4 Signs It’s Time to Find a New CPA
How do you know when you need to make a change with your CPA? In this article, I break down the four signs that it’s time to make a change and how to find a better fit.
After enough time in business, you start to trust your gut when it comes to people and relationships. This intuition builds up over time from hard experiences and serves as a way for your body to tell you when all the little pieces are adding up to something. In many cases, it isn’t any one specific thing that makes the difference, which is why listening to your gut is such a big deal.
One of the most common things we hear from our clients who need a change with their CPA team is, “Should I be expecting more?”. This question typically gets asked because they are missing elements of guidance from their existing team and don’t know if that is their fault or their team’s fault. It can be both, but typically shows up because of a lack of proper expectations about the relationship. As a default, most CPAs and their teams are built around tax compliance and not tax planning. There is nothing wrong with being compliance-focused, as it is the baseline need of everyone working with a CPA. The issue arises when an entrepreneur has more complex planning needs and the CPA isn’t able to meet them.
So how do you know if you need to make a change or just re-establish the boundaries of the relationship? If you are seeing the four signs below, it means it’s time to seek out a new team.
- You have asked for tax projections but don’t get them.
- You have asked for guidance around the timing of a use of capital but your CPA doesn’t want to offer a recommendation.
- You feel like your CPA knows less about taxes for your business than you do.
- You have found errors with prior year business returns prepared by your CPA.
Let’s dive into each of these, in turn, to illustrate why it is time to find a new tax team when you see them.
Sign 1 – You aren’t getting tax projections when asking for them. This usually shows that your CPA either doesn’t offer planning or hasn’t built out the ability to do so in their firm. As an entrepreneur, your CPA should be working with you on tax projections for the current year and be able to put together estimates for a few years into the future upon request. The purpose of making projections is to give you good information to make business decisions. So if you need to buy $50,000 of new equipment, should you purchase that in this tax year or the next? Do you need to make your quarterly estimated tax payments this year or will your payments exceed your liability without them based on business performance? These questions require your CPA to use your current data and internal business projections to create a model and help you make good decisions. If you are asking for these and not getting them, it is time to consider a move.
Sign 2 – You are asking for guidance around when to use capital on specific expenses or activities and your CPA doesn’t want to make a recommendation. Often we hear that these conversations generate a response of “it’s up to you” or “I don’t have enough information to make a recommendation”. If your CPA is not willing to at least help you discuss tradeoffs and model the different outcomes for your business decisions to be made, it usually means they don’t provide planning and focus on compliance. Again, there is nothing wrong with a CPA staying focused only on compliance but as a business owner, you need to understand the taxable impact of your decisions so that you can make the right call.
Sign 3 – You feel like your CPA knows less about taxes for your business than you do. We see this often with specialty businesses like real estate or oil and gas. There are so many nuanced provisions in the tax code for how to treat a variety of business activities, so your CPA really needs to understand that particular area. If you have a heart problem you wouldn’t want to work with your family medicine doctor to address it, you would want to see a cardiologist. The same principle applies to CPAs and specialty knowledge about your business.
Sign 4 – You have discovered errors in prior year business returns. This is the most straightforward sign, and if you feel like you can’t trust the ability of your CPA to keep you compliant, it becomes difficult to work on anything with them going forward. The term “garbage in – garbage out” still applies, so if your internal record-keeping system has errors, your tax returns certainly will as well, and that has nothing to do with your CPA. If you find yourself in this place, look at bringing on a bookkeeper, controller, or fractional CFO to put your internal house in order.
If you find yourself seeing one or several of the signs listed above, it’s time to interview some new options, but where do you start? Industry peers, trade groups, and business coaching organizations all have connections with good CPAs who serve business owners like you. At Entrepreneur Aligned we work with some fantastic CPA teams on behalf of our clients and spend a lot of time on due diligence so that we connect the right team for the unique needs each entrepreneur faces.
Once you have candidates to interview ask them the following questions to understand how they are going to work with you as a client.
- Do you serve other businesses like mine?
- Focus on the size, industry, and business model to get specific.
- How do you provide tax planning?
- Leaving this question open-ended will allow them to talk about when they do this work, how much of the service is focused on it, and whether it is something you have to ask for each time or is offered proactively on their side.
- Can you provide references for other business owners that I can contact?
- Make sure you actually do the reference checks and ask questions about their specific experience around working with that CPA firm.
There are lots of fantastic CPAs and tax firms to work with as an entrepreneur. Don’t stay with one that doesn’t meet your needs and take the time to find the right fit!
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DISCLOSURE: Jarrod Musick is an officer of Destiny Capital and Entrepreneur Aligned, a DBA of Destiny Capital. This article is for informational purposes only and should not be relied upon as a basis for your investment, business, or personal financial decisions. We recommend consulting with your wealth advisor, CPA/tax advisor and/or attorney, as applicable to your situation, prior to implementing any new tax, legal, or investment strategy. Advisory services provided by Destiny Capital Corporation, a Registered Investment Adviser.
ABOUT JARROD
Jarrod was born into financial planning and solving financial problems. With his financial advisor father Steve telling stories about finance around the dinner table from an early age, the idea that everyone has a different financial situation was always there. After an early professional career spent in nonprofit and government, Jarrod came back to his roots helping people plan and invest in 2011. Since then, he has worked with individual clients, led internal teams and ultimately became partner and the CEO of Destiny Capital in 2017. With a passion for helping entrepreneurs change the world, Jarrod ultimately oversaw the creation of Entrepreneur Aligned in 2020. With both Destiny Capital and Entrepreneur Aligned, Jarrod leads teams that help people live lives of abundance where money is simply a tool to let everyone be a positive force for the world around them. When he isn’t working with the talented teams for EA and DC you can find him chasing his twins, wily trout or a podium spot at an OCR race.
