1. How do I pay less taxes?
The supreme court said in ruling that a taxpayer is allowed, encouraged to use the tax laws to pay as little taxes as is legal. The fact is that unless you are dealing with a tax accountant, most accountants have no idea. Tax accounting is more of a specialty area. Why you would use an accountant (which means he uses a tax accountant and bills you for that) instead of hiring a tax accountant to start with is beyond me.
3. How do I cut costs?
THIS is definitely in the realm of the accountant you pay. He should be analyzing your costs and warning you that certain ones are increasing at an unusual rate. If all you hire an accountant for is to push numbers - stop wasting money and hire a bookkeeper. There is a cost savings right off the bat.
4. How do I improve my cash-flow?
Cash flow analysis is taught in accounting classes last I checked - why would you not expect your accountant to help with that?
2 & 5 are managerial type things I agree they are not accountant specific questions.
I would love to see the statistics, and especially the questions feeding that data, that supports the concept that small businesses are more likely to succeed with an accountant than without. Having taken statistics, the questions are the key, ask them the right way and you get the answers you wanted, and if that fails, keep in mind the old saying, "figures lie, and liars figure" applies to statistics. You can make numbers say most anything.
Hi Rustler, The piece is meant to be provocative... as those 5 questions ARE the most commonly asked to accountants and probably the reason you hire an accountant in the first place... It is at least the most common reason people hire me.
This is the first of some pieces in which I use the concept of business advisory as the catalyst for driving value to our clients as computers/AI/quickbooks automate some of these things and can deliver numerical answers within seconds... and what will the role of the accountant have?
hope that makes sense, where I am coming from... Thanks your comments by the way, I am agreeing with you actually!
Well if you are trying to talk about driving value to accounting clients and how software can help - I don't see where this article even introduces that concept.
Hector Garcia’s five questions you should not ask your accountant:
That is a pretty cut and dried statement to me, what connotation did I miss?
The Sleeter group did a whole series on your subject not too long ago, I did not agree with all of it, but it did cover your proposed subject very well, have you looked at it? Sorry I do not have the link, wasn't important enough to save.
I would like to add, the important thing is to find an accountant who understands your business and industry. As Rustler said, some of those questions are business management questions. A good consultant who specializes in a particular industry should be able to offer better advice on how to cut costs and grow the business. When I bought my company 10 years ago and inherited the former owner's accountant I quickly realized he didn't have a clue about how our business operated or the industry for that matter. He barely did a passable job on our annual taxes. The more I looked into those the more mistakes I found. He swept an awful lot of things under the carpet, I'm sure because he was so rushed during tax season and had no extra time to ask about specific transactions in our books. I've been doing my own books and corporate taxes for the past 8 years (easy with Turbo Tax) and cleaned up all the problems.
Re success of small businesses with or without an accountant, I have heard and seen that poor bookkeeping is a leading cause of small business failure. A good bookkeeper/tax preparer can do most of what an accountant does for a fraction of the cost. Medium and large businesses can much better afford accountants. Cheers!
These are very good points. I am sure @hectorgarciacpa appreciates the feedback. Do you think one way to alleviate shady accounting is to work with an accountant/bookkeeper on a regular basis to ask questions throughout the year? Or is it more about finding a good fit?
Glad you took the reins and learned how to do a much better job. What's an acceptable level of accounting knowledge business owners should know so they can spot patterns like you did?
We should write a companion piece about signs/red-flags of poor bookkeepers. Absolutely. Where do we start?
I have found that asking a CPA a ton of questions during a tax sesson may not be productive. Hire the CPA for a consultation and email the questions ahead of time.
CPA may or will not understand every aspect of your business without you investing the time and money to get what you are after. Most of us are fairly good at the microbuisness out there -- and the vast majority of our customers are microbusiness. Just don't about sourcing barely for the bakery.
And we are not marketing experts, but can help you find the right consultant for your needs. I would not ask my doctor to analysis my heart, but he will find me a specialist.
It is a good take on it... I agree with your assesment.
I feel deep inside that some accountants have the abiliy to become great advisors for things that are beyond the numbers; which is why I want to provoke small business owers to find one that also dares to help you find answers to those questions.
James, the issue most of the times is not "shady" bookkeeping, is more "lazy" bookkeeping, shortcut driven and with the intent to just lower the taxes...
And I think that AFTER the books are accurate, AFTER the tax-related choices are optimized, AFTER the budget is created to help the business control their expenses, and AFTER the payroll controls are put in place to make sure there is "waste" created through the payroll system, AFTER the obvious opportunities for sales growth have been addressed, and AFTER all the mechanisms for improving cash flow are put in place... it comes time to move beyond the role.
But, often I find myself with clients that askt he same 2-3 questions EVERY SINGLE year, and somehow expect a different answer... and because they are stigmatized that the accountants have ONE role; which is to "stick to the script"; to me, it becomes a waste of talent and energy.
So I did this video to get THESE exact reactions "Accountants are not supposed to be doing that stuff..." to challenge folks to think with an Advisory hat... Otherwise, who will be the business advisors of the future? Marketers? MBA's? Engineers? I propose, it should be the accountants (but the ones that WANT This and not see this article/video as an attach to the profession... instead just see it as some sort of "tough love" encouragement to think outside the limited back of tricks that "accountants" are supposed to have.
This is fantastic insight. Thank you. I think the characteristic you are talking about is ubiquitous across industries - there are just some folks who aren't genuine or out to do the right thing by others. They're driven by the bottom line, cold facts. Avoid them.
To your point, the high-level conversations you are encouraging others to have should be done after the usual accounting process is done. It's the natural "next step" of the conversation you should be having with your accountant/bookkeeper if you lean on them to look beyond the numbers.
"To challenge folks to think with an Advisory hat... " Absolutely! Again, relevant and applicable to any industry. Being able to ask the "what" and "why" and challenging yourself and others with those questions to think productively sounds simple, but it's a highly valued talent. Such a perspective lets you see the whole picture, not just a narrow perspective - not the parts, but the whole.
Right... but bottom line.. I get those five "do not ask" questions from all clients and I answer them with upmost joy.
But I know that if my clients only ask me accounting questions; I will only be their "accountant" - It is up to me to challenge the paradigm and nudge them to feel they can ask more, and while I may not have the answers, it does give me license to explore other areas where I can add value.
It is not a binary choice,but obviously the article and video is meant to be provocative and not informative, LOL
We have removed this post for violations of our Community Rules of the Road.
We don't expect everyone to agree - in fact, we encourage discussions with different perspectives. As long as the conversation remains respectful.
Inappropriate, demeaning or insulting language of any kind is not tolerated on QB Community. Learn more about how we’re building QB Community as a safe and supportive space.