Why You Should Never Get a Surprise Bill from Your Accountant

Joe Collins, CPA, CA / 7 min read
If your accountant is invested in your success, and by your side for the whole business journey, you should never get a surprise bill you didn’t see coming. Here's how to avoid unexpected bills from your current, or future accountant.

If your accountant is invested in your success, and by your side for the whole business journey, you should never get a surprise bill you didn’t see coming.

Surprises can be nice. A free coffee from the barista just because. A rogue $10 in your jean pocket. A double yolk is sure to liven up your breakfast experience.

But one surprise no one is cheering about, is an unexpected bill from their accountant. If you’re not hearing very much from your accountant year round, but receiving a figure you didn’t expect at the end of the year, it means three things:

  • You’re having to front money you hadn’t planned for
  • You’re probably playing guess work with your taxes which can cause major stress
  • You’re likely not getting the regular attention and communication you need (and deserve) from the person you’ve hired

SURPRISE BILLS ARE PREVENTED BY REGULAR COMMUNICATION

Despite what you may have experienced in the past, good accounting isn’t transactional. It’s relational.

We encounter a lot of business owners who’ve had a more ‘traditional’ accounting experience. Typically traditional means transactional.


You’ve probably experienced being billed in this way:

  • You need a tax return done.
  • The accountant charges by the hour
  • The accountant will let the bookkeeper know what information they need at the end of the year
  • You get billed after the work is done

In this instance, the bookkeeper and accountant are working in parallel. They share a common year end goal, but if they’re not in regular communication with each other (or with you) mistakes can be made, roles can be over or under stepped and you may miss out on opportunities to improve your business and financial position throughout the year.

Throughout the year it may feel like your books are being maintained for the most part, until you find you get a higher bill than you expected at the end of the year. Your numbers aren’t up to date and lots of things need fixing.

Although by no means an exhaustive list, you should expect the following from an accountant working in the modern, cloud-enabled age:

  • Responsiveness - You shouldn’t have to track down your accountant via multiple phone calls and emails just to have a conversation.
  • Education + Communication - Your accountant needs to be proactive in teaching you about your finances and tax situation. They should park the jargon at the door and speak to you in plain English to help you understand your numbers.
  • Accountability (No pun intended) - Your accountant needs to give it to you straight. What were your goals last quarter? How did you perform against them?
  • Trust - This is someone who gets to peek behind the curtain. It’s vital that you trust them to be constructive and helpful.
  • Advocacy - Your accountant needs to care deeply about your success and actively participate. They should shout from the rooftops, and never miss an opportunity to help you make a connection or take that next step.
  • Proactivity - Your accountant needs to be reaching out to schedule your next call, check-in meeting, piece of advice, suggested software, tax planning strategy, tax payment deadlines, etc. You shouldn’t have to take the lead with regards to any of this
  • Confidence - You shouldn’t be scared to reach out to your accountant because they’re tracking their time by the minute to bill you. That isn’t the mark of a healthy relationship.
  • Empathy - Your accountant needs to understand that finance is just one aspect of the business you’re trying to build. It should fit with your operations, marketing, HR, etc.


AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE

Great accountants aren’t stand-offish. They roll their sleeves up and take an active interest in your business. They want to be the kind of advisors you can trust, keeping you accountable in your pursuit of your goals.

We set up Avalon to help Canadian small business owners all along their entrepreneurship journey. This means we have a lot of input into the bookkeeping all year round, allowing us to be proactive about your taxes. It’s a hybrid bookkeeping/accounting relationship designed to keep you informed at all times.

This is beneficial for the growth of your business, because you know your position throughout the year. But it’s also beneficial to your pocket. We can define the scope of work that needs doing up to the year end, and give you a fixed price up front.

We know the role we have to play, you know your role and you know the fee. No surprises!

Recently I had a call with a business owner who asked:

What kind of questions should I be asking when I’m trying to hire an Accountant?”

In order to figure out if the accountant is purely transactional, or works like a partner in your business, source the answers to the following questions:

1. What reports will you be receiving?

Whether it’s weekly, monthly, or quarterly, you should be seeing reports of your business’s performance. Without access to those numbers and the insight they provide, you’re essentially driving blindfolded.


2. How often will you be meeting with them and what will you be discussing?

If you’re only hearing from your accountant once or twice a year, and that’s simply to file a tax return, there’s a fair chance you’re being short-changed.

Yes, accountants can save you time by handling the paperwork and keeping you compliant. But we’re oh-so much more valuable to your business than merely existing as an extension of your admin function.


3. Why is cloud accounting the bee’s knees?

Your ability to access important accounting data could be the difference between success and failure. In fact, we believe using cloud accounting software should be a prerequisite for owning a business nowadays.
If your accountant isn’t in your ear, buzzing about the cloud and telling you it’s the bee’s knees, it might be time to look elsewhere. Particularly if they’re happy letting you continue to use outdated desktop software, or an error-strewn spreadsheet to run your numbers.


4. What should your bookkeeper be tracking?

Think of your business as a trek up an unfamiliar mountain path. You’ve got your provisions and your equipment, but that won’t matter at all if you don’t know where you’re going.

Enter your bookkeeper. They should act as your Sherpa, guiding you along the way, and making you aware of the obstacles and challenges yet to come.
You shouldn’t be caught by surprise with a good bookkeeper by your side.


So, how much should you expect to pay an accountant?

As with any professional service provider, accountancy fees will generally come down to the level of expertise and the number and complexity of services.


Rule of thumb, you’re looking at:

  • A minimum of 1.5% of revenue per month for basic reporting and compliance;
  • 2-3% of revenue per month for compliance plus education and customized reporting;
  • 3%+ of revenue per month for a full service financial department, including proactive reporting, strategy sessions, goal setting and accountability, and education.


The crux of the matter is: no matter what services you need for your business circumstances, you should always know exactly how much you’re paying each month.


From here on out, the only surprises we want to see you getting from your accountant:

  • More money than you expected to save on your taxes
  • A friendship you didn’t anticipate
  • Cake / Beer

Article by Joe Collins, CPA, CA.Originally published June 15, 2021.

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