Accountants: There are times to refer your client to an attorney

The duties and responsibilities of accountants and business law attorneys often overlap. Sometimes, the lines become so blurred that it’s difficult to see when professional legal help may be necessary. If there is ever any question concerning whether to involve legal counsel, accountants should always err on the side of caution.

Be aware of confidentiality issues

It’s always best to have a lawyer prepare any business-related legal documents. Purchase agreements, business contracts and articles of incorporation are better left to legal practitioners. Conversely, tax and certain other financial matters are usually best left to accountants.

While some lawyers are capable of preparing tax returns for their business clients, doing so can waive attorney-client privilege regarding the information contained in the tax return. Waiver issues can also arise when preparing profit-loss statements and other documents.

Take note of potential red flags

Accountants should pay particular attention anytime they run into a potential legal problem. For example, if you find that your client has failed to report a substantial amount of income or has claimed deductions where they shouldn’t, you should refer them to a qualified attorney. If you attempt to quickly amend a tax return on your own, you’re effectively admitting your client misstated their tax information.

A skilled business attorney can help navigate this potential minefield. Doing so can help ensure your client’s interests remain protected throughout this process.

You should also turn to a legal professional if you believe your position on a tax issue is likely to run into friction from the IRS. By seeking legal counsel, you can help insulate yourself and your client from the potential risks of IRS pushback.

Both accountants and attorneys are invaluable to their business clients. You should view your respective services as complementary, and always turn to legal practitioners if there is ever any doubt.

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