There are three critical questions you need to ask your tax preparer. If you don’t know the answers, then you could be paying more in taxes or setting yourself up for headaches down the road.
Think about this for a second. Your tax preparer knows your social security number, how much you make and where you bank. Plus, chances are you’ve turned over a big chunk of financial planning and certainly tax planning to someone you might talk to just once a year.
Maybe it’s time to get to know your tax preparer just a little bit better. Here are three questions to get you started.
Question #1: Can you tell me a little bit about your average client?
You’re not looking for gossipy dirt on your accountant’s clients. What you’re looking for is what’s average to him. If you’re the richest person he knows, then you’re going to be paying a much higher price in time and money to bring him up to speed.
Look for a tax preparer who regularly deals with clients that are where you want to be. You don’t want to be the test case. And you certainly don’t want to pay your accountant’s hourly rate to teach him about tax planning for your business. What better way to follow in the footsteps of someone you admire then to hire advisors who have the insider scoop?
Best Answer: Listen to your accountant describe her favorite, most exciting clients. If she talks about wealth and business-building in a way that inspires you, then you’ve got a winner.
Worst Answer: You’re the richest person I know!
Question #2: How could we work together better? (Or, how can you help me get smarter about my money and taxes?)
An answer of “huh?” from your tax preparer means she’s never thought of this question. Just as tough, a response that tells you it’s only going to be a once a year conversation come tax prep time means there will be no forward-thinking tax planning. In times of tax changes like we’re going through right now, you want someone who has got your back. Otherwise, your tax bills will just keep getting bigger and bigger.
The cost to hire a bad advisor is an expense. The cost to hire a good advisor is an investment. What’s the ROI (return on investment) on your tax preparer?
Best Answer: We’ve got a program that teaches you about taxes and financial education year-round. Here’s how it works….
Worst Answer: I hope we don’t talk until next tax season.
Question #3: What’s your personal opinion on small business, Internet marketing, real estate investing (you fill in the blank)?
Ask your tax preparer about something you’re currently working on or want to be working on. Then listen carefully to what he has to say about it. Don’t sell him on your idea or your business. You want him to sell YOU on why he’s the best advisor for what you’re doing.
More than anything, you’re listening for his point of view. If he thinks saving taxes is morally wrong, and you want to save taxes, then it’s not a good fit. If he thinks stock investing will always be risky and you trade stocks, then his negative point of view will come through the planning and support you want from him.
Best Answer: Your accountant either personally invests and has clients who do. His point of view is supportive and he’s knowledgeable about what you want to do.
Worst Answer: Are you nuts?
You’ve probably heard that you need to ask your tax preparer about fees and education. Those are important questions too, but the most important questions could very well be the ones you don’t ask. After all, when it comes to wealth-building, like so many things and especially in an economy like this, what you don’t know can hurt you.