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Dating an accountant – the 10 point checklist every entrepreneur needs

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In the entrepreneurial world the relationship between the entrepreneur and their accountant is significant and intimate. Exposing our financial matters to someone else feels much like showing up to a meeting without our clothes on; and we have good reason to be selective about whom we choose to entrust with our innermost confidences.

At the outset of the entrepreneur/accountant relationship it is helpful to consider that it is commonly an alliance involving two very different types of thinkers.

At the one end of the “stereotype” spectrum we have the accountant who is typically analytical, highly educated and trained to follow specific rules and systems. At the other end of the spectrum there is the entrepreneur who has varying levels of formal education added to a high degree of ‘street-smartness’, on which he capitalizes to enhance his ability to think creatively and courageously. To the entrepreneur, rules are regarded mostly as a point from which to deviate.

Clearly, this alliance is unlikely to be a natural match and therefore it is feasible to assume that some work will need to be done to effectively set a solid foundation for this partnership.

I knew that I had found the right accountant in my first struggling business venture when I asked, “what is the GST (VAT in South Africa) amount due for this period?” His answer was: “what would you like it to be?” Although this answer might sound as if he was suggesting something unlawful, that wasn’t the case at all. He had spent his early career as an employee and advisor with the Inland Revenue department and was very respectful of their requirements. He simply understood that there were several ways to follow taxation requirements legally without disadvantaging a fledgling business.

If you read the previous paragraph and immediately felt shock and horror at the question “what would you like it to be?” there is a chance you have a natural affinity for appreciating and following rules. If you felt immediate interest in the possibility of a different, yet legal, solution, you might have a natural tendency to think outside of the commonly accepted rules.

We are all wired differently as individuals ─ regardless of whether we are an entrepreneur or an accountant. Understanding behavioural scientific theory can be very helpful to all business relationships.  For now, we can bypass that theory and work within a framework of questions to ensure that we formulate the right foundation and working relationship between ourselves, as entrepreneurs, and our accountant, as a supportive and vital role-player in our business.

There are two key areas that need to be resolved from the beginning of the entrepreneur/accountant relationship: trust and transparency. Trust comes first and must be in place for transparency to follow on a pre-determined and consistent basis. Also, trust grows in a specific environment, and the entrepreneur needs to feel that the accountant is willing and able to be of service to his business, whilst adhering to the requirements of the Inland Revenue department in question. These two areas are not mutually exclusive.

For an indication of the style of accountant you might already be working with or are planning to work with, consider these common traits of the three EnQ (Entrepreneurial Intelligence) categories, the compliance accountant, the business coach accountant and the pro-active profit accountant:

 

Compliance

Business Coach

Pro-active Profit

First appointment

Speaks mostly about the SARS (South African Revenue Services) requirements and how he addresses them effectively with the year-end financial statements.

Speaks mostly about what he does in his role and what (he assumes) you need to do for your business to succeed. Makes frequent reference to generic systems such as “the 5 step plan to increasing your revenue”.

Listens more than he speaks and asks questions to ensure his understanding of your business needs.

Fees Quoting

States his fees according to the standard SARS requirements laid out for financial statements.

Quotes a set rate for financial statements and quickly offers a special rate to include additional coaching services.

Tailors his services to your business needs and prices accordingly and clearly.

Action from date of appointment

Waves you goodbye with instructions for sending in VAT information if applicable to your agreement and indicates when to send him your monthly or annual account information.

None instigated from his side in terms of your accounts other than an indication of when to send him the monthly or annual information.

Assists you with a tracking system to monitor monthly progress against financial forecasts and to establish “bottom-line indicators”.  Ensures that data capture software is compatible between your systems and his. Discusses implications of provisional taxes, GST on cash flow and paye and ACC levies (in NZ).

Monthly contact

None. You initiate all queries and get billed according to the time taken to answer them. Often a measure of research is undertaken to verify his explanations and is charged for, despite the professional rate you are already charged for his expertise.

All business coaching and networking events are filled with helpful and positive business information. You initiate all accounting queries and are charged for hours spent to answer them.

A monthly “check –in” on bottom line indicators is maintained with a clear and routine confirmation of year- to-date progress on annual accounts.  Any profit or loss indicators en route, that might create cash flow issues, are highlighted in advance or as they are recorded. Any changes in financial legislation are brought to your attention immediately.

Year –end process for Financial Statement compilation

Waits for you to submit year-end accounts. If not forthcoming, follows them up well into the next financial year. Completes the financial statements and charges accordingly with little communication other than questions relating to any unclear information provided.

Asks if you would like to sign up for the next year’s coaching course. Waits for you to submit year -end accounts and these are completed well into the new year. The results are seldom utilized to add additional relevant information to your coaching course.

Provides a clear format to follow to easily compile and submit year-end accounts and all supporting information. Charges are accurate as per the agreement.

Financial results tend not to be a surprise due to monthly tracking accuracy.

 Of course most accountants will not fit exactly into the above categories and we might recognize those we already work with as having some traits from each.  For me, it comes down to having the right combination for my business needs.

To re-cap the areas already highlighted in the last category, and at the risk of appearing repetitive, this is what I need from my accountant, as an entrepreneur:

  • A tracking system that places us both on the same page as to what my bottom line results are on a monthly basis.
  • Transparency and understanding as to what accounting services are needed and how and when they are charged.
  • Clear reasoning as to how any coaching offered is tailored to my business needs or might assist me above and beyond their investment costs.
  • Complete honesty between the parties, even if this means either one or both has to be open to constructive criticism from time to time.
  • Pro-active guidance as to how tax requirements might affect my cash flow in the form of GST, income tax, provisional tax and dividends tax and how to manage these influences to my best advantage.
  • Advance or immediate notification of changes in government legislation that might affect my companies’ financial commitments or systems.
  • Willingness to filter the vast amount of financial expertise involved in company accounting systems to just what I need to know, when I need to know it. By filtering and channeling this information effectively, he increases the value and intensity of my focus on my business

10 Questions to ask your accountant that will cover all these bases and encourage him to work with you in a pro-active profit manner:

1)      How does your fee structure work and how can your services and charges be tailored to my business needs?

2)      How can I structure my data capture to suit your processes best? (Check on software compatibility to ensure the least amount of doubling on monthly and annual data capture)

3)      When are GST returns and payments due, and what are my options in terms of working from invoices we have issued or money actually received?

4)      How is provisional tax calculated and at what point might it become an issue to my annual cash flow forecasts?

5)      What are the implications of income tax on profit that I might need to be aware of?

6)      How does dividends tax work and how is it best to manage dividends declarations?

7)      Can you advise me on a simple monthly tracking system to monitor my bottom line results against forecasts that might fit in with your systems?

8)      If you offer coaching, how is your coaching material specifically related to my industry and business progress in accounting and non-accounting related areas?

9)      By what communication method do you make your clients aware of changes to the country’s legislation regarding company taxation and related issues?

10)  Do you do the work on my accounts yourself or does another staff member complete them?

In conclusion

Accountants are an indispensable part of any business venture. The entrepreneur is well positioned to take the lead in terms of setting the foundation for the type of support and services that his accountant can provide to match his business needs. Cultivating a pro-active profit type accounting relationship provides meaningful and valuable support to all species of the EnQ entrepreneur.

Author and copyright: Sandy Geyer – internationally renowned author and speaker, and owner of training practice EnQ. Click on the link for more information www.enqpractice.com

 

Copyright (c) 2016, the credited author
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