I feel like I’m supposed to answer this question with a resounding “YES!” but all I can muster is, “It Depends.” And, it depends on the accountant and, you, the business owner.
Discuss big decisions with your accountant before-hand so they can make you aware of the implications of what you are considering.
Don’t Catch This Accounting Cold!
First, let’s talk about the fact that the word accountant is as broad as the word doctor. (In no way implying that accountants can cure diseases, however.) My point is this: if you think you have a cold, you will probably go to a general practitioner to get treatment. You would not make an appointment with the premiere ear-nose-and-throat doctor in North America.
But that is what can happen with an accountant. You have some basic business questions. You are referred to a friend’s accountant who specializes in tax planning for oil and gas partnerships. He doesn’t deal with colds. He deals with a very specific type of brain anomaly. (Did you catch that little dig?) Not your best bet for advice unless you actually have that anomaly.
This is where I think the trouble begins. Business owners say, “My accountant is not at all helpful. All he or she can talk about is the basics in my partnership. He or she seems to know nothing about my business.”
Specialists vs. Generalists in Accounting
The accounting profession has not done a good job of distinguishing specialists from generalists. And the public expects all accountants to be generalists. They aren’t. And they shouldn’t be. At some point in your business life-cycle, you need someone who specializes. But in the early stages, a generalist is your best bet.
So, how do you distinguish the two? The best way is to ask them if they have a specialty. If they say “small business,” they’re a generalist. If they say “like-kind exchanges under Section 1031,” they’re a specialist and they aren’t going to be able to help your small business much — unless it revolves around real estate like-kind exchanges. You are not going to need the same accountant that Amazon does. It sounds impressive, but it won’t help your business.
Second, I would say it depends on you, the business owner. Some business owners go head-long into decisions that have huge financial and tax implications but never ask their accountant for input. Then, after the deal is made and trouble is a-brewing, they reach out to their accountant for help. At this point, your accountant may not be able to do much.
So, find this accounting generalist to help you with your business and use them. Discuss big decisions with them before-hand so they can make you aware of the implications of what you are considering.
A good generalist can give you some idea of the pitfalls ahead so that you can watch for them. And, it is so much easier to correct a mistake before it happens than after.
And, for the record, I am about as general as an accountant can be.
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