Using an accountant's services or a contractor accountant is a great idea if you want to save your business precious money. Of course, accountants don't come for free, but sometimes a little investment can go a long way. When you balance out the cost with the savings that it can represent, it's well worth using accountants to help you with your end of year tax returns.
In fact, the application of your accountant's services can be much more far-reaching than just your tax returns. A good accountant can help you with tax consultation, VAT registration and your VAT returns, company formation, company dissolution and much more.
Wherever you're based, it's a good idea to source your accountants as locally as possible. By choosing accountants near to where you live, you will be able to arrange meetings as and when necessary without wasted time in unnecessary travelling.
The easiest way to find a good accountant is by conducting a search on the internet. The internet has become the most accessible and speedy resource for finding any kind of service that you require, so it makes sense to utilise it. Carrying out the search is easy; if you're looking for accountants then use this as your main search keyword, with the addition of your location. This will bring up a list of results for you to choose from.
Alternatively, you could also try to source your accountants through word of mouth recommendations. Talk to other businesses in your local area that use a good accountant who they can recommend.
Using professional accountants is the best way to reduce the amount of tax that you will pay - they will know all the legal loopholes and the various things that you can claim for to reduce your tax bill as much as possible while still acting within the law.
Contractor Accountants
If you're a freelancer or contract worker, there are plenty of contractor accountants around who can help you to organize your accounts and save you money - while you concentrate on doing what you do best: providing your services and using your skills to bring in more money.
The principles of finding a good contract accountants service is exactly the same as looking for any kind of accountants. Again, using a search engine such as Google, simply insert a search term based on what you're looking for and your location, then look through the results to identify the one that offers the best value for money and the services that you require.
Your accountants or contractor accountant should offer several levels of service, depending on what you're looking for. You may want to take care of your day today book keeping yourself, and then just submit these at the end of the year to your accountant in order for them to complete the necessary paperwork for HERC. Alternatively, you might want to find an accountant who can take care of all of this for you - so you keep hold of all of your invoices and receipts and then hand them over to your accountants. They then fill in your accounts books and use the information to file your tax return.
Obviously if you live near a big city you'll find it very easy to source good accountants as you will have plenty of choice, whereas if you live in a more rural area, you may be more limited in your choices. The thing to bear in mind is that as long as your accountants are fully qualified, it doesn't really matter whether you choose a big accountants firm in the city or a smaller accountant service that is situated closer to you.
Saturday, 6 August 2011
How to Choose a Personal Accountant
Taxes are a necessary evil in the course of life, but core to doing business or growing your personal wealth. Rather than dealing with all the good and bad advice on the internet, having an accountant handle the complicated state of my finances reduces the stress I get from doing my own taxes each year and wondering if I did anything wrong. Leave it to the pros so you can focus on the thing you do uniquely well - but, finding a great accountant isn't easy and after going through half a dozen myself, I've got some tips for finding the right one.
What's the point of having an accountant, can't I just use software and advice from the internet?
After doing my own taxes through college, I've realized that most of the off-the-shelf software out there will get you pretty good results. In fact, most average accountants won't do much better than the software you're probably using - if you're happy doing your own taxes and can take the time to research the latest tax laws, you're a better person than I. Good luck to you.
For the rest of us, we're pretty busy and we understand that leaving stuff like this to the right professionals can be the best decision you can make. Besides, you go to a doctor when you're sick and you go to the lawyers when you get sued, why not go to a good accountant when you need to worry about taxes?
Taxes and the shades of gray
Take a look at a typical tax return and you'll soon realize that there are thousands of ways to interpret the tax rules. It's pretty clear that filing taxes can be more of an art than science.
Average accountants will take a conservative approach by default. In my experience, only one accountant I know mentioned deductions from retirement accounts or luxury vehicle purchases. (Incidentally, he's been my accountant for years now.) Note: If you're getting nervous at the very thought of bending tax rules to your advantage, you probably ought to stop reading immediately - this post isn't for you. For the rest of you, what you need is a bulldog accountant that has creative ideas on how to bend tax rules to your advantage.
Sure, bending the rules might seem shady but the point is that bending the tax laws is beyond the comfort zone of most people, including me. That's why you need to find an aggressive accountant to do the work for you (and sign his name at the bottom of the return) - aggressive, while staying safely within generally accepted accounting principles, of course.
Fishing for Accountants
The key to finding great people is to ask the best people around you for their contacts - this works especially well if you know a number of successful entrepreneurs. Even if they can't give you the contact information for the person they use, they'll surely have some dirt on the accountants to stay away from.
If this doesn't work for you, the next best option is to simply start combing through the phone book and interviewing. Sure, this will suck up a lot of your time but desperate times call for desperate measures.
Loaded Questions: The Art of Interviewing Accountants
Interviewing accountants is pretty straightforward but you need to understand that they will charge you for their time. Don't start setting up in-person interviews until you've whittled the list down to the top 1-2 that you like.
Keep it simple, your goal for the interviews is to understand two primary things:
Do you get along with the accountant? You two are going to have a number of personal conversations over the next couple of years, make sure your personalities match. My rule of thumb: I won't do business with you unless I can see myself drinking with you. On a scale of 1-10 (with 10 being the most aggressive), how conservative/aggressive is this accountant? Ask specific questions about your current financial situation - use real numbers. Better yet, bring in an old tax return and ask the accountant what they would do differently. You're looking for creativity - is he asking good questions about what you might be able to deduct? When you ask about something the accountant disagrees with or warns against doing to save taxes, make sure his explanation makes sense.
Be the bullshit detector: ask questions that you already know the answer to. (This is a big one, don't forget to do this!) I usually ask about the deductibility of new vehicle purchases under my business entity. I'm not looking for him to agree with me 100%, I just want to gauge his response against my knowledge on the issue.
Get yourself the right accountant today and you won't be repeating this process for years at a time. Better yet, you'll save yourself tons of time and money in the long run - and you'll have a trusted partner to bounce ideas off of down the road. Oh, and one more thing: the really good accountants just happen to know everyone - I've been able to get leads for future clients, early access to business owners looking to sell out and references for lawyers, doctors or anyone else I might need for my own plans.
What's the point of having an accountant, can't I just use software and advice from the internet?
After doing my own taxes through college, I've realized that most of the off-the-shelf software out there will get you pretty good results. In fact, most average accountants won't do much better than the software you're probably using - if you're happy doing your own taxes and can take the time to research the latest tax laws, you're a better person than I. Good luck to you.
For the rest of us, we're pretty busy and we understand that leaving stuff like this to the right professionals can be the best decision you can make. Besides, you go to a doctor when you're sick and you go to the lawyers when you get sued, why not go to a good accountant when you need to worry about taxes?
Taxes and the shades of gray
Take a look at a typical tax return and you'll soon realize that there are thousands of ways to interpret the tax rules. It's pretty clear that filing taxes can be more of an art than science.
Average accountants will take a conservative approach by default. In my experience, only one accountant I know mentioned deductions from retirement accounts or luxury vehicle purchases. (Incidentally, he's been my accountant for years now.) Note: If you're getting nervous at the very thought of bending tax rules to your advantage, you probably ought to stop reading immediately - this post isn't for you. For the rest of you, what you need is a bulldog accountant that has creative ideas on how to bend tax rules to your advantage.
Sure, bending the rules might seem shady but the point is that bending the tax laws is beyond the comfort zone of most people, including me. That's why you need to find an aggressive accountant to do the work for you (and sign his name at the bottom of the return) - aggressive, while staying safely within generally accepted accounting principles, of course.
Fishing for Accountants
The key to finding great people is to ask the best people around you for their contacts - this works especially well if you know a number of successful entrepreneurs. Even if they can't give you the contact information for the person they use, they'll surely have some dirt on the accountants to stay away from.
If this doesn't work for you, the next best option is to simply start combing through the phone book and interviewing. Sure, this will suck up a lot of your time but desperate times call for desperate measures.
Loaded Questions: The Art of Interviewing Accountants
Interviewing accountants is pretty straightforward but you need to understand that they will charge you for their time. Don't start setting up in-person interviews until you've whittled the list down to the top 1-2 that you like.
Keep it simple, your goal for the interviews is to understand two primary things:
Do you get along with the accountant? You two are going to have a number of personal conversations over the next couple of years, make sure your personalities match. My rule of thumb: I won't do business with you unless I can see myself drinking with you. On a scale of 1-10 (with 10 being the most aggressive), how conservative/aggressive is this accountant? Ask specific questions about your current financial situation - use real numbers. Better yet, bring in an old tax return and ask the accountant what they would do differently. You're looking for creativity - is he asking good questions about what you might be able to deduct? When you ask about something the accountant disagrees with or warns against doing to save taxes, make sure his explanation makes sense.
Be the bullshit detector: ask questions that you already know the answer to. (This is a big one, don't forget to do this!) I usually ask about the deductibility of new vehicle purchases under my business entity. I'm not looking for him to agree with me 100%, I just want to gauge his response against my knowledge on the issue.
Get yourself the right accountant today and you won't be repeating this process for years at a time. Better yet, you'll save yourself tons of time and money in the long run - and you'll have a trusted partner to bounce ideas off of down the road. Oh, and one more thing: the really good accountants just happen to know everyone - I've been able to get leads for future clients, early access to business owners looking to sell out and references for lawyers, doctors or anyone else I might need for my own plans.
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