Business 101: Working with Tax Professionals

By October 8, 2015 October 22nd, 2016 Business 101, CEO Mindset, Profit First, Taxes
Finding Qualified Bookkeepers

Most of my accounting conversations with business owners involve one of three topics – steps to make bookkeeping easier, outsourcing options, and referral requests for or questions involving tax professionals. Since fourth quarter is when I recommend clients check-in with their tax professionals for year-end planning needs, this is also the perfect time to review the relationship and needs you may have with your financial team. The following three items are what I focus on when I provide referrals.

Tax Advice & Savings

Business owners either are proactive or reactive when it comes to tax planning. The biggest issue that comes up is that their tax professional didn’t provide any tax advice or find them any tax savings. Normally this happens after the business owners have received some shocking news about their unknown tax liability. This is a sure sign that the business owners are reactive. Reactive business owners ignore their accounting and do not choose to do tax planning. In my 20+ years working in the public accounting field, reactive business owners tend to seek out tax guidance after the start of a new year. At this point, it is too late to make changes to their business finances to save on taxes. Often the conversations with their tax professionals happen right in the middle of tax season, March and April. Let’s just say most tax professionals have quite a bit on their plates during this time of year, and getting them at their best tends to be a little difficult. If these items haven’t worked for you in the past, another choice would be to take the proactive approach.

When a business owner chooses to be proactive, they keep their accounting information current and seek out their tax professionals when big changes happen in their business. At a minimum, we recommend meeting with your tax professional at least once a year, and fourth quarter is an excellent time to do this. Tax professionals like businesses that are proactive too! For the right professional, they want to help and guide your business. Not all tax professionals will excel in this area though, and if you don’t ask for that type of service,you won’t get it! Embrace being proactive – keep your accounting current, connect with your tax professionals at least once a year, and ASK for their guidance.

[tweetthis]ADIPROTIP: be proactive- schedule your tax conversations fourth quarter, yes, before tax season![/tweetthis]


Experience & Fees

An unexpected tax bill will trigger issues about fees, and an inability to recognize the value the current tax professional is offering. When I provide a referral, I always recommend that the business owner works with a tax professional (and bookkeeper/accountant) that has industry specific knowledge. Accounting professionals that have a deep and intimate knowledge of your industry will be able to provide insight about vendors, financial ratio norms, and standard operating procedures.

If you do international sales, seek a tax professional that has that type of experience. If your business is in California – in my opinion one of the most complicated tax form states – hire a tax professional that is intimately knowledgeable with California. While ALL tax professionals will have “some” knowledge of your tax entity and business, it is an entirely different experience when you sit down with a tax professional that has worked exclusively with your entity type, industry, and location.

When I talk to business owners about expected fees I give estimates based on what I am seeing my clients pay for their own tax returns and, of course, how much I pay for my own S-Corp tax return. The truth of the matter is that I do not provide cheap or low-cost provider referrals. I also leave the money conversation between the business owner and tax professional. Here is my two cents: if you are more concerned with cost than the professional experience or value your team member will bring to the engagement, then all you are looking for is someone to enter your data into tax software that spits out a tax form. Your local H&R Block will probably be just fine for this. If you are looking for tax advice and guidance, then have the cost conversation up front and make a choice based on budget, and not because you want the cheapest game in town.

Communication & Style

I hear this all the time: “My tax professional didn’t explain anything to me or seek out to provide me guidance.” My response usually is: “Did you ask them to provide you any guidance or seek out a tax planning conversation?” Like with anything, f you don’t ask for it, you won’t get it. Some tax professionals only provide and do tax returns, they are not consultants. You won’t know which one they are though, if you don’t ask!

The second complaint ends up being about their personality or how they explain/present tax info. As with any doctors, some have great bedside manners and some don’t. Let’s face it, you want a tax professional that is detail oriented, tax knowledgeable, and high compliant (aka: follows the rules). That style of knowledge normally shows up in a professional that is very data-focused rather than people-oriented. They will lead with their knowledge around the numbers, not about how that might make you feel. Once you go into the conversation with that bit of knowledge in your back pocket, then you will also know immediately if you can work with that style or not. There are tax professionals with a variety of communication styles, you just may need to kiss a few frogs before you find the perfect match.

The key here is to take action and start interviewing potential tax professionals. I have worked with so many business owners that had a horrible experience with their tax professional back in March/April. Come January, they have forgotten that experience and will stay with their tax professional because it is EASIER. They will once again have a similar experience.

Don’t be that business owner. Your tax professional is one of your key financial team members. Create a relationship with a tax professional that stands in your corner and provides you with guidance and support that you understand, that you need, that will ultimately help you grow your business.


ADIPROTIP: This is everything I tell business owners to look at when they also outsource their bookkeeping.

In fact, we created an Outsourcing Resource page just for this very thing. Near the bottom are two white papers that will help you in your search for anyone on your financial team: bookkeeper, tax professional, accountant, CFO. There is a checklist and some great questions for you to use as you interview your potential candidates.

Do you have questions on how to choose or work with your tax professional? Connect with us below or on social media and we’ll be glad to start a conversation!

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