- It’s Okay – Walk Away In standard
“Well… that sucked.”
That was the summation of a business owner’s experience filing his taxes this year. He finished working with his CPA feeling underserved, unimpressed and blind-sided by a big tax bill he didn’t know was coming.
Before this turns into a gripe session about accountants, let’s set one thing straight. CPA firms are not miracle workers— they’ll never get you to a place where you don’t have to pay taxes. And secondly, no one finds the process fun or exciting–including your CPAs– who have been giving up their evenings and weekends to slog through returns since February.
Since my firm doesn’t file taxes, we are an unbiased party watching the same scenarios play out each year between clients and their CPAs.
If we had to summarize the general “disgruntled-ness” of both parties, here’s how it would play out:
- We got a big tax bill that we didn’t know about. Unfortunately this happens more than we’d like. The best thing that you can do is send financials and projections to your accountant quarterly in either cash or accrual basis (depending on how you file.) If your accountant is not revising your quarterly estimates or confirming that you are OK where you are, you need to find a new accountant.
- My CPA has no idea about our business. This is a tough one. Sometimes clients don’t have the budget to engage their CPA to dig deep into their business. If you are only talking to your CPA once a year, can you blame them? And, on the flip side sometimes CPAs say they’ll do more and don’t. Frankly CPAs bill rates can be so high it doesn’t make sense to engage them at that level unless you are a big company.
- I need more than my taxes done. Often clients need help with their strategic plans, someone to oversee their financials’ accuracy, or even need an extra hand with bookkeeping. Some CPA firms offer these services, and do it well, but many dabble in these services when they are not doing taxes or audits. If you ask me, it’s a distinctly different skill set and mindset. The challenge we see with many CPA firms is that their resources get stretched during tax season and they can’t consistently offer these services. Those that do, often have a dedicated group that works on this side of the business and doesn’t get pulled into taxes.
- I never know what this is going to cost. Time and time again, clients are surprised not only by their tax bill but also the bill they receive from their accountant. I think this is why they don’t engage their CPAs more often– they just have no idea how requests can snowball, and frankly, CPAs need to do a better job of setting and sticking to budgets with clients. It’s one of the biggest reasons we see clients leave their firms, aside from being surprised by a big tax bill.
- Clients don’t get information to us timely. Clients wait to the last minute to get financials to the CPA then expect a lot of dedicated time in their busiest time of the year. If you aren’t closing your books timely, or not providing timely responses to your CPA, you can’t complain about surprises.
- Clients don’t want our help. Hard to believe, but many CPAs reach out to clients mid-year or in third quarter to do planning, but clients don’t think that there is a need to speak to the CPA. They don’t want to incur the billable time. But what they don’t know is that there is a great opportunity to sit down with the CPA and do planning, and get a better idea of what their tax liability will be and what proactive strategies they can employ to reduce their tax bill.
- I wish you had told me about the _____(equipment, business, loan, etc.) you acquired before you did it. Again, clients can be short-sighted and not understand the tax impact of the decisions they are making throughout the year. A little foresight and consultation with a CPA can save you big bucks when it comes to Uncle Sam.
- Clients don’t tell us how the business is doing vs last year. If clients only plan on talking to their CPA at the end of the year, why are they surprised when the CPA drops the bomb and tells them they owe tens of thousands of dollars more than they’ve been paying in, and only have a few months or weeks to come up with the money? The bottom line is this– if your business is doing well, you need to talk to your CPA for adjusted quarterly payments and, on the flip-side, if your business is not doing well, consult your CPA to adjust your quarterly payments downward so that you don’t suck up cash in tax payments you’ll get refunded at the end of the year.
- We try to work with the client’s bookkeeper to fix things but they just don’t get it. We hear this often from the CPA side– they are frustrated because they are spending a lot of time troubleshooting the bookkeeping rather than tax planning. And, the changes they ask the bookkeeper/office manager to make don’t get done correctly, requiring them to revisit the same thing over and over. And clients wonder why their billing from the CPA is so high??
So what’s the solution? Either you need to find a good CPA firm, look at how you are interacting with your CPA, or find a solution like ours which bridges the gap. I rarely plug our services in our blog but this is where a consulting company like Profit Point adds significant value. Whether you use our services or not, we encourage you to follow some of the things we do for our clients.
We help clients make tax season less “suck-y” because we know what tax accountants are looking for, and have the books turn-key for the CPAs through a thorough review process. This saves clients money and CPAs frustrations in unwinding messy books and having to book a lot of adjusting journal entries. Because we are forecasting income and cash throughout the year with our Controller & CFO services, we make it a point to talk to your CPA quarterly at a minimum and let them know what the status of the business is and–more importantly– where you are heading, so they can calculate new quarterly estimates and we can set up the necessary cash reserves for the quarterly payments.
In the end, having a strong accounting presence helps two ways: the client optimizes the use of the CPA’s time for compilations, audits and taxes and the CPA is happy because they can spend their time focusing on higher level work in tax planning and not dealing with bookkeeping issues, which many times they have to mark down or write off.
Whether you decide to handle the above in-house or you engage an outside party like ours, look at the interactions you have with your CPA during tax time I and look at it also from their perspective.
I’m interested to know your thoughts– any other issues you see between CPAs and clients during tax time??