In the fast-paced world of entrepreneurship, success often hinges on making smart financial decisions. And the quality of those decisions often hinges on the quality of your advisors. As your business grows, so does the complexity of navigating the ever-changing tax landscape. Not all CPA firms are created alike. Working with a Certified Public Accountant (CPA) firm that specializes in tax strategy for businesses can be your secret weapon. In this article, we’ll share some criteria that you can use when selecting your CPA firm.
- What kinds of clients do you work with?
You want to make sure your CPA understands entrepreneurs. A CPA that focuses on entrepreneurs and business owners has an advantage over a generalist CPA. They work with the tax issues that affect small business owners every day and build up a wealth of knowledge and experience that can benefit your business.
- Are you available year round?
Some accounting firms shut their doors after October 15th and only reopen for the following tax season. Many CPA’s work themselves to exhaustion during tax season. But when you’re running a small business, you’re going to need help all year. If something comes up, you don’t want to wait until tax season in order to get your issue addressed.
- What’s your experience with the IRS?
It’s important to hire a certified public accountant because CPAs have more comprehensive certification requirements. They’ve been in the belly of the beast. They may have more inside knowledge of how the IRS really works.
- Who will be doing the work?
Does the CPA firm outsource overseas or to a third party to prepare the tax returns? It’s important to be able to speak directly to the person who is preparing your return. Anytime your confidential information leaves their office, it can create a potential data risk and other issues, if a firm outsources work to a third party. We recommend working with a firm that keeps all of the work in-house.
- Do you have a tax strategy process to identify all legal tax strategies to maximize my tax savings?
Follow up that question with “Tell Me More.” If all they can tell you is to maximize your pre-tax retirement savings and to maximize expenses, you may find yourself working with a compliance focused firm. A human version of Turbo Tax. A firm with a tax strategy process knows how to identify all the legal tax strategies for which you qualify. Strategic tax planning is forward looking and takes time to implement, but the rewards are worth the effort.
- How do you bill for your services?
Some accountants charge by the hour; others bill a flat rate. Regardless of the billing approach, be sure to get an estimate of their likely fees. Provide a copy of your previous year’s tax returns so the CPA can familiarize themself with your business and your tax return before giving a quote.
- How do you handle working with multiple entities?
If you have more than one business entity, be sure the CPA can manage them simultaneously–a skill not all CPAs possess. If you own rental property as an LLC and a retail store registered as a C-corporation, for example, you’ll need an CPA who can coordinate and track money moving between those entities. Multi-entity tax strategies take experience to implement and coordinate.
- What can you tell me about medical expense reimbursement plans (MERP)?
This question may seem technical, but not all CPAs are familiar with this strategy. A MERP is an HSA on steroids for business owners. It allows you to deduct your family’s medical expenses as a business expense. If the CPA you’re speaking with is unfamiliar with MERP’s, you should be wary because that might be a red flag that he or she isn’t well versed in strategies that can lower your taxes and keep more cash in your business.
- What type of technology do you use to interface with clients for their tax preparation?
You would be surprised how many CPAs are still only doing business on a face to face basis. Look for a firm that can share tax returns through secure online portals and allow you to upload your tax documents securely. Can they send your tax return for you to sign electronically? Do they use Zoom or Microsoft Teams to hold meetings so they can share their screen and other information with you so that you don’t have to run across town just to ask questions about your tax return?
- How often do they communicate about tax issues?
Every CPA firm will be different when it comes to frequency of communication for tax planning purposes. Ask about a prospective CPA’s approach and be sure you’re satisfied with the frequency and type of communication. Do they send updates on a consistent basis when new tax laws are issued? How often do they communicate with you, and do they have regular blog posts about important issues and other resources that you can easily access? Are they available to answer questions and meet when you are making a big investment or selling assets that have large tax consequences? You want to feel comfortable calling them with issues relating to your taxes.
Conclusion: Empowering Entrepreneurs for Success
A business focused CPA firm serves as a powerful resource for you and your business. And, it may come as no surprise that our focus is working with business owners and entrepreneurs to help them keep as much of their hard earned money as possible through the tax strategies that are in the IRS code.
To learn how to optimize your 401k or IRA, we’re offering a FREE Retirement Assessment to review your taxes, investments, and current financial strategies.
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