How to Know if You Have a Good Accountant
During your career you are going to need to interact with a number of professionals. You will need an accountant, at some stage a couple of different lawyers, if you are smart probably a practice management consultant and, if you are really smart, a good financial planner. These professionals come in all flavours: really good, good, so-so and terrible. Picking the right flavour will contribute in a huge way to the success of your practice, your financial stability and your enjoyment of life in general – wow that sounds ominous, but it’s true.
Let’s start by setting out some guidelines to help you pick or determine if you have a good accountant. Being an accountant myself, I can speak to this matter with some authority. The first thing to know is that’s some accountants specialize, while others do not. You want an accountant that specializes in professionals, with a large percentage of those professionals being dentists. You definitely don’t want to be one of the half dozen dental clients that your accountant has. It’s pretty easy to find out if your accountant specializes in healthcare professionals – ask. If more than 5% of their client list is comprised of clients other than heath care professionals, particularity dentists, then find another accountant – if you don’t you will be making a BIG, and likely costly, mistake.
The second very important thing to know is that some accountants are proactive and some are reactive – you want the former. A reactive accountant is one that will give you an answer, hopefully the right answer, if you ask the question. The challenge of course is knowing the right questions to ask, and in most cases you probably won’t. If you have a proactive accountant, you won’t have to worry about asking the right questions because they will be the ones interrogating you. It is a little harder to gauge whether your accountant is proactive or reactive because they are all going to tell you that they are proactive. If your accountant sits down with you on a regular basis to review your business and financial affairs in detail, you have a proactive accountant.
The following is a list of additional things your proactive accountant should review with you:
- Your accountant should help you prepare an annual practice plan, setting out production, cost, staff and any other important and measurable objectives to be achieved during the upcoming year.
- Your accountant should not only prepare your annual financial statements but should also explain them to you and compare them with both previous years and with your annual practice plan.
- Your accountant should have at least one mid-year interim review to avoid year end income tax and operational surprises.
- Your accountant should prepare and explain not only your personal and/or corporate income tax returns, but also any HST, T4 and T5 returns that are necessary.
- During the fall of each year, your accountant should provide you with an estimate of your tax liability for the current year so you can make sure that you are in a comfortable position to pay your taxes.
- During your annual and mid-year review, you should be receiving advice on legitimate tax saving strategies and ideas.
- As part of your practice plan you should have a projected cash flow plan for both the practice and your family, which should be reviewed during your annual and mid-year reviews.
- A plan should be developed and monitored annually to manage and reduce your outstanding debt.
- On an annual basis, your net worth should be updated, reviewed and compared to your planned net worth and to previous year’s net worth.
- The current results of your investment portfolio should be reviewed and if deemed substandard, connections with appropriate investment advisors should be coordinated.
- Your accountant should help you prepare a retirement strategy and make sure that you are on target to meet your objectives.
- Your accountant should review with you and make sure that you are up to date with such items as insurances and wills.
- In general terms, your accountant should make sure that you have a well thought out career and personal plan and that you are following the plan.
If your accountant is not providing you with, or prepared to provide you with at least the services set out above, you need a new accountant. If your accountant is providing you with the above services, a nice side effect is that what you save from the advice you get, will more than pay for the annual cost of your accounting fees. A good accountant is probably your most important professional; make sure you choose the right one.