Chapter 14 — Working With Your Accountant (and What to Never Do Yourself)

Working With Your Accountant (and What to Never Do Yourself)

You can keep your own books — this book was written to make that possible. But bookkeeping and professional accounting are different jobs, and knowing where one ends and the other begins is what separates a well-run business from one that’s merely busy.

What belongs to the bookkeeper vs. the CPA

The bookkeeper’s job — yours, or someone you hire — is the ongoing recording and organizing: entering transactions, invoicing, paying bills, reconciling accounts, running payroll entries, maintaining the AR/AP routines, producing the monthly close. Regular, process-driven, and it keeps the raw material clean.

The CPA’s job is judgment, compliance, and strategy: preparing the tax return, advising on entity structure (sole proprietor vs. LLC vs. S corporation — a decision with real tax consequences), tax planning (timing income and deductions, retirement plan choices, estimated payments), representing you before tax authorities, and answering the questions the books can’t answer themselves.

The overlap zone — depreciation elections, complex accruals, unusual transactions — is where they collaborate: the bookkeeper flags it, the CPA decides it, the bookkeeper records it.

What to never do yourself

• Choose your entity type alone. Sole proprietor, LLC, or S corporation affects your taxes, liability, and payroll obligations. Get professional advice before you file the paperwork, not after.
• Handle an IRS notice or audit alone. Even a simple-looking notice can have traps — deadlines that waive your rights, wording that means something specific in tax law. A CPA or enrolled agent resolves in an hour what might cost you months.
• Design your tax strategy from internet research. The internet is full of confident, outdated, or jurisdiction-wrong tax advice. Your CPA knows which strategies — like the Augusta rule, hiring your children, or home-office deductions — actually apply to your situation.
• Sign a tax return you don’t understand. You’re legally responsible for what’s on it, even if someone else prepared it. A good CPA walks you through it before you sign.

How to choose an accountant

Look for credentials that match the need: a CPA for tax strategy and complex compliance, an Enrolled Agent (EA) for tax preparation and IRS representation, a bookkeeper for the monthly recording. Many small businesses need a bookkeeper monthly and a CPA yearly.

Look for small-business experience in your industry — a CPA who mostly handles large corporations may not know the deductions and rhythms of a trade business or freelance practice.

Look for responsiveness: ask how they handle urgent questions in March and April — the answer tells you everything. Look for proactive communication: the best accountants call you in November about year-end moves, warn you about law changes, and remind you about estimated payments. And demand clear pricing — hourly, monthly, or per-project — with what’s included in writing.

Interview at least two or three, and ask each one: “What would you do differently for a business like mine?” The quality of that answer is the quality of the relationship you’re buying.

When a business outgrows DIY books

Doing your own books is a great way to learn the numbers — watch for the signs that the DIY phase is ending:

• You’re spending more than a few hours a month on the books, and it’s pulling you away from revenue-generating work — compare your time’s value honestly to a bookkeeper’s fee.
• You’ve hired employees. Payroll compliance raises the stakes; many owners hand payroll to a service or bookkeeper at this point.
• The books are always behind. Late books mean late decisions and a brutal tax season.
• You’re making bigger decisions — a second location, significant debt, a partner. These deserve statements a professional has reviewed, not ones assembled the night before the bank meeting.
• Tax time is miserable. If every April is a scramble, the problem is the eleven months before it.

How a bookkeeping service helps

If the books shouldn’t be your job anymore, a professional bookkeeping service takes over the routines this book describes: recording transactions, reconciling accounts monthly, managing receivables and payables, running the month-end close, keeping payroll entries straight, and delivering clean financial statements — plus a year-end package your CPA can use directly.

What that buys you: books that are current every month instead of reconstructed every April; errors caught while small; statements you can hand to a lender; and a tax preparer who spends their hours on strategy instead of cleanup. It also buys back your time: the evenings spent categorizing transactions go back to running the business.

Whether you hire a local bookkeeper, a dedicated service, or your CPA firm’s bookkeeping department, the test is the same: books done monthly, clean reconciliations, and a reliable P&L whenever you ask. If yes, the service is earning its fee.

What good help costs

• Monthly flat fee (bookkeeping): a fixed price based on transaction volume and complexity.
• Hourly (cleanup and projects): catch-up bookkeeping and special projects. Get an estimate up front and an agreed cap — open-ended hourly cleanup is where bills surprise people.
• Per-return or per-project (tax): tax prep is typically priced per return. Get the quote in writing before work begins, including what’s not included.

Whatever the model, get three things in writing: the scope, the price, and the timeline. And compare the fee not to zero, but to the cost of your own time plus the cleanup fees, missed deductions, and penalties that disorganized books produce.

Red flags in a tax preparer

Walk away from any preparer who guarantees a refund before seeing your documents; bases their fee on the size of your refund; won’t sign your return or give you a copy; asks you to sign a blank return; or deposits your refund into their account first. Your refund goes to you — directly.

The IRS maintains a public directory of credentialed preparers (CPAs, Enrolled Agents, attorneys) — a solid starting point. And the best test remains this chapter’s: a good professional explains your own return to you before you sign it.

Key takeaways

• The bookkeeper records and organizes; the CPA advises, plans, and handles compliance — know which job is which.
• Never DIY your entity choice, an IRS notice, internet-sourced tax strategy, or a return you don’t understand.
• Choose an accountant for small-business experience, responsiveness, proactive communication, and clear pricing — interview several.
• Outgrow DIY when the books consume your time, you hire employees, the books fall behind, decisions get bigger, or tax time is miserable.
• A bookkeeping service buys you current books, caught errors, lender-ready statements, cheaper tax prep, and your evenings back.