Topics Every Accountant Should Address with Clients

The relationship between accountant and client is a relationship based on open communication and the exchange of relevant ideas, and this serves as the basis for decision making. Without the exchange of ideas between client and accountant there is no value added to the decision making process. Key to the relationship between both client and accountant is what can be viewed as an exchange of “relevant ideas.” For there to be an exchange of relevant ideas both parties need to establish what information the other party would likely need in the near-term and the long-term.

This article provides examples of information that the client and accountant will likely need for their decision making processes based on possible transactions contemplated over the near-term and long-term.

Timing for this communication is key, as this white paper notes. The start of a new year is the perfect time to touch base with your clients or reach out to new ones. Take the time to ask existing and prospective clients about their business plans overall. This is a good opener to uncover any activities they may have in the works that could impact them financially.

The following key business issues, as pointed out by Avalara, are examples of issues that should be a part of the presentation.

1. Company growth: If your clients are planning any major changes to their business, it could affect their valuation—and their taxability. Counsel your clients of any liabilities or changes in status that could affect them.
2. Financial planning. Budget tops the agenda for most companies going into a new year. But what about other financial issues that could impact the business? Now is a great time to do a portfolio review and talk to your clients about their financial future.
3. Risk Management. Close to 75% of small businesses don’t have a plan in place to protect their business from operational disruptions—either planned or unplanned.1 Broach the topic with your clients to ensure they understand the importance of continuity planning and how to mitigate risk in their business.
4. Inventory: For businesses that deal in the sale or resale of goods, keeping on top of sales tax rules and regulations is critical—and challenging. Many states now have nexus rules related to where businesses warehouse inventory or fulfill orders. Advise your clients to do a thorough assessment of their order process.
5. Tax compliance. State-imposed taxes can be just as onerous on your clients’ time as federal taxes. Ask them if they feel confident that they have adequate processes in place to comply with regulations. Discuss any new tax laws with your clients that could affect their business and how to implement changes to address them.

Furthermore, Entrepreneur magazine has identified the following additional questions to ask before hiring a tax accountant.

1. What’s the best way to contact you and how often should we be in touch?

This might seem like too simple a question, but clear, effective and frequent communication is the key to a healthy, beneficial relationship with your accountant. Establish early on how often you’ll connect, either in person, on the phone or online (via a video chat app like Skype, Google Hangouts or Facetime). Decide together if you’ll meet weekly, monthly or bimonthly.

2. What are some considerations I should consult with you about on an ongoing basis?

According to FF Venture Capital Chief Financial Officer Alex Katz, a skilled accountant should get to know you and your business well enough to regularly keep you aware of -- and swiftly and appropriately reacting to -- an array of factors that could effect your bottom line, for better or for worse. He or she should also be open to assisting you in weighing the financial ramifications of certain decisions, like whether or not to hire an independent contractor or a full-time employee, buy or rent an office space, or rent or lease a company car and much more. Your accountant should also work collaboratively with you in a way that makes it easy for you to consider and understand which actions you need to take now and in the future.

3. How can you help me grow my business?

A qualified accountant absolutely can help small-business owners expand over time, that is if have the right groundwork in place with you, Katz says.

4. How can you help me clamp down on my cash flow?

Your accountant should be able to help you develop an organized, effective cash flow model that allows you to adjust your operations in ways that help you survive shortfalls, as well as improve receivables and manage payables.

5. Can you assess the overall value of my business?

Your accountant should be up to the task of estimating your company’s fair market value in excess of your tangible assets. He or she should start by examining your financial plan and then execute a discounted cash flow (DCF) analysis, a common but effective valuation method. 

6. What are some special considerations for my particular industry?

Businesses in different industries come with their own unique accounting issues. Your accountant should be knowledgeable about the various ones that specifically apply to yours.

7.What are some common mistakes that I should avoid when working with you?

Not being 100 percent honest with your accountant is the worst mistake you could make, Katz says. “The truth will come out, either in the planning stage or in front of the IRS auditor.”

In conclusion, when engaging the services of a reputable accountant, it’s important to know what to ask and when. Timing and thoroughness are crucial to the process.