Should one of my best friends be my accountant?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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DangerZone23
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Joined: Fri Sep 03, 2010 5:25 pm

Should one of my best friends be my accountant?

Post by DangerZone23 » Thu Apr 14, 2011 12:18 pm

Hey, Bogleheads! Good question for you:

I have a couple good friends that are CPAs. One of them helped me out with my taxes and is advising me on some aspects of my business. Right now, I'm a 1099 worker. However, I plan to start an LLC this year and possibly hire some workers and create a business.

My question is: Is it a good idea or bad idea to have one of your good friends as your CPA? Right now, they're helping me with taxes but I'm thinking it might become more advanced soon after I create an LLC. Right now, he knows all of my finances and I trust him. But, I'm wondering if anyone has been in my situation and if it's been good or bad for them. Thanks!

Tex
Posts: 109
Joined: Sat Aug 07, 2010 11:19 am

Post by Tex » Thu Apr 14, 2011 12:24 pm

I suggest that you hire a different CPA if you value your friendship. If anything bad goes down, it could ruin the relationship.

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Bulldawg
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Post by Bulldawg » Thu Apr 14, 2011 5:18 pm

Tex wrote:I suggest that you hire a different CPA if you value your friendship. If anything bad goes down, it could ruin the relationship.
OTOH, A friend may devote more time to your situation. I knew my dentist and doc as friends first and became friends with CPA and attorney after working with them over the years. I see both the risks AND benefits.
" IN GOD WE TRUST " ( official motto of the United States )

SteveB3005
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Post by SteveB3005 » Thu Apr 14, 2011 5:31 pm

Unknowable, go with your gut feeling.

imagardener
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Location: south of Sarasota FL

Post by imagardener » Thu Apr 14, 2011 6:11 pm

Not only should your best friend NOT be your accountant but I will add this suggestion: make your accountant "out of town". It's something that only occurred to us much later.

Even in a mid-size community people talk, and an accountant has no ethical obligation, unlike an attorney, to keep your business private. For example, if under questioning by the IRS your accountant is obliged to answer truthfully and cannot protect your privacy if asked.

I will also add that IMO when applying for a loan of any type where you have to fill out how much you earn and what your assets are that you make application at a different branch than your neighborhood bank. Of course the local bank can see your local deposits but better to keep your total worth private. Again, you would be surprised how few the degrees of separation that exist in most communities.

I say this because I cannot believe how naive we were when applying for a mortgage several years ago which was handled by the husband of an aquaintance. We didn't even stop to think about it. Dumb.

PaulW
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Location: PA

Post by PaulW » Thu Apr 14, 2011 6:48 pm

I can not imagine an accountant keeping any clients if information was not kept confidential. As a CPA (now retired), I know that nothing would have gotten a staff person fired quicker than disclosing information about a client.

Paul

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