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The topic of finding a qualified tax professional is common in my mailbox. There is no pat answer for each request so I generally ignore them. Another common request is for a referral if I am too busy. It is true I only accept a small fraction of the requests for service, but the good news is I have more staff this tax season and have been accepting more new clients than last year. The bad news is that I don’t have someone to refer you to in your area.
Yesterday I received an email that touched me. Long emails usually die before I read more than three sentences due to time constraints. This email was different. The sender asked to remain anonymous and I will honor that request. He asked: How do I go about finding a good local accountant? He wants someone local he could shake hands and sit down with to discuss his tax and financial matters. I get it. He continued: I am hoping for an idiot-proof, step-by-step guide. I don’t know where to start searching, never mind narrowing the choices.
Finding qualified professionals is a difficult task. I wish it were as easy as an idiot-proof guide, but there is no such thing. My goal today is to share ways to increase the odds you have a good tax professional on your side.
Good tax professionals are a busy group, especially this time of year. The industry has consolidated over the last few decades and many top notch accountants have retired. Making matters worse is fewer people entering the field. CPAs frequently seek employment in government and large corporations or large accounting firms. The small and mid-sized accounting practice is a dying breed. These are the same firms serving the average American family’s tax preparation and planning needs. Finding an awesome tax professional to work with you is getting harder by the day. I have a few ideas to help you land a good one, but you might not like what you here.
The Initial Search
You need to build a list before you narrow it. The phone book or an internet search will give you a long list of local tax professionals. However, there is no way to determine quality with such a shotgun approach.
The first step I would take in searching for a tax professional is talking with friends and co-workers. Business owners tend to find average or above avaerage tax/accounting firms if they are in business any length of time. You don’t want average, but building a list that excludes as many dudes as possible reduces the winnowing process.
Second, know the difference between a CPA, attorney, enrolled agent and unenrolled preparer. A CPA is an accounting professional who might focus on taxes. Attorneys are legal professionals. Many attorneys take tax preparation work. However, they tend to farm that work out and add a fee on top of the real preparer’s fee without adding additional value. Some CPAs and attorneys are good tax professionals; others, not so much.
Enrolled agents are licensed tax professionals. EAs sometimes handle payroll, bookkeeping and other accounting issues as well. Unenrolled preparers are anyone who hangs a shingle.
CPAs, attorneys and enrolled agents can represent you before the IRS.
There is another group of semi-professionals in the tax field: those in the Annual Filing Season Program. These folks have limited representation rights, but are required to take 18 hours of continuing education each year and pass a test. This program has been in flux the last several years as the IRS works to improve the tax profession, while the courts knock it down because the IRS has no authority to regulate tax preparers at that level. It is a voluntary program as a result.
I am an enrolled agent so I am biased. In my search for a tax pro I would consider EAs and CPAs first, then attorneys (based on cost and because most farm the work out anyway), then preparers in the Annual Filing Season Program. I would avoid non-licensed tax people. The worst riff-raff is usually avoided once a professional designation is attached to the professional.
There are two places to look for a list of generally qualified tax professionals: professional organizations and the IRS. (Yikes! The IRS! Yup.)
The National Association of Enrolled Agents has a Find a Tax Expert page. Plug in your ZIP code and you get a list of EAs in your area who also happen to be members of the NAEA.
I am not a member of any professional organization so my name will never show up there. These organizations are expensive and the annual dues do not provide enough benefit for my investment. However, the enrolled agents you find at the NAEA site not only have a professional designation, but also have a commitment to their professional development by belonging to the NAEA. I undertake different activities to earn my credentials. That is just me and should not reflect poorly on the fine people on the NAEA registry.
A complete list of tax professionals can be found at the IRS. I like the IRS site better because it has a complete list of all tax professionals with any sort of designation. If the best tax professional for you doesn’t belong to the NAEA or the organization you are searching you will miss out. The nice thing about the IRS site is you can limit your search to a specific professional designation, like enrolled agents.
Making a List and Checking It Twice
Now armed with a fist full of names, it is time to shorten the list. There is no simple way. You need to pick up the phone and call.
I am writing this as tax season is starting. If you are starting your search for a tax pro now, shame on you. And your job is 100 times harder, too. As a tax pro with over 30 years under the belt I can say with absolute accuracy, tax professionals don’t have time now to discuss your search for a tax pro.
Not all is lost. The earlier you start the better. During the off tax season is the best time to build a relationship with a tax professional. The initial consultation is probably free, except during tax season. Too many tax pros are like me: swamped. We have paying customers lined up with cash in hand. Free consultations have no place in the schedule until May. A quick phone conversation might do the trick, but getting the accountant to give you more than a few minutes is unlikely if they are good, because if they are good they are swamped.
There is another way. You might not like it, but it will get you much better results. Pay for the service. Tell the accountant up front you want a paid consultation where you expect solid information as it relates to your tax situation. Make it clear you are also looking to hire her if you feel it is a fit after the paid consultation.
During the off tax season I would talk to a few additional tax pros. If it is tax season before you even look, expect to hire the first competent tax pro you can find if they even accept new clients.
The Most Important Step
You did your research and found three or four potential tax professionals that could work for you. Now you need to have a short meeting or phone call with the tax pro. Truth is you will know in 10 minutes or less if it is going to work. In some cases you will know if it will not work in less than 30 seconds. If it isn’t going to work, save both yourselves time and say it. Move on to the next name on the list.
People calling my office tend to ask two questions: How much do you charge? And are you taking new clients? They ask in that order. The answer to the first question is it depends what work I have to do. The answer to the second question is I am always taking new clients, but selectively. Depending what the kind of work you have will determine if I will take the account.
And those two questions are the wrong ones to ask! The guy you call could be dumb as a hammer and all you want to know is what he will charge you and if he will honor you by charging you. There is a better way.
Whether you have a short phone conversation planned or a one-hour paid consultation on the schedule, you want to ask the right questions. Remember, the tax pro is interviewing you too. They want to know if it is a good fit. Tax pros don’t want problem clients.
Think about how you plan on presenting your tax situation. If it is a mess, be honest. Many tax offices have people inside the firm and outsourcing options to get your paperwork in order. It will cost extra, but the option is available.
Be clear in what you expect. The tax pro needs to know if you are the kind of client who needs handholding or will show up once per year with maybe a phone call or two over the summer. Don’t try to guess what kind of client the tax pro wants. It’s not going to work if you play that game. I fire clients every year who do not fit my preferences. It is not personal. Better yet: it’s not you, it’s me. If you don’t fit the corporate culture, best we know up front. I can still help with consultations in most cases, even if another firm prepares your return.
The last questions you should ask are, in this order: After reviewing my account, are you willing to take me on as a client? With that attitude I will want to do just that. It will hurt if I have to take a pass. Good, professional clients are always my favorite. And the last question you should ask is: Now that you reviewed my tax situation and are able to take me on as a client, how much will my tax return cost to prepare? See the difference? Most people ask the last questions first when I have no idea what it will cost or if I have time to prepare the return. Be a good client and you will get the best tax pros to say “Yes” and at a reasonable fee.
Paying for Service
Tax season is triage. I want your stuff and I want it done and out the door. Now is not the time for a consultation. I am more than happy to provide a short review of your tax return before filing it. Asking me how you can save taxes should wait until May or later in summer.
Many tax professionals offer a phone or in-office consultation during the off tax season without fee. This is a mistake. I know the accountant it trying to be nice, but think about the mindset. If I am not going to charge a fee, I will not prepare. We will jawbone for an hour without digging as deep as we should. A well planned consultation will allow the accountant plenty of time to research your tax return for ideas and it should be a paid consultation to encourage the tax pro to perform.
In some situations the tax pro will say there is not much to discuss so there will be no fee. I get it. But the consultation should be more than just taxes. For the accountant to do an awesome job, she will need a deeper discussion on your financial goals. Now is the time to work on retirement goals and how you can reduce taxes while you save and invest. Education planning for the kids might be a topic. A planned major purchase run by the tax pro can give you insight from a third party with your best interests at heart.
Taxes are only the first step when working with a tax pro. Before you hire the accountant, make sure they are versed in the areas important to you. If maxing out retirement accounts is an issue for you, make sure the accountant understands that part of tax law. Not all do.
There is no fool-proof method for success when searching for a tax professional. Here are the things we discussed that will increase the odds you find a good one:
- Ask friends or trusted business owners who they use for an accountant.
- Search NAEA, the IRS or other tax professional organizations to build a list of potential tax pro candidates.
- Stick with an enrolled agent or CPA unless you need the specialized services of an attorney.
- During tax season a 10 minute call is about all you will get when determining if you will hire the tax pro.
- Outside tax season be willing to pay for an in-depth tax analysis.
- Ask quality questions pertaining to your situation. Focus on areas outside taxes, too, such as, personal finance, home purchase, retirement planning and education funding. Make sure the tax pro handles areas of concern to you.
- Save the discussion on fees until the tax pro knows what work she is expected to do.
- Be willing to pay for our professional advice.
- Be nice. We really, really want to help you, but we get really tired at times from all the hours in front of a computer. We love you guys and want to help, but we are only one person.
- Give your accountant a hug. She needs one after a long day.
There it is. As fool-proof a method if ever there was one for finding the tax professional of your dreams. Remember, communicate. The more your tax pro knows you, the better job she can do.