What Your CPA Wants You to Know
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What Your CPA Wants You to Know
66. How to Hire & Work With a CPA: Interviewing, Pricing, Questions to Ask, & More!
Wondering when you should hire a CPA? When is it okay to DIY your taxes?
If you own a business, you definitely want to hire a CPA to do your tax return even if you've done your own return in the past! In this episode we explain why that's the case and how you can find a good CPA for your business.
We also discuss what working with a CPA looks like during the year and during tax time!
We also cover CPA etiquette and billing that everyone should know . Ever wondered if that quick email to your CPA will cost you? We break down the billing protocols, so you're never caught off guard. Plus, we explain the full spectrum of services CPAs provide.
Whether you're a seasoned business owner or a newcomer to the financial arena, this episode is your compass to confidently choosing and working with a CPA who will bolster your business's success.
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Oh, this one's a biggie. What is the turnaround time for your tax return? So, if you didn't know, business tax returns have due dates in March and the personal tax returns and the C-Corps have the due date in April. So if you gave your CPA all of your stuff in January, would they have it done by the March deadline? That's a great question to ask. How early do they need your stuff in order to prepare everything by the deadline?
Speaker 2:Welcome to what your CPA Wants you To Know.
Speaker 1:Tax and accounting help can be expensive, so we've created this podcast to help guide you through it all and make you feel like you have a CPA in your back pocket. I'm Carson Sands and I'm Taryn Sands.
Speaker 2:I'm a CPA with over 10 years of experience helping people start and grow their businesses and I'm an MBA with a specialization in marketing and entrepreneurship.
Speaker 1:Taxes suck and we want to make sure you don't pay more than your fair share.
Speaker 2:We're here to share everything your CPA wants you to know.
Speaker 1:In a fun and easy to understand way.
Speaker 2:Let's get started.
Speaker 1:Let's do it. Today we have an episode all about CPAs and working with one, finding a good one and all of the things that everybody should know before hiring a new CPA.
Speaker 2:Yes, currently we're not accepting new clients, so we're hoping this helps you find another good CPA. If you listen to our show and you're looking for one and you're, you were planning to ask us, or you already did ask us, and we said I'm sorry, but we're full. You were planning to ask us, or you already did ask us and we said I'm sorry but we're full. We're trying to stay really relevant to our existing clients and really responsive to our existing clients, so we're not taking any new people.
Speaker 1:Yeah, I think we know what our capacity is and we're at max capacity and what we see when people come to us, it's because they've hired a CPA that is unresponsive and doesn't answer emails or phone calls for weeks at a time and has, you know, really, really long turn times, like we've seen like nine, 10 months over a year to do a tax return. So that's kind of the main reason. People generally leave because they want someone that they can contact and sit down with when they need them, send an email and get an answer back. So that's usually what we see. The reason is that people want to leave. So today we're going to talk about how you could find a good CPA, when is the time to hire one, and then just some etiquette with working with the CPA, because nobody teaches you this stuff.
Speaker 2:So one of the first questions you should ask is when should you find a CPA? You don't want to wait, that's for sure. Now, if you've just started a business at the beginning of the year, you might wait until after tax season. That's probably a good idea because it's very unlikely you're going to get a new client meeting with an existing CPA in February or March, and if you do, either hopefully they're new or they're probably not a very good one.
Speaker 1:That's true. So if you started a business which most people listening to this podcast are either starting one or about to start one then you know that's a time to start looking for one. But you're not going to hire a CPA in like January, february, march or April. Unfortunately, you are going to have to wait until the summer to be able to get a new client meeting, and that surprises people. Sometimes we have people coming in, walking into our office, you know March 1st, saying, hey, I would like you to do my tax return. I started a business this year. I have all of this going on and I know I need a CPA, and we're always like we're so sorry but we can't talk to you really until probably after May.
Speaker 2:Now, if you find yourself in this position but you wanna make sure you're doing every single thing that you possibly can correctly before you meet with the CPA and that's gonna be in the summer, so that's four or five months of doing something maybe not the ideal way. You could just buy our guide, which is less than the cost of meeting with the CPA for one hour and that will tell you everything that you need to do from the start, as far as when to set up bank accounts, what to set them up as, whether you need LLCs, all the things you need to know to get started, and you'll be ready to go for that first meeting with the CPA. They'll think you're the smartest client they ever had.
Speaker 1:That is true. It has everything that you need to do in the very start. So if you're in that position, that's a great place to just start making sure that you are teaching yourself all the things that you need to know, because one meeting with the CPA is not going to give you everything you need to know in that one year.
Speaker 2:And if they're a CPA that's kind of taking some people and not some people they're starting to get selective, then that will greatly increase your chances of being one of the people that they select to be a client, Because they'll say, yes, this person will be easy to work with.
Speaker 1:Yeah, and it kind of sounds rude, but it really just comes from. Any sort of job could feel this way. If you're telling people things and you don't see them implement them or they don't want to do any learning themselves, that just makes it really hard to work with that client because they aren't trying to understand their taxes at all and they're not trying to work with you and they're not trying to learn alongside you and that is just really hard because there is a lot of things that you need to learn and start trying to understand if you're going to start running a business.
Speaker 2:Well and we are perfectionists we like to get the lowest tax bill possible without sending people to jail, and the only way to really do that is to have people that are organized and work with you and things like that. So that does help and it makes us feel like we're able to do our job better and save people more money.
Speaker 1:And that brings me to another great point, which is when you're saving taxes. It's all proactive, so you can't just come to a CPA and expect them to work miracles whenever the year has already passed. There's really nothing to be done. I mean, of course, they can prepare your tax return, and that's a service. But the service of tax planning and helping you get your taxes down and make sure you're not missing any deductions, that has to happen before. So if you're not a proactive person, and it's going to be hard to work with the CPA that wants you to be proactive.
Speaker 2:Right Now. Don't panic. That's just one bad year right, and they'll still make sure that you get every deduction that you qualify for that you already spent money on. But it is too late to go back in time and buy more stuff that you didn't already buy before the end of the year. That doesn't mean we can't start planning for next year and do the best we can to minimize the current year.
Speaker 1:Right. So you know you're going to start looking for a CPA when you have a business. Before that, if you've been using TurboTax or something to file your tax return, that's completely fine. I know we've said that on a lot of episodes. But when you own a business, that's the time that you do need to have a CPA. So you're going to hire them in the summer. You're going to just make an appointment and that will cost money for a consult with the CPA. Sometimes I think you can get a free consult if they are just building up their business, but nine times out of 10, you're gonna pay something for that hour to meet with them.
Speaker 2:That's true. We actually did for the first I don't know six months. We were hoping we would meet with anybody just trying to get clients.
Speaker 1:Yeah, and I think that a lot of people do that in the start, but we're seeing a lot of people being very booked, so I don't know if less people are being CPAs or I don't know. It just doesn't seem like there's enough people to go around.
Speaker 2:I can't imagine why. It's very exciting, edge of your seat thrills every day. It's really easy too and really cheap to go to college and get a master's degree, so I can't imagine why there's not more people doing it.
Speaker 1:I know it's crazy. It's such a great job. Another thing people always ask us is where do you find a new CPA, where do you find a good one? And I always suggest starting with friends and family, and if you know someone that owns a business, has been a business owner for a while and has worked with a certain CPA, that's a really great place to start Now. Another good place to look is on Facebook in like a local group. We get tagged all the time locally whenever our clients see that someone's looking for someone else. So if you have lots of people vouching for a specific CPA, then you know that that's a really good place to start. Just make sure that that CPA specializes in business tax returns, because there is a difference. Some people only do individual returns mostly and maybe a business return here and there, and some firms, like ours, focus on business tax returns. So you definitely want to make sure that you're going to someone that is very efficient at business tax returns.
Speaker 2:A lot of them will tell you the honest truth and send you to someone else if they don't. Some of them won't because they don't want to turn down business. So just the best thing is to do some reviews and do some research and figure out if the people that you asked are people that have businesses. Like Taryn said, don't just if they did someone's 1040 and did a great job, that doesn't mean they're going to do your 1120s properly, or even recommend that you need an 1120s when you need one. So that's important. You can also use a search engine, but just make sure that I mean that can bring you a list of three or four people to look into, but that's what you need to do Look into them. Don't just pick the first one on the list, because that just means they spent more money than anyone else on the.
Speaker 2:SEO. So you need to go and do some research and make sure that they're qualified, competent and personable, Cause that's important too. A lot of people are really smart, really good at doing returns, but are they're going to take a year to do your return and never call you back? That's probably not someone you want to work with.
Speaker 1:And someone that doesn't have a teaching heart or someone that you just don't jive with. You know a lot of people would tell us that they were scared of their CPA. I don't know why.
Speaker 2:One in particular.
Speaker 1:Yeah, no, a lot of people have said that Like, oh, y'all are so nice, I was terrified to send stuff over because they would just get mad about little things or I don't know.
Speaker 2:I would say you know that we work for you, right? So just saying, I mean you know we're not going to get mad.
Speaker 1:Exactly so that first initial meeting, when you do find someone that you want to meet with, one of the things you're looking to see is that do you jive well with that person? Do you like the way they explain things? Do you feel like that they can teach you along the way All of those things and make sure you're not scared of them?
Speaker 2:Yeah, that's important.
Speaker 1:Another thing you want to do in this first initial meeting is come prepared with your questions. I'm sure you have a lot of questions. Make sure that you take time to put those on a sheet of paper and kind of get organized, because you're going to want to take notes, because likely you're going to forget what they say about some things if it's something a little bit down the road from your business.
Speaker 2:And they'll tell you a lot of things that they know. You need to know that you didn't even know. You need to ask, and that's good, but when they do that, it's going to make you forget the questions you wanted to ask. And so, like Taryn said, make sure you write those down and bring them to the meeting, because you'll think you're going to remember, but you won't when they start jabbering on about God only knows what taxes.
Speaker 1:Good Lord, I know Boring. Now in our new business guide we do have a list of questions. You should ask a CPA if you're about to start working with a new one. You should ask a CPA if you're about to start working with a new one. A lot of these you could ask someone if you got a referral. So definitely, if your I don't know in-laws have a CPA that they love, they've worked with in their business for a while, you would be asking them kind of what is the price? What are their turn times like? Do they do business returns, all of those things. You might have found out the answers to some of those, but if you didn't, we can go over some of these questions that are very important to ask before you start working with a new CPA.
Speaker 2:Are they a tax season only CPA, or are they open all year? Because they do have some of those. They check out after April 15th. But you want to do some tax planning to make sure you don't pay as much next year as you just paid this year. So you want to make sure they're going to be available for that too.
Speaker 1:Yes, a lot of CPAs kind of disappear in the summer and things, and if you're a business owner, you're likely going to need more than just tax return preparation. So that's another thing to ask, so that you know you're not going to be ghosted all year. Like I was saying earlier, a big thing is how quickly are they getting back to you? Now, we really like to get back to people within a day and so that if they send us an email, we like to respond quickly, and that is not the case with most of the firms.
Speaker 2:It's not even the case for us during tax season, but hey, it's two or three days. It's still a lot better than what we're hearing from a lot of people coming from other CPA firms. We try to be as responsive as possible, though.
Speaker 1:And if you are getting someone to respond to you, is it the actual CPA? A lot of times, especially in bigger firms that we worked at, it was like they did not want you to talk to the CPA ever. You could call, you could email and likely you're not going to get to talk to them. You can talk to like the lower level staff accountant, but you weren't really going to get to talk to them unless I guess it was like the biggest client.
Speaker 2:And a lot of times the lower level people are scared to make suggestions or to make changes just because they don't want to rock the boat, and it's almost like they feel like they're saying that their boss that had been working on it before didn't do a good job or didn't think of everything, and so they're hesitant to do that, and so you might end up missing out on opportunities that, if you're working directly with the person in charge, sometimes that can be better.
Speaker 1:Yeah, so you want to know if you're going to have access to the person that's actually preparing your return. Of course, you definitely want to ask pricing, and that will be generally a price per hour, and then you should ask what they would charge for your tax return.
Speaker 2:Right. Some people are hourly on everything, including the tax return. Some people have a mix. Ours is kind of a mix. We'll give you a flat price for the tax return so you can know what to expect. But general consulting does have to be on hourly because there's no way to know exactly how much time certain things will take.
Speaker 1:But if you book a meeting with them, there should be a specific charge, whether you're taking 15 minutes or an hour. What is that hourly rate? And that's really important to know. It's also important to know what the ballpark pricing is for tax returns, and they will vary. But, like Kirsten said, we do give an exact quote for a tax return once we've looked at it and seen how complex it is and how long we think it's going to take us. But sometimes people don't and they get a really big surprise. So you should definitely at least ask that question.
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Speaker 1:Now back to the show. Another thing that we see that confuses people because I'm sure people do it way differently is if you want to contact your CPA and have a question, whether it's on the phone or email, are you going to get charged for that phone call or email? And nine times out of 10, you are. It's just like a lawyer. They're going to be tracking their time for clients, because that's why they're in the office is to bill out for time. So if you're doing that, what is the protocol? Are they going to send you an invoice every time? Is it going to be a monthly thing? How does that work? Because you want to know how it works so that when something does come up, you don't have a big surprise.
Speaker 2:And what we do is we let people send us quick questions by email and we'll usually respond to those and we don't send invoices for that. But if the question is more complex and I don't want to have to write a whole book just to answer their question, then I'll just tell them, like you're going to need to schedule a 15 minute phone call and then we'll go over it. It will be a lot easier that way.
Speaker 1:Yes, and that is some etiquette we can talk about. Can you send a quick email to your CPA? Yes, of course we all communicate via email now and that's a really easy way to do it. But you don't want to send like we've seen like pages and pages of like. Here's my first question in this paragraph. Here's my second question, here's my third question.
Speaker 1:And that just that would take forever to respond. That really needs to be a paid meeting or a paid phone call. So just know that they're going to be billing in time and keep that in mind. Oh, this one's a biggie. What is the turnaround time for your tax return? So, if you didn't know, business tax returns have due dates in March and the personal tax returns and the C-Corps have the due date in April. So if you gave your CPA all of your stuff in January, would they have it done by the March deadline? That's a great question to ask, like how early do they need your stuff in order to prepare everything by the deadline? We've seen a lot of times where people said, oh, my CPA had my stuff for six months and they still haven't got it done.
Speaker 2:That's too long.
Speaker 1:That is way too long, way too long. I don't know why that happens. Maybe that happens a lot after the deadline, whenever people are getting their stuff in late, and then maybe they're taking vacations and things and then they just get way, way, way back. I don't know, but for us, whenever a tax return comes in, we get to it as quick as possible and our turn time might get up to a month during tax season, but it's never six months.
Speaker 2:Right, and even six weeks could be possible. But if you just think about the math on six months, well that means that they have to stop taking clients June 30th, Because if it's taken them six months to do something, then they won't even have it done by the end of the year. No, that actually means they have to have. It has to be March 15th, because they have to have it done by September 15th, so even if they extend it. So that means if it takes them six months, then any paperwork they get after March 15th they can't be clients. That just doesn't make sense. It means that they backburnered you for some reason.
Speaker 1:Yeah, or a lot of people. We're not sure, but this does happen a lot. They will extend a bunch of clients without really telling them and then just provide very little communication.
Speaker 2:So we make it really clear. We say if we get your stuff by this date, it's guaranteed. If we get it in between these dates, it's a maybe, and if we get it after this date, you're for sure going to be extended. And we let people know pretty far ahead of time and then we remind them again when they give us their stuff, like, hey, we're probably going to have to extend this or we're definitely going to have to extend this, and that gives people the chance to you know, use another CPA if they're like I don't want to extend. And hey, there's no hard feelings, we just we can't get to it by the deadline. So you know that's something we're upfront about, but not everyone is. So you might have to ask and just make sure that you understand.
Speaker 1:And that is something that's important to note If you've never worked with a CPA before. Everybody in the entire country is trying to get their tax return done and, like I said, there is a shortage of people doing tax returns, so you can't turn in your things, let's say March 5th, and expect them to get to it by March 15th. It's just, there's just too many people now. If they can't get to it, it's because they don't have any clients and you probably don't want them to be your CPA. But we did have a few people that were new saying, oh, like I thought, if I got you my stuff by the 10th, it would be ready by the 15th. And we were like no, just don't rush, we'll file an extension. Um, there's no way we would be able to get to it that quick. So you're going to need to make sure that your timing is good, make sure you have your books all set and get organized as quickly as possible in January if you don't want to extend.
Speaker 2:Another thing you might want to ask about is what all services do they offer, and do they offer different levels of service? And what I mean by that is do they just do tax returns? Do they do planning and projections as well, which I think is very important? And on top of that, can they handle your sales tax, if that's something you just don't want to do? Will they do your monthly accounting and your bank reconciliations, things like that?
Speaker 2:You know, most of the time those things are going to be extra, but a lot of people, if they're going to pay for those services, they would just rather have it all in house with one place. Another would be payroll and payroll taxes. We offer all of those services. They're all charged separately. We do offer some package deals as well. That includes kind of everything, if that's what you might want to ask, because if you're not planning to do those things, then you don't want to end up with a bookkeeping firm, a tax accounting firm and then a payroll processing place all at different places. Or maybe you do, maybe that's the best way for you, but you at least want to know whether you have to do that or not.
Speaker 1:Yeah, that does make things a little bit more complicated. So if you are looking at maybe hiring those services out, that's something to bring up in the first meeting and you can just get pricing or more information about that. But I do think it's very important to bring up now for those that have never worked at the CPA before. All of these things are billed separately. So if they're doing your tax return, that's going to be one fee. If you're like, hey, I want you to start filing my sales tax reports, that's going to be probably a monthly fee, a different one. If you want them to file 1099s, that's a different fee. So each thing that you're having them do is going to be a separate bill and I mean that makes sense to me. But we have had some people be surprised that their tax return fee didn't cover us also filing all their 1099s or all of the services that you need all year, and it doesn't. It's just the service to file your tax return.
Speaker 2:Right, oh, and a big one that people sometimes think is included. I think it's because TurboTax and H&R Block offer that audit shield and it's like you pay 25 extra bucks and it's like insurance, basically against getting audited.
Speaker 1:Which is a scam. I've heard a lot of people talk about that.
Speaker 2:It's a scam for a lot of reasons. First of all, your chances of getting audited, especially if you're using TurboTax or H&R Block. It means you'll probably have a real basic, simple return. Your odds of getting audited are less than one-tenth of a percent, probably. And on top of that, what do they mean by audit protection? They don't really mean what you think. They're not going to send a lawyer down there to go to court for you for that $25 you paid and I don't think that's included. Now, I be wrong, so I don't. Don't sue me. H&r Block if you do, but no, it's not.
Speaker 1:I've had people use it and that's not what it is at all, so no help.
Speaker 2:We people ask me do we represent people if they get audited? Yeah, it hasn't happened yet, but yes, we would. But it's not included in the price because that's something we can't plan for the IRS. Sometimes they just send a letter and we just send one back and explain. This is why we're right and you're wrong. But sometimes they make you go down to their office in Fort Worth park at their ridiculous place that's $15 a day for parking and sit in their office for eight hours and go through receipts Whenever they need you to do that. It costs more money just because it takes up my whole day of work time. So that's something you need to be aware of.
Speaker 1:And that's just getting super unlucky because if there were something done on the tax return that were incorrect, that caused an audit, I can't even think of what this would be in the scenario. Of course, we would straighten it out for free if it were something on our firm, but that's likely not the case. The likely case is that you get randomly audited and that just sucks.
Speaker 2:Right, and we have helped people with audits before, but never on a return that we prepared so far knock on wood. But we try to be very careful, be very honest and file correctly so that that doesn't happen. But we have represented people that someone else messed up their tax return, did something they shouldn't have, and then we did our best to rectify the situation afterwards.
Speaker 1:And if you want more about audits on tax returns and how to avoid one and how likely you are to be audited, we do have one a couple episodes back, so check out that episode. All about audit.
Speaker 2:One more question that we have on this list and then we'll move on to the next thing is that you should ask if they're familiar with your industry. So now we're not talking about whether they're familiar with business returns versus individual, but I'm talking if you're a farmer. Do they understand farm tax and accounting? Because it's different. There's special rules for farms. You know, there's ways that you have to treat cattle. Is there inventory If you do one thing with them, their assets if you do something else, and it has to do with whether you're breeding them.
Speaker 2:So, yes, the IRS does care whether your cows are having sex and that seems a little nosy to me, but you know, nobody asked me or you know if you're in oil and gas there's very specific rules about depletion and the way that you calculate that if it's for royalties and another way if it's working interest, and it gets very complicated. So if you're not familiar with that industry, then as an accountant you're supposed to say no, I either need to do a lot of research and get familiar with this or I need to pass you on to somebody else. But a lot of times they won't say that unless you at least ask them hey, have you worked with a lot of restaurants? And if not, then maybe it's something they can get acquainted with, or maybe you need to find somebody else.
Speaker 1:Yes, lastly, what documents should you bring to this meeting if you are meeting with a new CPA?
Speaker 2:So when we have a new meeting, a new client meeting, we provide a list of all the things that we want them to bring. So whatever they ask you to bring, of course, bring that. But in addition, you should make sure or if they don't tell you what to bring you should make sure you bring a copy of your most recently filed tax return. And if you started a business, bring your organizational paperwork, including the LLC filing paperwork. And if you have an operating agreement or a partnership agreement or something of that sort, maybe that a lawyer did for you or that you did yourself online then make sure you bring that with you as well. Your EIN, which is your employer identification number, and any other paperwork that seems even remotely accounting or tax related. Go ahead and bring it. They might not take it, but it's worth bringing just in case.
Speaker 1:Better to have it and not need it. You can always take it back home Exactly, and that just gives them all the things that they need to really look at your whole business, figure out what type of tax entity you're going to be, what kind of tax return you need to file, all of that. So if you show up without that stuff, there's very little that they can help you with for your specific tax return.
Speaker 2:Right If you just come in and ask them can you save me money? But you don't have a copy of your tax return. That's just kind of like walking into Walmart and asking them how much your grocery bill is going to be before you put anything in your cart.
Speaker 1:Great, great example, all right. Well, that is all we have for you today, hopefully, if you are starting a new business or just started a business and you are looking for a CPA, this really helps you find one and know what to do once you do find one.
Speaker 2:So until next time. Thank you so much for listening to.
Speaker 1:What your CPA Wants you To Know. Podcast CPA wants you to know podcast.
Speaker 2:This podcast is intended to provide accounting and tax information for educational purposes only. All tax situations are unique and should be handled with the assistance of a tax professional.