I’ve seen some people in the comments section ask a few times, “Hey john, how do I find the right tax accountant for me?” Oftentimes, as I’m onboarding new clients, they tell me, “Hey, I’m using the tax guy that my friend recommended,” or, “Hey, I’m using the Major Things you should look for when hiring a tax professional one that my family has always used.” But they never really stop to think: is this the best accountant for me?
I find that interesting because, as a tax accountant and a tax strategists we are, we can very quickly tell if a tax professional is good at what they do. Sometimes it takes one to know one, right? For example, I used to think that any doctor who went to school and earned a doctorate degree must be qualified enough to talk to me about my health. It took another doctor to tell me that there are good doctors and bad doctors, and you can tell by the type of medicine they practice, the tools they use, and so on.
Today, I want to help you identify what makes a great tax accountant. I will go over the difference between a tax preparer and a tax strategist, what questions you should consider asking before working with any accountant, and what to expect in terms of pricing. If all that sounds good to you, then hit the like button to join us on Telegram and also share this post so other small business owners like you can find this article. As always, I’ll have table of contents above, so feel free to skip ahead if needed. However, I think you will find reading this entire article incredibly valuable.
What Most Accountants Do
To start, let me give you some context on education so you know how to choose the right accountant. In general, you learn how to do accounting by going to college or university, where you are taught the technicalities of good accounting best practices. This includes creating and analyzing financial statements, properly categorizing transactions and journal entries, business law and ethics, and overall compliance with the government or IRS.
If an accountant pursues higher education, such as a master’s degree or a CPA license, they will go even deeper into these topics. A lot of education is geared toward working as an accountant in a corporation rather than a small business. This makes sense because college is expensive, and graduates want a great salary after they graduate—something big corporations can typically afford.
However, some accountants decide to start their own accounting firm after graduation or working in a corporation for a few years. They then begin working with small business owners like you. Many accountants focus on gathering your profit and loss statements and tax forms and preparing your tax return. While this is necessary—every small business owner should file their taxes on time and accurately—the problem is that most accountants think their job is done after that. “All right, john, your tax return is prepared. I’ll see you next year.” But that is just tax preparation.
That’s what most accountants focus on: compliance. It’s what we are taught in school. But what about tax strategy? There are things you should be doing throughout the tax year to properly prepare for your next tax season and pay fewer taxes. This includes maximizing deductions, changing your legal entity structure, exploring retirement and insurance strategies, and using legal tax loopholes.
When I talk to people about working with us, they often say things like, “I have to tell my accountant about the tax, I’m learning in this blog website” or “My accountant didn’t even know about this tax loophole,” or “I only hear from my accountant during tax season.” These are things to consider when selecting an accountant.
If you need help with tax planning or preparation and you’re looking for a good team, we may be able to help. Click the first link in the comment below to learn more about how you can work directly with our team.
Questions to Ask Your Potential Accountant
If you are booking a discovery call with an accounting firm, keep in mind that this can be difficult, especially during tax season when accountants are extremely busy. If they are not busy, that could be a red flag. Every tax season, we have to stop accepting new clients simply because we reach full capacity.
If you are lucky enough to book a discovery call, here are some questions you should ask:
- Do you offer tax planning? Not tax preparation, but tax planning. If their answer is that they wait until tax season to help you save on taxes, that’s a red flag. Either they don’t know what they’re doing, or worse, they are not doing things legally and can land you in trouble with the IRS.
- How much tax savings do you see on average for your clients? You want a solid, confident number. For us, our clients save an average of $15,000 to $20,000 in additional tax payments.
- What is the most amount of tax savings you have found for one client? This will give you an idea of their level of skill in tax planning.
- Do you work year-round? Many accountants only work during tax season (January to early May), which is why they may take a long time to get back to you in the offseason.
Some questions to avoid:
- “Should I be an S corporation?” This requires more research into your specific situation.
- “Are you a CPA?” Being a CPA doesn’t necessarily mean they are the right accountant for you.
- “Are you local?” Federal tax code is the main factor, and remote accountants can provide great strategies no matter where you are.
What to Expect With Pricing
When you find a good tax accountant, what should you expect to pay?
Tax Preparation Costs
For individuals filing a 1040 return, expect to pay anywhere from $300 to $1,000. The higher end is for those with complex situations like rental properties, stocks, or cryptocurrency investments.
For business tax returns, the pricing depends on the complexity and structure of your business. A small LLC filing as a sole proprietorship may pay $500 to $1,500, while larger businesses with more transactions and deductions could pay significantly more.
Tax Planning Costs
Tax planning is a proactive service and typically costs more than preparation. You might pay anywhere from $2,000 to $5,000 per year, depending on the level of service and the complexity of your business.
A good tax accountant can save you much more than they charge. If they help you legally save $20,000 in taxes, then paying $3,000 for their services is a great return on investment.
Conclusion
Finding the right tax accountant is about more than just getting a recommendation from a friend or family member. It’s about ensuring they provide real tax strategy, not just tax preparation. Ask the right questions, evaluate their experience, and be prepared to invest in a quality accountant who can save you significant money in the long run.
What questions do you think are important to ask a tax accountant? Let me know in the comments below!
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