Tax season is here and your accounting firm is gearing up for every sort of client. There’s the client who has methodically kept a record (receipts included) of every transaction for the last year. There’s the client who will take out their anger on the accountant who has to tell them they owe money back to the government. And then there’s the client who has no idea what a W-2 is.
These clients are coming to you for a service they cannot perform themselves. As such, they expect that you, the professional, can and will perform the service with such perfection that they will reap the benefits tenfold.
No one is perfect at their job, but customers paying for a service expect it. If it’s believed that you or another accountant at your form mismanaged the client’s financial information in any way, there will be hell to pay. Here are four reasons why accounting firms need to invest in a business insurance plan for accountants.
Client claims poor service
If a client believes an accountant’s actions or advice did not live up to the service that was promised, or if it affected the client negatively, they have grounds to sue the acting accountant and the firm. This can cost your firm tens of thousands of dollars in legal and restitution fees. If your firm does not have the financial resources to pay up, it will be forced to shut down. A professional liability plan covers the financial repercussions of a lawsuit and aids the firm in staying afloat until the situation is resolved.
Accounting firms are popular targets for cybercriminals
According to the Financial Times, lawyers and accountants are some of the hardest hit industries by cybercriminals. “Accounting firms that provide tax advice on mergers, boutique advisory firms and consultants who weigh in on synergies and downsizing plans are almost certainly on the [cyber]criminal’s hit list.”
Cybercriminals follow the money, and accounting firms have private client financial information saved in their network. Once a cybercriminal is able to break through the server, that once private financial information is public and used for the cybercriminal’s nefarious dealings. Cyber insurance and business interruption insurance will cover the financial damages of the cyberattack and any loss of business on part of the accounting firm.
Business insurance is required by state law for CPAs
Depending on the state you live in, you may be required by law to carry a business insurance plan if you own and run an accounting firm. Check with your local county office to make sure you are following county and state law.
A business insurance plan demonstrates smart financial planning
Business insurance protects your business and your clientele. If an accountant should give incorrect advice or a software program fail to work, business insurance will compensate for the damages. When your clients see that you have taken every step you can to offer them protection by doing business with you, they’ll trust you. Isn’t that what you want, client trust?
Get your free business insurance quote when you visit CoverHound today; we guarantee you’ll find a plan that fits your firm’s needs.