I couldn’t say the same about my doctor or even my mechanic, but I’ve never second-guessed my accountant. Yet when I think about it, my accountant, Doug, is just a guy who went to college with my sister and offered a friends and family discount. And while those typically aren’t necessarily the bona fides of someone you should blindly trust with your health or money, I’m more confident in him than I am any other person on this planet.
When Big Doug tells me I could throw funds into one account to save money on another, or that I owe the IRS more than last year for reasons I don’t quite understand, I’ve never sought out a second opinion. But should I? How do I really know Big Doug is the tax whiz I think he is?
According to Kari Brummond, an accountant with TaxCure.com, there are a few ways to determine whether or not your accountant is subpar. “Most people don’t have the tax knowledge to review their returns to assess how their accountant is doing,” she explains, “but they can pay attention to other cues.”
One of the first signs your accountant is “on the right track,” Brummond says, is how active a role they play in your long-term tax strategy. In other words, is your accountant “just taking your bookkeeping records and entering numbers into tax prep software,” or do they “sit down with you and ask active questions about your finances to better optimize your tax situation?”
A high-quality accountant should assess your financial situation regularly, and contact you about any warning flags, financial obligations or upcoming deadlines. “They will sit down and sketch out different tax scenarios to see which one helps you out the most,” Brummond explains. “They’ll talk with you about your situation to ensure you’re making the most of your business deductions.”
For instance, one of Brummond’s recent clients had “lost out on thousands in deductions,” because his former accountants just went through the motions instead of taking a more active role. “My client didn’t have the tax knowledge to know the specific ways to add certain things to his tax deductions,” she says, “and his tax preparers didn’t bother to inquire — they even forgot to deduct his vehicle expenses.”
In the same vein, you want an accountant who is transparent about their process and what they’re deducting. If they’re opaque, and don’t explain why they’re deducting certain things or how they’re managing your retirement income, for example, it might be time to seek a second opinion. “Your accountant plays a significant role in your business and your personal finances,” she says. “But to be on the safe side, you might want to have someone else review your tax situation once in a while.”
To do so, take your latest return to another accountant and “ask them to look it over,” Brummond continues. “You’re just getting a second set of eyes on them, and if your accountant knows they’re doing a great job, they won’t feel threatened when you get a second opinion.”
If the second accountant sees anything missing, or unexplained fluctuations in your tax reports from year to year, “it may be a sign that your current accountant isn’t living up to their role,” she concludes, “or that you need a new accountant altogether.”
As for Big Doug, you’ll be happy to know he checks all the above boxes, so I remain fairly certain that I’m in safe hands. He even contacted me last weekend as a “heads up” because, in order to make the IRS’ deadline, he “needed my tax forms two weeks ago.”