As a small business owner, an independent adjuster must wear many hats. They are a salesman, negotiator, and analyst (and sometimes grief counselor!) all rolled into one. No matter how well an adjuster performs these roles, the long-term success of his business will greatly depend upon effective financial management. A Certified Public Accountant (CPA) can help ensure that happens.
So, how does an adjuster choose the right CPA for the job? The key is to ask the right questions of your potential CPA, during the first consultation. Here are five essential questions to help an independent adjuster choose a CPA who is a good fit for their business.
Who are your clients?
In an ideal world, the CPA will have a portfolio of other satisfied customers who are also independent adjusters. If not, his clientele should be small business owners with expenses and tax situations similar to that of an adjuster’s. A good example would be real estate appraisers, contractors, or even salesmen with travelling expenses (which would involve knowledge of multiple state per diem rules). These types of clients would present challenges to the CPA that are comparable to those of an adjuster.
What is your tax specialty?
Many accountants have a specific area in which they specialize. This could be due to a large proportion of their clientele in a certain business or industry, or simply due to their own interest on a topic. For example, if their specialty is non-profits and trusts, an adjuster may want to continue searching. On the other hand, a CPA whose specialty is finding lesser-known tax breaks for small businesses might be a keeper.
What is the average income of your current self-employed clients?
An adjuster can easily earn a six-figure income. A CPA who has experience working with high-earning independent contractors will know where to look for less obvious ways to lower the taxable income as much as possible. An extra write-off or two could prevent years of debt to the IRS. High-earning businesses require different tax strategies than their lower-earning counterparts, such as forming a C corporation, or setting up a business retirement plan. A good CPA familiar with the challenges of a six-figure income (yes, believe it or not, it has challenges) will help the adjuster stay ahead of his income growth to avoid a crippling tax burden later on.
What services do you offer beyond preparing taxes and quarterly reports?
A CPA needs to be more than a number-cruncher. They should be an advisor whose counsel leads to sound financial management. An independent adjuster should require their CPA to schedule quarterly meetings to discuss the financial state of his adjuster business. A good CPA will give guidance in all things financial, from the correct setup of the adjuster’s chart of accounts (COA) to future tax strategies.
What about references from clients whose businesses are similar to mine?
Trust, but verify. In other words, even if each of the above questions results in an impressive answer, the true measure of the CPA’s level of service lies in what his clients have to say. The adjuster should ask for both positive and negative feedback from the client references. It is also important for the adjuster to ask the client if the CPA returns phone calls in a timely manner, and how available the CPA is for spur-of-the-moment appointments or questions. A busy adjuster’s schedule is extremely tight, so a CPA who is reasonably available when needed is vital.
A good Certified Public Accountant plays a paramount role in the successful financial management of an independent adjuster’s business. Vetting a potential candidate with these questions will help ensure the adjuster hires a CPA who is a perfect fit. For more valuable information regarding your career as an independent adjuster, sign up for our free e-book, The Top 5 Habits of the Efficient Adjuster.