Do you have an accountant you adore and trust? If so, you can stop reading now.
If, on the other hand, the mere mention of the word “Accountant” puts you on edge . . . today’s article is for you, dear friend.
So many of us feel dis-empowered, confused, and overwhelmed when it comes to hiring and working with an accountant, E.A. (Enrolled Agent), or Tax expert.
Today’s article is intended to help you work through your money emotions and resistance SO that you can take some practical next steps, and see a clear road in front of you.
The end of 2012 is here, and with it, tax time is looming on the horizon.
Head spinning? Heart pounding? Gentle reminder: Inhale, exhale.
Let’s calm anxiety. Gain confidence. Get clear. And take steps to line up an accountant you trust.
Part of your money self care is creating space to take your practical steps. And to make space to work through all the emotions that come up around those practical steps. If you don’t have a tax expert, or accountant, on your financial support team (or the one you have doesn’t feel right), it’s time to pick up the phone and begin interviewing.
(Important piece to note: For the most part, accountants, tax experts and bookkeepers aren’t the place to bring your emotions around money. They’re just not really trained for that. And it’s usually not a safe, right place to bring these vulnerabilities, because you may not be met there. Financial Therapists (like me), Money Coaches, many Financial Coaches, and my money programs — are all good places to bring the emotional/psychological side of your money story.)
To ease this process for you, I’ve compiled 20 tried and true interview questions that will bring clarity for you. And, I’ve interviewed one of my favorite colleagues, Eva Konigsberg, Financial Coach & Tax Expert — to give her answers and commentary and help you get a sense of what you’re listening for.
If you lined up 10 accountants, they’ll all answer these questions differently. And at the end of the day, you need to do your own research, ask for referrals, and move forward with the person that feels like the best fit for you.
20 Interview Questions for Accountants and EA’s (Enrolled Agents-Tax Experts)
- How do you charge? Can you give me some range-estimation of your fees?
- Do you charge for phone calls?
- Do you outsource work or do it personally?
- How do you handle audits?
- Do you have a tax specialty or preferred area of work?
- Would you consider yourself conservative or aggressive with deductions?
- How can you help me get the information you will need from me?
- Do you like to teach and educate? Or do you prefer to just do it for me?
- How long is your turnaround time?
- License and experience?
- Do you have your CTEC license?
- Are you an Enrolled Agent, CPA?
- How many LLC, partnership, and corporate returns do you prepare? (This question is important if you are not a Sole-Proprietor.)
- Can you represent me in front of the IRS?
- What would you advise me to do if my tax situation was in the “grey area”?
- Do you have a preference what bookkeeping system I use? Are you cool if I choose a different one?
- Will you meet with me 2x per year to discuss my Chart of Accounts and advise me on how to get the most deductions throughout the year?
- Can you help me get caught up for previous years that were not filed?
- Are you familiar with Creative Entrepreneurs, Artists, Therapists, Coaches and Healers? Can you advise us?
- (This last one is for you to ask yourself, during and after your conversation) How am I feeling? What am I noticing in my body? Does this person feel like a good fit? Insert body check in.
Ready for some honest answers, from a dear colleague of mine?
I hope this will help you know what you’re listening for, and bring more ease to the process. Eva’s answers and commentary are thorough – she’s a teacher and an educator, and she loves what she does. I hope her comments will help you see what’s right for you. (And yes, Eva is taking new clients if you fall in love with her answers and want to know more!)
Tax Q & A with Eva Konigsberg, MBA, E.A.-Tax Expert, Financial Coach
How much do you charge?
Many people looking for the right tax preparer will ask “how much do you charge?” While this question seems like an obviously good one, it is a bit like asking the building contractor “how much do you charge?” Are you having a shack built, a la beach cabana, or are you building your 3 bedroom, 2 bath, home of your dreams? It depends.
More relevant questions might be “how do you charge?” and “what can I do to keep your fee to a minimum?” For professional tax return preparation, the price is based on complexity and time. Some preparers charge by form: more complex tax returns require more forms to be included in the return. Others by how long it takes. I charge by a combination of the two (complexity and time).
What might seem quick and easy to you may be the result of extensive experience and training by the preparer. You are paying for the preparer’s expertise and experience. The price of doing a tax return has definitely gone UP in the last few years.
While TurboTax is a phenomenal tool to help you do it yourself, the tax laws themselves have become extremely complicated. Typically someone will describe something common, such as calculating the auto mileage deduction for a self-employed person, where they have glaringly done it wrong. They may take the mileage deduction without a home office, or they may deduct actual expenses without using a vehicle mileage log to calculate the percentage of auto expense they should be deducting. I’ll ask, “where’d you come up with that?” They’ll say “the software walked me through it.” Well, obviously, there was a disconnect between how they walked through the software and what the software was intending to do, because they did it wrong.
Tax rules, even frequently utilized ones, are intricate with many permutations. You need to know what you’re doing. Additionally, it seems that the more talk I hear about simplifying the tax code in Washington, the more new legislation, making it decidedly more confusing. So when you are paying, you’re paying for expertise and research that is often done on a case by case basis, that takes thousands of hours and many years to acquire.
Another problem is how organized your information is when you deliver it to your preparer. A lovely new client asked me to estimate what I thought I’d charge for a tax return: she and her husband both had jobs (2 W2s) and she had a private therapy practice (1 Schedule C self-employment). She assured me that her return was ‘simple’ (that’s what they all say!) and that everything would be very organized (she had a bookkeeper for her business so could give me a clear profit and loss report). I estimated three hours for the return. It turned out to be well over six hours. Her profit and loss report had many oddities requiring a great deal of back and forth questioning and correcting her business record data.
Basic rule for all you entrepreneurs: spend time and money to keep your books properly, because it is always more expensive to correct than to get things right the first time.
Another thing you can do to keep your fees down is get all your data together before you deliver it to your preparer. When I do a return and get 75% done, only to realize that 25% of the information I need is not there, I stop (because I can go no further) and contact the client for the remaining information. When she or he gets it to me, I have more than 25% additional work to do. I have maybe 35 or 40% more work to do. I have to reacquaint my brain with the whole picture of the return, put the info into the return, and review again the previous data to see whether the new complete picture agrees with the picture I have created previously. It’s a basic principle of projects. Putting things down and picking them up later always requires extra time. Be complete and clear in what you give your preparer and you will pay less and she or he will love you more.
Do you outsource work or do it personally?
This is a great question. I was at a trade show recently and some very smart people from a different country solicited my business as a tax preparer, to outsource returns to be done much cheaper in that foreign country. I chose not to do this.
For one thing, it is illegal for tax preparers to send confidential information outside their firm, without the express, written consent of the taxpayer (with the exception that the preparer may share your confidential information with your spouse, or other close family member, unless you state that you do not want this to be done).
I specifically state in my tax agreement with clients that I protect their privacy and only share their information with persons in my firm who are working on the return, on a need to know basis.
On a more personal level, I feel it is wrong to ‘sell’ a client on using me based on my expertise and empathy, only to discover later that I had the work done by someone who may have a lesser level of expertise.
If, by exception, I run into a particularly challenging tax situation that requires greater expertise than I or other members of my firm have, I may need to bring in that expertise by consulting with a colleague-specialist. That is still not outsourcing and such potential exceptions are also specifically addressed in my agreements. That, by the way, is an extremely rare situation. It is more common for me to decline a return that I feel is beyond my capacity and refer you to someone who can better serve you.
I’m so happy with my business and my clients, and I am earning the income I want, so I have no need to bluff and take on work I can’t handle. But I am accepting new clients!
Do you handle audits?
Yes, I like handling audits. That’s my alter ego in this work… being your defender and protector. Going into the lion’s den on your behalf and making sure you don’t get eaten.
On the day before Thanksgiving I sat in an audit with a woman who is doing fantastic work to bridge the nutritional divide between low income and middle class/upper income people residing in the same cities. It was a ‘field audit,’ where the IRS revenue agent comes to your place of business. That morning, when I dressed, I worried about her and her cash flow challenges (I do charge a fair price and audits take time).
After the auditor left, she graciously handed me a check for services to date, hugged me and said, “thank you for being so generous in how you charged me. I could not have gotten through this without you. I don’t know what I would have done if I hadn’t had you to work with.”
Getting that kind of feedback is why I went into this work in the first place. It’s the reason I endure high stress in dealing with challenging research issues and meeting pressing deadlines. When you are looking for right person to represent you, be sure you find someone where you feel they ‘get’ you. It isn’t just about knowing the tax rules. Finding the right representative means finding a person you can really talk to, who will understand you and your business and go to batfor you.
Do you have a tax specialty or preferred area of work?
Another great question to ask. In my case, I am a general tax preparer. So I do a wide variety of individuals. But I do have a few specialty areas: entrepreneurs, nonprofits and trusts.
I love small business. I am a small business consultant and have been self-employed my entire career (with the exception of a half time job for a couple of years while building my tax practice). I love helping self-employed people and in that capacity, I do sole proprietor returns (those who file on Schedule C, LLCs, S corps and C corps). I help people understand the difference between these business entities, so that they end up with the right structure to serve their interest.
I have also worked extensively in non-profit finance and accounting. That is the specialty for which I am known in the tax world. I teach other tax preparers how to do the Form 990, the unique return used by exempt organizations. The reporting rules for exempt organizations differ from GAAP (generally accepted accounting principles) and the reporting has many extra requirements regarding governance, related-party transactions, foreign expenditures, etc. I also help people obtain tax exemption.
In the last few years, I have been training for an additional special focus: trusts. As we deal with aging parents, protecting our own children, or protecting our loved ones for when we transition out of this world, trusts are an increasingly important part of the puzzle. That’s why I am making it a specialty.
Would you consider yourself conservative or aggressive with deductions?
Both, depending. I don’t want you (or anyone) to pay 10 cents more in tax than you are required to pay. This means that I look for to get every deduction and credit to which you are entitled. In matters where the tax code is complex and subject to interpret, I always seek to interpret the law in your favor.
I follow the law, and inform you of items that are in your interest of which you may not be aware. However, this always means that where I know the law precludes you from taking certain deductions or credits, I don’t misinterpret the law. Nor will I ever take an unreasonable position.
The IRS imposes preparer penalties on preparers who take unreasonable positions. The penalty can be $1,000 or 50% of the income derived by the tax return preparer for preparing the return or claim. The positions I take are ones in which I have a reasonable belief that they will, more likely than not, be sustained on their merits.
How can you help me get the information you will need from me?
Before working on the return, I send out both a Tax Checklist and Tax Information Organizer. These documents go through the items to gather and ask questions regarding various types of income and deductions. By going through these documents you clearly know what to gather for the task.
Will you help me file for previous tax years and get caught up?
Yes. I often help people get out from under the psychological burden of being behind on their filing requirements. People tell me all the time that it feels great to get right with the IRS and your state taxing authorities.[/box]
What’s next? It’s your move.
Call Eva, ask your friends for referrals — and pick up the phone and begin interviewing people. Get started building, or fine-tuning your financial support team.
