At tax time -- and all year -- an accountant should be an integral part of your team

Now that 2014 is over, it is time to file taxes. Most businesses will rely on accountants to help them complete this task. However, there is a big difference between having an accountant do your taxes once a year and having an accountant monitor your operation to ensure you are not blindsided when it comes time to pay the IRS.

A very good, profitable company I was working with was notified by their accountant late in 2014 after they had applied for extensions that it owed an additional $230,000 to the IRS. The company had not expected this and ended up having to borrow the money from their financial institution. If this company had an accountant monitoring their tax liability each month, they would have been able to hang on to enough cash to meet their obligation.

A similar situation had happened more than once to this business, so the fed-up owners changed accountants and now have one who monitors their financials throughout the year. Every month, the new accountant calculates how much they will owe at the end of the year.

Clearly, you want an accountant who will minimize your tax liability in accordance with tax laws. It is also important to have one who will file your tax returns in a timely manner -- not like the next example.

A company had been using the same accountant to file their tax returns for years, and they thought all was going well. Though the accountant had been filing their returns as late as possible every year, they had never been audited. However, when they were audited, the IRS found a number of glaring problems. In the end, the firm had to pay over a million dollars in back taxes, interest, and fines and penalties.

The bottom line is that tax laws are complex, and business owners just do not have any way of knowing if their accountants are doing a good job or not. This firm wanted to pay the right amount in taxes but was not because of the poor advice they were getting from their accountant. Sure, getting a clean audit is one test of accounting quality, but you do not want an audit to be the way you find out if your accountant is doing a good job.

This firm admitted that one of the reasons they chose this accountant was because he was cheap. But as they found out, picking the accounting firm with the lowest cost is not the answer. Paying a reasonable fee and getting a great accountant is so much more important.

Too many firms see accountants as people they only need once a year when their taxes are due. On the contrary, however, your accountant should be an integral part of your team so you have access to great financial advice and someone knowledgeable to deal with complex tax and regulation issues. Both of these are important to ensuring your company’s success.

It is good practice to meet with your account on regular basis so that they can give you an update as to your taxes and the financial health of your business.

Now go out and make sure you get the best accountant you can to help with your annual tax filings as well as the management of your business overall.

You can do this!

Dr. Osteryoung has directly has assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at jerry.osteryoung@gmail.com.

Tags: Florida Small Business