Do I need a new accountant?

[workathomedad]

About a year ago my accountant of 5 years tried to pitch me on being a CFP, running my 401k, and sticking me in a bunch of mutual funds. - I told him I wasn't interested in paying the fees.

I was kind of irritated with him though, because he, for the first time, told me I should have a solo 401k for my business (which he should run). I was confused why he didn't tell me about this before, and told him it sounds like good advice, but isn't that his job? I shouldn't have to pay him extra for this kind of advice, just so he can take a % on being an advisor right?

Then suddenly this year, I ask him to verify my contribution amounts are valid, and he comes back telling me I need to talk to my CFP. This is completely BS right? That is an accountant's job, and he's just being spiteful?

[DebtFreeBy25]

It does sound like declining the CFP pitch created bad blood with your accountant. If you can find another accountant charging roughly the same rates, I would recommend switching.

[jwright]

When I worked at a CPA firm, we would analyze tax returns to look for inefficiencies, usually retirement planning, but also reasonable comp, mortgage interest rate, new business entity selection.  We aren't always the most specialized person for this advice, but clients see the CPA is the top advisor on all business activities.  That's why you pay me by the hour for my time. 

If I were going to a non-CPA preparer and paying $100, I would not expect anything other than the numbers on the return.

[workathomedad]

Thanks, this is a certified CPA.

I ran it by my wife, and she thinks he's being spiteful/angry as well. He's always been helpful in answering questions in the past, so it's the only thing that seems to make sense. Basically saying "now that I can't be your CFP, I wont advise you on any aspect of tax efficiency, or whether what your retirement account contributions conform to IRS rules" is very unprofessional.

He is paid $4,000 year for business + personal return, and was hired with the understanding that he would provide advise on tax efficiency, tax planning, etc.

This is ridiculous, and upsetting since the returns are nearly finished for the year anyway.

--

What would you do? Try to find a new accountant right now, in the middle of tax season, or let him file this return and get a new one for 2016?

[DebtFreeBy25]

Unfortunately, you're likely to pay a premium rate if you try to switch to a new accountant right now. Depending on your market it may be difficult to even get an appointment if you're not an existing client. I also don't know what the financial implications would be since he's already begun working on your return.

If I were you, I would do some research to verify my own contribution amounts this year and find someone else to handle my return next year. It's up to you whether you want to let him know why you'll be switching.

[workathomedad]

Unfortunately, you're likely to pay a premium rate if you try to switch to a new accountant right now. Depending on your market it may be difficult to even get an appointment if you're not an existing client. I also don't know what the financial implications would be since he's already begun working on your return.

If I were you, I would do some research to verify my own contribution amounts this year and find someone else to handle my return next year. It's up to you whether you want to let him know why you'll be switching.

Thank you!

[Midwest]

CPA here, I send my solo k clients to fidelity.  If a client asked me to calculate the solo-k or sep contribution, I would as part of the engagement and bill them my hourly rate (shouldn't take that long).

Lastly, don't switch now.  More trouble to you than it's worth.  If you're switching, switch after this year's done.

[workathomedad]

CPA here, I send my solo k clients to fidelity.  If a client asked me to calculate the solo-k or sep contribution, I would as part of the engagement and bill them my hourly rate (shouldn't take that long).

Lastly, don't switch now.  More trouble to you than it's worth.  If you're switching, switch after this year's done.

Thank you! It is good to know that he's not the only one.

[Axecleaver]

This is critical advice to get from your tax preparer. Every year I use my accountant (a CPA) to advise me on what my max contribution can be and make sure to get the maximum in before 4/15. It's basically a function of all the other stuff on your return - I assume you have a SEP-IRA? Tell him you want to contribute the maximum allowed, he will need to list it on the appropriate line on the 1040.

I'd find a new guy, but you probably need to get it done this year and look after 4/15.

[Cpa Cat]

It sounds like you accountant is trying to build a specialized boutique practice that is all around full service CFP + CPA, where he gives personalized and complete service to a smaller number of clients who are worth more in fees.

So it may be spite, or it may be that you're no longer the type of client he wants. The answer is the same for you - you should start looking around for someone new. If he's doing your 2016 bookkeeping and payroll, you probably want to start shopping early. Have him finish up your taxes, but pull the rest to a new accountant.

It's hard for me to imagine chasing my $4,000 clients away with a stick, but if your accountant is highly successful and pricey, you may not be a good fit for his practice anymore.

[Midwest]

It sounds like you accountant is trying to build a specialized boutique practice that is all around full service CFP + CPA, where he gives personalized and complete service to a smaller number of clients who are worth more in fees.

So it may be spite, or it may be that you're no longer the type of client he wants. The answer is the same for you - you should start looking around for someone new. If he's doing your 2016 bookkeeping and payroll, you probably want to start shopping early. Have him finish up your taxes, but pull the rest to a new accountant.

It's hard for me to imagine chasing my $4,000 clients away with a stick, but if your accountant is highly successful and pricey, you may not be a good fit for his practice anymore.

If it's out of spite or the accountant has outgrown the client, comes off as unprofessional.  It's amazing how bad customer service gets around faster than good.

[With This Herring]

When you switch, make sure you have the depreciation schedules (book, federal tax, AMT/ACE, and state tax) for all assets for your business, any rental properties, etc.  Those can be a pain to wring out of a prior accountant if a our new client left them on bad terms.

[Cpa Cat]

When you switch, make sure you have the depreciation schedules (book, federal tax, AMT/ACE, and state tax) for all assets for your business, any rental properties, etc.  Those can be a pain to wring out of a prior accountant if a our new client left them on bad terms.

And the basis worksheets for the company if it's an S-Corp.

[CowboyAndIndian]

He is paid $4,000 year for business + personal return, and was hired with the understanding that he would provide advise on tax efficiency, tax planning, etc.

Drop this guy ASAP.

My CPA charges me $1k for my LLC and $500 for my personal taxes. He does let me know what I should put into the individual 401k. We also have a tax planning session in late October, so I can make sure that I do not have an surprises.

If your CPA does not provide you these services, get rid of him.

[Cheddar Stacker]

$1k vs. $4k is highly dependent on time. We charge $20k+ for some tax returns, and everyone is happy with that. But if your CPA is not offering a SEP/SIMPLE calculation, which takes 10 minutes and the software does most of the work, time to shop around.

[jwright]

$1k vs. $4k is highly dependent on time. We charge $20k+ for some tax returns, and everyone is happy with that. But if your CPA is not offering a SEP/SIMPLE calculation, which takes 10 minutes and the software does most of the work, time to shop around.

Seconded; depending on the level of service done, $4,000 may not be unreasonable for a business return.  Nonetheless, it seems like you and your CPA are no longer a good fit for each other. 

[workathomedad]

Thanks for the help guys.

He also wont help me with an earnings loss calculation on an excess IRA contribution. He says there is a lot of potential liability involved. The account was transferred between custodians and they recommend having an accountant do it. Is that normal?

[MidWestLove]

Couple of questions first
- do you know how he proposed charging? You write above about paying percentages, etc but is that what he offered? CFP does not actually defined how FINANCIAL advisor charges, that could be fee based (per hour), assets under management, or anything in between.
- do you know what services you and are not buying in what area those services are (accounting , financial advice, etc). You mention "advice" and that is a very loaded word

your CPA may not be unreasonable at all  - think of it using legal advice as example
if you come to him for legal advice, the only real response he can give you (unless he is into business suicide)  is I am not an attorney, please seek qualified advisor.  now let us say, same CPA at great cost and investment gets licensed as a lawyer (JD, bar association ,etc.) and mentions this to you. you now have a choice of accepting or refusing such services, if you refuse and come to him for legal advice, his answer should be ' I am sorry, you are not my client for that service and I can not legally provide it to someone I do not have attorney-client relationship with'.

Same thing with financial/investment advice  - it is highly regulated, monitored, and in a world people always attempt to blame others for the consequences of their decisions, very litigious. to provide financial advice, one needs to register with relevant authorities, disclose a lot of items up front and in course of engagement, collect and keep a lot of information to relevant authorities to request if/as needed should you ever raise a complaint or ask for arbitration or sue him.   

If you do not want financial service and not entered into relevant engagement with him, he is absolutely right of being able to offer you any financial or investment advice. doing anything else is a direct violation of industry regulation, significant liability, and grounds for a lot of problems.

Now, with all of the above, in a free world, you are entitlement to change your providers at any time and for any reason
Similarly, he can fire you as a client for same perspective and probably should do so by referencing you to a different provider along with documentation transfer as a matter of courtesy. if he is now providing financial advice  as part of consolidated practice and you clearly said you do not such advice from him, how soon it would be before two of you come to disagreement and you may think he is responding on an accounting matter and you later claim he provided you with investment/financial advice that you did not sign up for? "advice" - great, show us where client signed up for it? he didn't? oh, oh. problems all around, with FINRA, likely with your insurance , etc.

from a person who is not a CPA but works in financial services I would completely understand hesitance to respond to person who asks anything that may later be constituted as financial advice without having necessary engagement papers executed and myself covered. this is crazy thing to do.