Is it bad to use a investor's accountant?


2

We need to find a new accountant. The investor we hope to get on board in the next fortnight is recommending his who is a great guy, but we think it might be a bad idea to use our investor's accountant? Any help will be very much appreciated!

Investors Accountants

asked Sep 5 '13 at 20:36
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Andy P
11 points
  • It is probably fine as any professional will be used to dealing with potential conflict of interest scenarios. Probably a slightly expensive option, but at least you'll get someone who knows the startup scene (hopefully). – Steve Jones 7 years ago
  • thanks very much for all the answers - very much appreciated! – User27780 7 years ago

3 Answers


2

Note: it's a horrible idea to use your investor's lawyer. Lawyers have to look out for your best interests, so when you are in a fight, the lawyer is conflicted. Never use your investor's lawyer! Accountants are a different issue. Generally speaking, your accountant's job is to make sure that you represent your accounts fairly and accurately, and comply with legislation. Their goal is 'the truth', not 'your best interests'. As an entrepreneur, you should want to do this: to be as close as possible to 'the truth'. As an investor I want you to do this, and I want to know when you are not doing it. As a well-meaning, honest entrepreneur you shouldn't care if I know when your accounts are inaccurate, since your intention should be to fix this as soon as possible.

So long as you use your accountant only for standard tax, filing and accounting services, you should feel OK about it. You should just make sure you never use your accountant to do a business valuation (something that may be in your shareholder's agreement) or something like that where your and your investor's interests may diverge.

answered Sep 7 '13 at 07:12
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Kamal Hassan
1,285 points
  • I don't even think it's Legal to use your investors lawyer. That's major conflict of interest. That's like a criminal prosecutor being a partner at a law firm of the defense attorney of the prosecuted criminal LOL – User60812 7 years ago

0

Two possibilities:

A) it is an independent accountant whom services your inverstor uses - then it's not a problem. An independent accountant is bound by the rules of the "Chamber of Accountants" (or whatever name the professional association of accountants has in your country) - independency, ethics, honesty etc.

He can't afford making any "bad behaviors" because his career depends on his reputation. Once his reputation is challenged, he is almost "profesionally dead"... And I don't expect he is ready to risk his carrer for the blue eyes of your investor.

B) he is an employee of your investor - then it's more imaginable that he could follow the directives of his boss. But in fact, ask yourself what your investor can win by cheating you... Maybe he can earn some money, but the day you discover the cheating, you make a suit and he will probably lose much more than what he "earned".

And one remark - bussiness is also (and mainly) a matter of trust. Do you trust him? If not, are you sure you need him so much? Do you want to associate with someone that you don't trust?

In the case of doubt, just ask another accountant to check (once - at the beginning) the work of the investors one - if it's ok, then no problem. If not, change the investor...

answered Sep 6 '13 at 04:25
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Data Smarter
1,274 points

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You can always provide for an audit by an accountant of your choosing. Very common practice. It will probably be at your own expense. If they object, consider that a red flag. A waving, banner-sized, bright red flag. Like they say, trust but verify. It'll be your name(s) on the tax return.

answered Sep 11 '13 at 13:54
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My Cat Herder Llc
91 points

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