As part of my ongoing mission to stay up to date on the latest innovations in the fields of Accounting and Tax, I belong to a number of groups on social media focused on those industries. It helps to keep me informed on changes in technology, how my colleagues are running their companies, and occasionally seek help refining how I run mine. However, over the last year, it has also shown me an astonishingly common problem with the industry. I am writing this as a PSA to those who are not currently our clients.
Beware of anyone who calls themselves a “professional” bookkeeper, accountant or tax preparer, but cannot prove their experience or credentials. Companies are targeting under-qualified people and encouraging them to start their own Accounting practices. “Earn 6-figures working from home part-time” is a common ad that I have seen for this, seducing stay-at-home parents to buy a copy of QuickBooks and call themselves accountants. The training these companies provide their customers is about marketing and getting clients, not at all about how to actually do taxes or bookkeeping
Here is the thing most clients do not realize: the accounting industry as a whole isn’t really regulated. There are certainly laws that must be followed, but you would be surprised how easily some of these “professionals” can get around them. While the IRS is able to require that you must be an EA (like us) or a CPA to practice in front of them (meaning speak to them on your behalf, represent you in audit or tax court, etc.), anyone can be a Tax Preparer, charging the client for a tax return and stamping “Self-Prepared” on the forms.
There is no license required to call yourself a “Bookkeeper” and charge money for it.
Anyone can offer payroll as a service.
You literally do not have to have any experience or knowledge in order to start a company calling yourself a Tax Professional or Bookkeeper, and charge people money for providing service. Is it unethical? Absolutely. Is it illegal? Nope.
I am seeing hundreds of questions posted in accounting industry social media groups by so called “Professionals” which clearly show that they have no idea what they are doing, but they are charging their clients to do it wrong.
And who pays the price when someone who isn’t qualified does your accounting? You do. The client. Not the “professional” you paid.
The IRS will have very little sympathy if you hired someone who wasn’t qualified to do your taxes and they made a big mess of it. Additionally, your ability to run your company effectively hinges on you having reliable financial data to make decisions throughout the year. An unqualified Bookkeeper may be providing you with information that is completely bogus.
So, if you are thinking of having someone do your bookkeeping or taxes, here are a few questions I would recommend asking. I have also include a few acceptable and unacceptable answers.
– Where did you earn your accounting degree?
Acceptable answers include (but are not limited to): Any accredited university.
Unacceptable answer: I don’t have one.
– How many years of experience do you have?
Acceptable answers include (but are not limited to): 5 or more.
Unacceptable answer: 4 or less. Someone with that experience should still be working under someone else. They are still learning.
– Before you were on your own, who did you work under that mentored you on best practices for your work?
Acceptable answers include (but are not limited to): A CPA or EA. A larger firm. Look for specific answers here. Ask them to name the firm and the person who mentored them.
Unacceptable answers: Vague answers that include their friends who they won’t name, online courses, certifications provided by software companies and not licensing authorities such as the IRS or AICPA.
– What licenses or credentials do you hold?
Acceptable answers include (but are not limited to): EA Enrolled Agent, CPA Certified Public Accountant, IRS RTRP Registered Tax Return Preparer, CB Certified Bookkeeper through the AIPB.
Unacceptable answers: None, or credentials issued by for profit software providers or marketing companies.
– How much insurance do you carry for Professional Liability, Errors and Omissions, etc.?
Acceptable answers include (but are not limited to): This answer varies, but they should have some coverage present. You should make sure that they have ample coverage for all of the services you are paying them for.
Unacceptable answers: None. “I’m not required to have it.” “That’s not a thing in my industry.”
If the answers to those questions do not give you the warm and fuzzies about their competency, move along and find a provider who knows what they are doing.
View the original article HERE.
Kaleigh Canavan, a Colorado native, attended Regis University where she earned a B.S. in Accounting with a minor in Human Resource Management. Before founding Canavan Financial Group in 2013, she spent several years as an Account Manager for a local accounting firm in Littleton, CO. In August of 2017, Canavan Financial became Canavan, Syddall & Associates.
Prior to her career in Accounting and small-business, she worked for 6 years for a Denver concert promoter. Working within the ticketing department, production, merch sales, and behind the bar, she gained in-depth knowledge of customer service and the inner-workings of the music industry. She also has experience with retail management and sales training as well as customer service across many industries.
Besides acting as the President of Canavan, Syddall & Associates where she enjoys working with business owners to grow and improve their own companies, she enjoys spending time with her family, cooking, and playing video games.
Learn more about Kaleigh and her team at https://www.csaaccounting.com/