses annually to retain their license. This benefits you by guaranteeing that you will be working with a professional who is required to keep up-to-date on the latest and best accounting methods."

3. Be sure to check references. Checking an applicant's references is one of the most important steps in the hiring process. While it may be rare, even professionals can misrepresent their backgrounds and credentials or simply leave out important information.

Checking references takes a little time, but human resource professionals know that it's a simple step that could save you from hiring someone who is woefully unqualified. And make no mistake: Even though you are not putting this individual on your payroll, you are, nevertheless, hiring him or her!

4. Find out if you are comfortable with the person. Fulbright emphasizes the importance of the chemistry between you and your accountant. "Make sure that you have clear goals for your business and that your prospective accountant understands them," she says. "Go to lunch; have a conversation. That will help you to decide if you're both on the same page."

Berkowitz interviewed four accountants before deciding on the one he felt was best for his practice. Every expert interviewed for this story agrees with the need to have an at-length personal interview before hiring an accountant.

5. Use the 60 percent rule. Keep in mind that CPAs specialize in a wide range of accounting activities, from individual taxes to large corporate clients, to small businesses, and everything in between.

"Look for a CPA who has 60 percent of his or her business coming from small business owners or professionals in practice like you," says Marsala. "They're more apt to keep up with the laws regarding clients they deal with most often. If your practice is incorporated or is an LLC, make sure that the person specializes in corporate accounting, including financial statements and audits."

6. Consider your special needs. If you have, or are anticipating, unusual accounting problems in your practice, you should look for an accountant with specialized training or experience.

"If you are in need of an outside audit, additional designations such as CFE (Certified Fraud Examiner) would be helpful," says Fulbright. "If you need a business appraisal/ valuation, someone with an ABV (Accredited Business Valuation) designation or CVA (Certified Valuation Analyst) designation would be an advantage."

Perhaps you have limited experience in personal financial management and would like to explore the possibility of increasing your investment portfolio. Berkowitz considers the help he receives from his accountant on financial investing to be an important part of their relationship.

"If you decide to use your accountant (or accounting firm) for this purpose, it is important to understand how much time the firm spends on these issues," says Rogin. "Is this just a side business for the firm or is it a primary service it provides for a number of their clients? Depending upon the specific type of advice you are looking for, you may be better off with an advisor who specializes in financial planning and wealth management."

Fulbright agrees. "An accountant who is also a Certified Financial Planner (CFP) would be a good choice when you need investment/ portfolio advice," she says.

"The biggest problem many professionals and small business owners have is stepping back to take the time to evaluate their business," says CPA Carol Katz, Baltimore, Md. "They are so busy running the business and keeping up with the paperwork that they do not allow enough time to plan ahead.

"You should always consult with your accountant before entering into any significant business or financial transaction. Undoing a poorly thought-out transaction or removing assets from an entity without causing unnecessary taxes can cost much, much more than the time spent on a planning meeting and document review."

"The nature of professional practices and small businesses requires owners to consider succession planning," says DiAntonio. "Generally, succession planning consists of either transferring the business to the next generation, selling the business outright to a third party, or, perhaps, to an employee. This will often be one of the most significant life events of a professional in practice and should be planned appropriately by a trusted advisor.

"Typically, a CPA who knows the operation and its assets can bring additional value to a potential sale or transfer. Also, once the business is converted into cash or a revenue stream, a financial planner can assist the client in maintaining and growing the client's wealth."

7. Don't be afraid to make a change. Despite your best efforts, it's always possible that you will find yourself working with an accountant who simply isn't right for you and your practice.

Kevin Smith, DC, Smith Chiropractic, Philadelphia, found himself in that position with the first accountant he employed. Smith, who operates a joint practice with his wife, Kathleen, says, "It became increasingly evident to us that our accountant was doing a poor job. Our taxes weren't being done properly, and he was unreliable."

The Smiths decided to make a change, and they hired an accountant who was also a patient under their care. "It was a great move," he says. "Our new accountant discovered numerous errors in our past returns, and we relied on her for management and financial advice as well. She stayed with us until she retired about a year ago."

If you should find yourself dissatisfied with your accountant for any reason, say our experts, you should not hesitate to look for a replacement. Your accountant is too important to your success for you to compromise.

Chiropractors in practice should periodically review where they are in the life cycle of their professional careers. "If the accountant used when the practice was small no longer seems effective, then it may be time to move to another with more expertise," says Katz. "Or it may be time to change the business form of the entity as their business grows."

Some practitioners may need tax-savvy ways to bring in family members to whom the practice will eventually be transferred. If there is no succession planned, there probably should be a proposed structure for eventual sale of the practice, including buy/sell agreements among partners.

Finding the right accountant for your practice may take a special effort, but the time you spend on that job may well prove to be among your best business investments.

SIDEBAR:
Do you need 2 accountants?

William J. Lynott is a freelance writer whose work appears regularly in leading trade publications and newspapers, as well as consumer magazines including Reader's Digest and Family Circle. He can be reached at lynott@verizon.net or through his Web site, www.blynott.com.