How to know when you need an accountant?

Choosing the right professional for dealing with your tax and financial plan is vital for protecting and growing your finances, wealth, family and retirement. 

When considering hiring or changing your accountant, it is important to consider the benefits, risks, and mutual fit with the professional. It is also important to hire someone who can provide independent, professional advice without bias, and can help you learn, plan, and grow your own financial skillset.

Do you need an accountant?

So you've saved frugally and done your own taxes (or asked a parent or friend for help) during undergraduate and maybe even medical school or residency. And now you're wondering if you should hire accountant. How do you know it's the right time?

• If it's costing you more than 4-5 hours a year to do your taxes, its usually time to get an accountant
• If you are incorporated and have a CCPC (Canadian controlled private corporation), an accountant is a must-have
• If you are wondering whether you need to file HST, spending time on figuring out payroll issues, or googling tax questions, its likely time to get an accountant
  

What are the the benefits of finding the right accountant?

1. The right accountant helps prevent your assets and wealth from over-taxation
2. Can support you through your career and practice growth
3. Can help you realize blind spots (you don't know what you don't know!)

What can go wrong if you don't have the right accountant?

1. Failing to optimize your taxes, reducing your lifetime take-home earnings
2. Not being able to analyze and take advantage of business or financial opportunities
3. Overspending on unnecessary services

What are red flags for an existing accountant?

• Not knowing how much taxes to put aside or how you will pay your tax bill
• Being pushed for services like incorporation when you are early stage, use all your earnings, and have no clear tax benefits from incorporating
• Only hearing from them once a year at tax time
• Only communicating by email and not offering you a chance to meet in person or by a video/virtual call to review your results
• Being billed for services and fees you did not expect, or feeling the lack of transparency on fees
• Does not get back to you within 24 to 48 hours after an email or voicemail
• Provides inconsistent advice or does not explain the rationale clearly
• Overly aggressive recommendations or being extremely conservative
• Poor attention to detail and missing things or making mistakes
• Causing you penalties or interest due to delayed filings
• Not completing engagements in a timely manner
• Not employing technology to help reduce time spent or your administrative burden
• Does not remember your financial situation
• Not coming to meetings prepared to help you
• Does not take notes, asks insightful questions, or repeats the same questions
• Lack of critical thinking and problem solving
• They don't know what they don't know (and when to refer you to a tax lawyer or expert)
• They fail to follow up after a meeting with you, or fail to keep their word
  

How can an accountant help you save time and money?

1. Accountants understand the Canadian tax code, which is complex and continuously evolving. You do not have time to take this on as a practicing professional.
2. Tax planning can help you save an extremely significant amount of funds by strategies like income smoothing, making incorporation vs proprietor decisions, and utilizing dividends vs salary.
3. They can help you set up processes and technology so that your tax returns are audit-ready in case CRA ever comes knocking.

What to consider when choosing an accountant?

• Familiarity with your field: Experience with physicians is very helpful so try to look for someone who will understand your unique needs.
• What sort of responsiveness do you expect? Ease of communication is extremely important, especially if you are already very busy. If you don't want to wait a week to hear back on an email, it's important to set expectations early on with your accountant.
• Balance and match the risk vs reward: Someone who is too conservative will cost you higher taxes, but being too aggressive can lead to harsh penalties from the CRA. Its important to find someone who is balanced and aligned with your risk level, but can also counsel you to help you make key decisions.
• Consider your current and future state and needs: How much help you do you need? Do you have a set of clean books, or do you even do your bookkeeping? Do you want to update your annual minute book and corporate renewals yourself?
• Cost of services: Do you want someone who does everything after you email them your bank statements, or are you fairly organized? Do you have a lot of ad-hoc requests? What are the fixed fees and hourly rates charged by the accountant?
• Frequency of advice: Are you someone who wants to meet and review your taxes once a year or do you rely on the accountant for advice and questions throughout the year?
• Ongoing needs: Do you need help with bookkeeping, payroll and HST returns? Do your employees often have questions about pay or benefits, and who handles them? Do you need your accountant to sometimes step in?

It is important to consider the benefits and the risks of working with the right accountant. When you find the right professional, it is important to have a comprehensive discussion to review their services, costs, risk threshold, and expectations. Ultimately, if things work out well, you may be working with this professional for 20 to 30 years, or possibly even longer!