10 action items to address with your future accountant before making a commitment

As you try to make sure your accountant meets your requirements and passes the usual test on education, experience, specialization, her value proposition, response time, price levels and the work process, it comes down to understanding of whether your accountant will be able to handle the depth and the width of your business requirements for financial management and tax planning.


At that point, you have to dedicate time to:

  1. Present a list of partners/shareholders with their investment apportionment, state of their domicile and ask for a discussion about owner distributions, owner compensation, and whether any expenses incurred by partners/shareholders could be accounted for as business expenses.
  2. If it has not been done, examine the entity type to ensure that the tax liability is minimized. Some changes could be made without affecting the legal status of the organization.
  3. Project gross revenue for the first 2-3 years and ask about a recommended accounting method.
  4. Draft requirements for your company’s financial system and plan setting up your accounting system, not as an overhead necessary to calculate taxes, but as a “core circulation system” of your company operation integrated or at least communicated with Point of Sale (POS), Inventory Tracking, and Billing and Client Relationship Management (CRM) software. These days, a company does not need to earn millions or even hundreds of thousands to be able to afford basic financial management systems. Having an accountant able to help you navigate the world of simple, efficient, cloud-based solutions is worth a million.
  5. Identify the states where the company is going to do business and ask about SALT (state and local tax) experience. Inquire about tools used to determine state nexus.
  6. Ask about company’s ability to collect and make a tax payment on behalf of a client.
  7. Ask about the types of financial statements your accountant will provide to you. The list must contain the Profit & Loss (P&L) statement, a Balance Sheet and, most importantly, – the Cash Flow statement. This is the most important document a business owner has to review regularly, because the best companies provide excess cash, not always the highest profit.
  8. If your company pays contractors overseas, has foreign shareholders or sells goods or services internationally, has international transactions with related entities, ask about your accountant’s experience working with cross-border tax planning, and whether he or she is familiar with forms W-8BEN, 1042S, 5471, 5472, and issues related to FATCA, effectively-connected income (ECI) and transfer pricing.
  9. Plan payroll and employee benefits, and therefore, ask your accountant about capacity to discuss processing of payroll and online employee access to payroll information, tax and reimbursement details of payroll constantly reflected in the accounting system, ability to support workman compensation audits, tax benefits of a company retirement plan, key man insurance, Section 125 and other.
  10. Manage your risks and inquire your accountant’s ability to support your company during a federal or a state tax audit. Ask how it is usually done and who is responsible at the firm level.

If you accountant had enough patience to address all of this, you are in good hands. Now, if you feel comfortable with all of the above, paying close attention to the process of setup and transition provides a good sense of communication quality and efficiency.

Choosing an accountant is often compared with choosing a doctor. Both work for you to keep you running…and smiling.

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