Tax agent or accountant? Who to go to for advice?
MAX NEWNHAM
April 12, 2010
WHETHER you are thinking of starting a business for the first time, or have been in business for many years, it is vitally important to get the right advice. In a lot of cases people get this advice from accountants. Unfortunately not all accountants were created equal.
In many cases people believe they have an accountant, when in actual fact they have a tax agent. Tax agents tend to mainly look back and are focused only on completing forms for the tax office and other regulators. Accountants on the other hand, as well as taking care of the compliance work, are more focused on the business and are also looking forward.
If you regard preparing financial statements as an administrative burden rather than an opportunity to gauge the health of your business, and a visit to the accountant as only slightly better than a dental appointment, a tax agent will probably be more than adequate for you.
If on the other hand you want to ensure you are operating your business in the most tax effective structure available, and want ongoing advice on how to maximise your profits while minimising taxes, you need an accountant.
The best way to judge is by asking the following questions;
• Are you able to contact your accountant by phone relatively easily when you need them
• Does your accountant return phone calls promptly and no later than the morning of the day after your call
• Does your accountant suggest ways of improving your business or tax situation
• Does your accountant answer your questions in a way you can understand or do they say they don't offer advice in that area
• Is your accountant interested in you and your business, and
• Does your accountant pay fines for problems caused by them
If you answered no to any of these questions you more than likely have a tax agent.
For some reason business owners find it hard to change accountants. This can often be due to the misconception that a new accountant will not know enough about their tax affairs. Nothing could be further from the truth. A good accountant should, in only a very short space of time, and using the financial statements and tax returns prepared by the previous accountant, obtain a very clear picture of how a business operates and what the tax and financial issues are.
The process of selecting a new accountant starts with the first phone call. If your call is not answered promptly, you are placed on hold for an excessive period of time, and are put through the third degree by a receptionist, the chances are they will not be any better than what you currently have.
If you get through to the accountant without too much trouble, you should ask them what they try to achieve for their clients. If the answer is all about lodging tax returns on time and other compliance issues, they will more than likely be a tax agent.
If the answer is that they assist clients to maximise the potential of their business and the profits, while ensuring they don't pay more tax than they have to, they will more than likely be an accountant.
In the first interview, once they have a quick review of the financial statements and tax returns, a good accountant will be able to ask intelligent question about how you operate the business and what you want from it, and offer initial advice on where they see things can be improved.
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