Unfortunately, some people make the mistake of believing that simply because a hired professional boasts an “Accountant” placard on their desk, their taxes are in good hands—but accountants are not one in the same.
First of all, there’s both good and bad accountants. Even though someone might have passed their CPA exam and received accreditation with the IRS, it doesn’t mean they’re necessarily talented at navigated the complex sea of tax codes.
Furthermore, the IRS warns people every year to watch out for tax scams and accounting fraud. Instead of getting their hard-earned money back, many people wind up owing large sums of money after getting duped by such con artists.
So, can you trust your accountant? Here are some warning signs to watch for.
This is a major problem if you’re paying for your accountant by the hour. Not only are they wasting your time, but also your money. Is your accountant using trustworthy professional tax preparation software, or are they still punching numbers and running their books the old school way? If his or her office looks like a tornado ran through it, with papers and files strewn all over the place, consider it a big red flag.
They Don’t Explain the Financial Statements
At the end of every month or quarter, you walk into your office and find a financial report sitting on your desk. “Good,” you think, “They did their job”. You move forward with your day, not having any idea what the report actually means.
If this sounds familiar, pump the breaks. It’s not your fault that you can’t understand your financial statements; unless you went to business school, there’s no formal way to learn this skill. However, it’s your accountant’s job to explain the numbers to you and give you the financial breakdown. If they’re not completing this important task, they could be keeping you in the dark about worrying activity.
They Miss Deadlines
This is unacceptable, no matter what. Whether it’s for your personal tax return or for the due date of your projected earnings, there’s no excuse for an assignment not being completed on time. Remember, you deserve what you paid for, and anyone who can’t deliver as promised should not be trusted.
Promptness is a basic courtesy, and if your accountant is slow to respond to your phone calls or emails—or, worse yet, ignores them altogether—it could be time to move on. If they seem to rarely have time to meet with you, find someone else who will willingly fit you into their schedule.
Their Qualifications are Unclear
If you ask your accountant about their qualifications and they seem to get flustered or defensive, it’s a cause for concern. Always double check on the IRS website to make sure they’re legally able to practice accounting and file taxes. Too many taxpayers overlook this critical step and fall victim to IRS Tax Preparer Fraud.
Also, make sure to verify the experience of your attorney or CPA; a person who claims to have more experience than they actually do speaks to issues of trust. Even if your attorney has been in the game for years, they might not know your specific industry. They need to know how businesses operate in your sector since they can miss certain tax codes and tax breaks that may apply.
It’s wise to always read reviews of your accountant’s performance prior to hiring them, and perhaps even go a step further by asking for references from their clients in similar industries.
They Promise Inflated Claims
This is so common that the IRS includes it on its annual list of known “Dirty Dozen” scams. If you’re used to getting a consistent amount of money back every tax season and are suddenly promised a number that seems abnormally high, be a bit suspicious. Unless you earned some major tax credit, your accountant could be reporting false expenses, exemptions, and deductions on your return. If the IRS catches you, you’ll be the one responsible for the penalties and fees incurred for the falsification—not whoever prepared your return.
The consequences for bestowing your trust to the wrong accountant run the gamut, including everything from stolen money to a stolen identity. Watch out for these signs of a bad businessman to better safeguard your financial circumstances.
Choosing an Accountant you can count on when it comes to handling your financial statements can be dreadful at times. Trust and Accountability should be first. Above are some of the things you should watch out and consider first, this will help you in looking for that perfect accountant or ask yourself it is time to change your accountant.