Instead, you’ll be asking your friends and family for recommendations.
So, like a large percentage of Gen Y business owners, if your family already has an accountant, that’s where you’ll be heading. Let’s call him your dad’s accountant (though of course it could be your mom’s or siblings’ but we’ll just call it that to keep it simple).Your dad’s accountant already does your family’s taxes.
In fact, he (yes it may be a she, but for simplicity…) knows your family quite well. Your dad says you should get in touch with him so you do.
You make an appointment to come see him so on the day of, you sit in the waiting room and are led into an office with a large wooden desk and papers piled high around you. After your meeting you’re asked to send a bunch papers to his office and he’ll prepare your tax return.
Since he’s the expert, you’re not quite sure what’s going on but agree to provide him with the documents he asked for. Next thing you know, a few weeks later you’re given your financial statements and told how much tax you owe – then with a hand shake and signature say “see you next year.”Many Gen Y entrepreneurs admit to having a similar experience with their dad’s accountant. If you asked one of them if their accountant did a good job, they’ll generally shrug their shoulders and say “I guess so.”
Here are then a number of common problems that entrepreneurs experience with their dad’s accountant:
Since it’s your family’s accountant, many times the advice you receive is looked upon as a “favour.” As you’re starting out your business, you don’t want to pay much for services. The accountant knows that your dad is a good client and agrees to do your taxes as part of the work he does for your family.
The problem is that next time you have a quick question, you may not want to “bug” your dad’s accountant.Which is precisely the problem – he’s still your dad’s accountant, not your accountant. Despite having an accountant, many entrepreneurs report asking their other entrepreneurial friends for advice through the year rather than their accountant. This may be due to a number of factors, all of which problematic, be it a fear of additional costs or not believing that the accountant has expertise in the area in question.
Ultimately the issue is that many entrepreneurs don’t develop a close enough relationship with their accountant that they feel he is their accountant. As a result, they don’t get the level of advice and service they deserve throughout the year.
You should have a pretty good idea of what’s going on in the financial part of your business[/caption]After receiving their financial statements and tax return from their dad’s accountant, many entrepreneurs will admit that they’re not sure if their accountant did a good job.
Perhaps this is because they’re not interested in reviewing the financial statements; however, often times it is because the accountant did not take the time to go over the return and clearly explain the important items in simple language.
When you walk out of a meeting with your accountant, you should have a pretty good idea of what’s going on in the financial part of your business and the basic techniques used to optimize your tax bill.
If you don’t, you’re going to need an accountant who speaks your language and takes the time to do so.
Your dad’s accountant is really experienced. He’s been doing this for years. He could probably tell you what paragraph in the income tax act that deduction relates to.
Yet when it comes to technology, that’s probably not his area of expertise. He doesn't really care how you get the year end numbers to him – what’s important is that all the papers are there and that your accounts are reconciled.
Whether you scribble your daily transactions on graph paper or send your receipts to be digitally scanned and automatically entered into your cloud accounting software is going to have a significant impact on your business’ efficiency. Unfortunately, many entrepreneurs aren't updated on the latest accounting software tools in their industry simply because they haven’t been told. An accountant who looks at your current system and can make improvements based on the wide range of tools available in today’s market can improve the way you do business.
Don’t sell yourself short. As a business owner, ensure that your accountant is just that – your own accountant.
If you’re going to use a family accountant, make sure that you feel comfortable calling any time you have a question, that they stay on top of technology and that they speak your language – explaining the important items on your tax return and answering your questions in a way that makes sense.
If not, start looking for someone who does – you’ll see it will have a big impact on your business.