When choosing a CPA, you have many choices. Ideally, you want to find a CPA with whom you can establish a long-term relationship with. This way, you both get to understand one another’s work styles and processes, the CPA will get to understand your business in depth, and you will have a trusted partner in your personal and/or business success.
Understanding the Difference Between a “Tax Preparer” and a CPA
The IRS maintains a public online database of tax preparers who obtained a Preparer Tax Identification Number (PTIN), which is required for anyone who charges to prepare a federal tax return. But you should know that there are no educational or experience requirements for obtaining a PTIN or being listed in the IRS database. Anybody—your brother-in-law, your 18 year-old college student, your hairdresser—can say they are a "tax preparer” and charge you money to do your taxes if they have a PTIN.
A Certified Public Accountant (CPA) is an accounting practitioner who has completed the educational requirements, gained experience, and passed the CPA Exam to receive the CPA designation.
Not all tax preparers are CPAs, and not all CPAs are tax preparers. Working with a CPA to prepare your taxes can save you time and money. It may also aid in the avoidance of future IRS penalties or audits. You may also expect a CPA to assist you in ways more than just preparing and submitting your tax returns. Depending upon who you choose to be your CPA, you may expect to have:
• Auditing and review services
• Tax consulting and preparation
• Litigation consulting and representation
• Financial planning and strategy services
How to Choose a CPA
Choosing a CPA is a deeply personal choice. But in general, you’ll want to consider the following factors when making this important decision.
Being Accessible
You will want a CPA who is generally available to take your phone calls or meet with when you need to discuss important matters. Most CPAs are very good at being responsive and available to clients. Others may try to field calls to assistants, which is fine, as long as when it matters you can get your CPA on the phone. Since your CPA may be helping you to make critical financial decisions, direct conversations are often needed.
Being Affordable
A CPA charges more than a tax preparer because they offer much more value than a tax preparer. While a tax preparer will fill in numbers on the lines of a tax form, a CPA understands the meaning behind all the numbers and is constantly vigilant for opportunities to take more deductions and save you money in other ways. CPAs also offer strategic financial moves during the year that can get you ahead come tax time. But your CPA should also be affordable for you. Otherwise, you may be tempted to go without a CPA at all, which would be a huge mistake.
Being Affable
It’s important that you have good rapport with your CPA. Personalities vary, but you should be able to have frank discussions in a friendly but professional environment. You shouldn’t feel intimidated or embarrassed with your CPA. Many people with CPAs even come to think of their CPAs as friends over time because they have such great relationships with them.
Offering the Right Services
As mentioned, the services that CPAs offer can vary. When choosing a new CPA, ask about what services they offer. Consider what your needs are currently as well as what services you and/or your business might need in the future. This will ensure that you can stay with that one CPA for the long-term instead of needing to transition to a CPA that is better able to keep up with your growing enterprise.
Questions to Ask Potential CPAs
When seriously considering a CPA to hire, there are some questions that you’ll want to ask. They are:
What are your areas of expertise? If the CPA mainly works for large corporations and you’re just looking for help with retirement planning, you may be better off elsewhere.
Are there any references I can contact? The CPA should be able to provide one or two people whom you can contact to see what it’s like to work with the CPA. You can also check out online Google reviews for the CPA practice.
What do you expect from your clients? A good working relationship entails reasonable expectations from both parties. Make sure that you are able and willing to provide what you need to your CPA so that they can do their job efficiently.
How long is your oldest client relationship? This is a good question to ask because it speaks to the CPAs ability to retain clients. If the answer is one year, that may indicate a level of dissatisfaction from clients that is troubling. If the answer is five years, hire the CPA right away because their services are likely in high demand!
What is your policy about calls during the year? This question speaks to accessibility. It’s a good question because many CPAs have specific policies about this. Some CPAs may charge by the hour for advice during the year. Others charge a flat fee. It’s good to find this out upfront.
How do you charge? Again, you are looking for information that will avoid a surprise later on. The CPA may offer you a pricing sheet for the various services they offer. It’s perfectly acceptable—and even smart—to ask for pricing so that you and the prospective CPA both know you are on the same page as far as fees go.
As mentioned, hiring a CPA is a personal choice not to be taken lightly. The CPA that your neighbor uses may not be right for you. The highest-rated CPA in town might not be a good fit. Shop around and you’ll find the best CPA for your needs. Just don’t settle for anything less than a CPA to help you with your financial needs.