If you dread your annual conversations with the CPA (Certified Public Accountant), if the questions seem to go on and on, it’s a “tell.” It means your bookkeeping isn’t up to snuff. Excellence in bookkeeping means the CPA has everything they need to do their work at tax time.
The Questions That Never Stop
Every year we get to visit our CPA. We turn over our books and records so they can produce our tax returns. And then the questions start!
- Can you get me the bank statements?
- Can you get me statements for all the truck loans?
- Were all these meals “business meals”?
- Why were payments to ________ classified as repairs and maintenance?
- Are some of the items in “office expense” actually personal expenses instead of business expenses?
The list can go on and on.
How I Used to Grade My Own Bookkeeping
In the past I was CFO (Chief Financial Officer) for a contracting conglomerate with ten (10) operating companies. And each year I tracked the number of year-end questions I received from the CPA. It was a way that I graded the department that I led. Lots of questions meant we hadn’t done a thorough job. Few, or no, questions meant we had nailed it.
What To Do About It
Don’t forget, every time the CPA comes back to you with another question, the meter is running. The more time the CPA spends getting the information they need, the bigger the fee for the tax return.
The more time the CPA spends getting the information they need, the bigger the fee for the tax return.
Frequently Asked Questions
Why does a CPA ask so many questions at tax time?
Because the underlying bookkeeping wasn’t tight enough during the year to answer them without asking — loose coding and missing detail all surface at once, in the CPA’s questions.
Does answering CPA questions cost extra?
Yes — the more time a CPA spends chasing down information you could have provided up front, the bigger the fee for the return.
How do I know if my bookkeeping is “up to snuff”?
One honest gauge: count how many questions your CPA has to ask you every year. Fewer questions means your books already have what they need. A long list, year after year, is the tell.