While very few businesses operate without tapping into the services of an accountant in some shape or form, some businesses aren’t using the relationship they have with their accountants to the fullest.
Some business owners might just go to their accountant for tax advice, but what they don’t realise is that they could use them for much more. Accountants are trusted business advisers and many business owners talk regularly with their accountants regarding issues that range from strategic planning, purchasing real estate, entering a new market or estate planning. Others, however, might not think to reach out and get advice from their Accountant.
What issues might arise if business owners don’t regularly engage their accountant?
Some businesses don’t keep good financial records during the year. That means the accountant gets books at tax time that are in bad shape, so it takes a lot more effort at the end of the year to sort out the information. That should be a concern for business owners because they’re using poor or incomplete information during the year; and basing decisions on what is likely an inaccurate picture of the business’s situation.
Undertaking debt financing or expansion by acquisition without first talking to an accountant could lead to a non-optimal decision. Had the idea been run past an accountant, he or she could have helped identify the best type of debt for the situation, or find financial information that would reduce the cost of an acquisition.
What is it business owners might misunderstand about their relationship with their accountant?
There are different types of accountants for different needs. Sometimes knowing which type of accountant can address specific issues is pretty clear — for instance, if a company has a tax issue or a tax filing need, it should go to an accounting firm that has expertise in tax. However, what might go unrecognised is that accountants offer other services and specialise in many areas of expertise that could benefit a business.
Business owners’ professional and personal lives are amalgamated. So as important as it is to keep an accountant informed about what’s happening in a business, it’s equally important that the accountant knows what’s happening in an owner’s personal life. For instance, an accountant should be informed if there is a change in marital status as it could have a significant impact on the business or the estate. An accountant can also be a valuable adviser when it comes to retirement and succession planning.
What does a good relationship with an accountant look like?
Ultimately, the tone and frequency of conversations with an accountant are up to the business owner. While a good accountant will check in and ask questions to find out what’s going on, it’s up to the business owner to make the time for that conversation.
At a minimum, business owners should talk with their accountant at tax time about what’s happening in the business — is it expanding, contracting, changing locations, planning to acquire another company? It’s also a good time to update the accountant on any personal life changes.
Though talking with their accountant at tax time is important, it shouldn’t be the only conversation of the year. Year-round expert advice could prove valuable if implemented.
Business owners should strive to have a healthy, ongoing relationship with their accountant, who in turn should genuinely be interested in the state of things and work to understand as much as possible about the business. The comfort level should be such that the business owner feels welcome and free to talk. What form those conversations take — lunch each week, a quarterly call — is up to the business owner.
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