Glenn Van Etten is one of the founding members and owners of Brighton Cromwell, which purchases and delivers parts globally for the defense industry, and GovBuy.com, an e-commerce purchasing platform for government and tax-exempt buyers. He is also a member of the Entrepreneurs' Organization (EO) of New Jersey. Van Etten contributed this article to Business News Daily's Expert Voices: Op-Ed & Insights.
An accounting firm is one of your company's most important vendors. The firm's ability to reduce your tax burden allows you to reinvest in your company's growth, so you must find the right firm to help you achieve that goal. Size is critical, and as your business grows, you may need to change accounting firms.
My company is on its third accounting firm. After outgrowing our first choice, we went to one of the big six firms, which turned out to be way too big for us. Now, we are working with Chris DeMayo at WithumSmith + Brown, a firm that is just the right size for us. Working with this firm, we've also learned that accountants can do more than just file taxes. We have an integrated strategic partnership with our new accountants that allows us to make moves based on their advice. For example, they recommend areas of the business we should grow that will also reduce our tax burden.
It can be difficult to determine if your company is too big or too small for a particular firm. It took us years to realize we had outgrown our first firm, and by then we had left tens of thousands of dollars on the table that could have been spent reinvesting in the business. Here are a few signs that it's time to change your accounting firm.
1. You can't get someone on the phone
This may be a sign that your company is too small for the accounting firm you've chosen. As a general rule, you never want to be a firm's smallest client. If the firm is too big for your company, you may receive bad service. For example, we had a misfiling on our taxes that needed to be addressed after tax season. It took weeks and a lot of follow-up phone calls and emails before I could get someone at our accounting firm to help us, which added unnecessary stress to the process.
2. The firm doesn't know what your company does
If you only talk to your accountant during tax season, and you need to explain what your business does every time you talk, that means you are either too small or too complex for your accounting firm. I recommend finding a firm you can communicate with throughout the year and that takes the time to get to know your business.
3. You find mistakes
You don't expect accountants to make mistakes that you can catch, but it sometimes happens. If your accounting firm forgets to file your capital gains, for example, it's time to find a new firm — no exceptions. Even without an accounting degree, you should be able to spot basic mistakes. Keep an eye out for them.
4. The firm presents only the most basic deductions
Business owners are eligible for many deductions, and your accounting firm should present options beyond simple child and health-care deductions. Make sure you get the option of deductions like Section 179, which allows for rapid depreciations of new corporate assets. It is a great way to improve operating cash flow.
5. The firm doesn't bring proactive ideas on easing the tax burden
Our new firm broke our business down into the different areas we service. They then used that analysis to determine what types of structures and tax incentives would most benefit each of our divisions. Make sure your accountant analyzes your business in a similar way. If not, the accountant probably isn't really trying.
6. You are the firm's largest client
Just as you don't want to be your accounting firm's smallest client, you never want to be your accounting firm's largest client, either. Don't let someone learn on the job while doing your taxes. Find a firm that has experience with companies similar in size to yours.
The views expressed are those of the author and do not necessarily reflect the views of the publisher. This version of the article was originally published on Business News Daily.