How to Get the Right CPA & Why It Matters

The journey to financial freedom isn't just about crunching numbers and watching your bank account grow; it's a transformative process that aligns your goals with your money.

Join me on this episode as we explore the world of accounting and tax professionals. I'll be sharing how to discern between different types of accountants, ways to find the right fit for your business, and the pivotal role these professionals should play in your financial journey.

When it comes to finding the right accountant, there's no one-size-fits-all approach. As we discuss the different categories of tax professionals – from bookkeepers to CPAs and tax strategists – you'll gain clarity on what each brings to the table and which one aligns best with your business needs.

Don't miss out on this episode - your business future may depend on it. Tune in, absorb the insights, and take actionable steps towards securing the right accountant for your financial journey.

IN TODAY’S EPISODE, I DISCUSS: 

• The categories of accounting professionals
• The difference between CPAs, tax preparers, and tax strategists
• How to choose the right CPA to guide you on your financial journey

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Transcript

1:56

One of the best hires that you can ever have is a good CPA, a good accountant. I know you're going to go, well. That'S Mel, because that's because you're an no, no. Here's the deal. The right accountant can stand by your side. The right accountant can do things to help you maximize your business, build your business, scale your business, optimize your profits. It's what I do with my clients, all right? With my elite one on one clients. My group clients, my consulting clients is. I stand by their side. I walk the path. With them. It's all about how do we scale the revenues and optimize the profits at the same time? How do we minimize the taxes? How do we do things that maybe need negotiation? What do we need to do to. Make you a success? And the right accountant can help you do that. But not all accountants are created equal, all right? And then one of the biggest questions I get is, Mel, I'm looking for a CPA. Do you know of any? How do I find a good CPA? How do I know if this CPA or this accountant is a good accountant? Well, in this episode, we're going to try and answer that. So let's have some fun in this episode. Welcome to this episode, the afternoon entrepreneur show. All right, let's do this thing. This is the afternoon entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money, and scale your life while creating a deeper impact and living with complete freedom, because that's what it really means to be an affluent entrepreneur. All right, welcome to this episode of the Affluent Entrepreneur show. This one, we're going to talk about accountants. I know that sounds boring, but it's not. We're going to talk about how do you find the right accountant? What do they do? Why does it even matter? A lot of people look at accountants. And say, well, they're bookkeepers. They're people that just tell us what we did. No, they have way more than that. When you find the right thing. They have a rap of, hey, we file taxes. We do all of those things. But they don't all do that. I don't do that. And so what I want to do is guide you, especially if you are an entrepreneur, to what does it take to find the right account for the right reasons in the right way? What are the questions you need to ask? What are the differences you need to look for? And why is it that not everyone, all accountants are the same? All right, so the first thing I'm going to do, we're going to talk about the categories of, let's say, accounting, tax professionals. So you understand the differences because I've had people say, well, I have a CPA, and they weren't really a CPA. So you'll understand what the differences are and when you need to do it, because some people don't need a CPA, they just need a bookkeeper. They need a tax professional or they need something like that. So the first thing is to understand. That at some level there is what. We call a bookkeeper, okay? A bookkeeper. And. A bookkeeper is literally someone that. Is going to do the record keeping for you. They're typically not going to do a. Whole lot of they're not going to do a whole lot of consulting. They're not going to do a whole lot of projections. They're not going to do a whole lot of strategizing. They're simply taking what you did, putting it into an accounting system, filing the proper paperwork if you have payroll, giving you some reports. They have computer skills. They have accounting skills. They have a background. They may or may not have a license. They may have just a high school diploma. That doesn't mean they can't do it. It just means that they're capable of. Doing certain things and they're basically there to do your accounting. Okay? Nothing wrong with bookkeepers, but understand that they're not tax planners. They're not tax strategists. They're not business strategists. They're not an analyst. They're not anything like that. So the first level is what I call a bookkeeper that's there. The second is what I would call a tax well, let's just look at. It and say a tax preparer. Now, a tax preparer is exactly what it says. They prepare taxes. They may or may not do bookkeeping. They may just take the stuff from your bookkeeper and prepare your taxes. They're not there to do tax strategies. They're not there to do tax planning. They're simply there to fill out the forms and either e file or file your tax returns for you to help you do that. They are not necessarily something at a higher level that says, hey, how do I minimize my taxes? What are the tax plans? And different things like that. Now, in this tax preparer category, there is this subcategory that you'll hear about. They're called EA's. They're called enrolled agents. Enrolled agents are professionals that have specialized. Tax knowledge and can represent you as a taxpayer in front of the Internal Revenue Service, in front of taxing authorities. They have taken a test. They adhere to certain ethical standards that are promulgated by the IRS. They have gone through that. Now. They're not a CPA. They're likely not even a bookkeeper. But they are an enrolled agent in the sense that they understand the tax law. They understand tax compliance. They understand the tax filings, and they are able to do it. They're basically federally licensed, okay, if you will, or certified, let's just call it from that. Perspective. And then there's what I would call a tax. Strategist. Now, a tax strategist is just what it says. They are there to do plans. Strategies to minimize your taxes, to use the tax law in the way it was. Meant to be used to your benefit, to make sure that you're not overpaying. Listen, you're not there to pick up. The whole tab for the government. So we have an obligation to pay taxes, but we don't have an obligation to overpay taxes. Tax strategists will get in the game and be more proactive. They're going to be looking forward. They're going to look at things and say, hey, I just had a conversation. With a client that said, we need to switch you from an LLC to an S corporation. Now, it's because of where they were. At in their journey. Not everyone should be doing this. So this is not tax advice. This is an example. By switching her from LLC to an. S corporation and giving her a salary, we were able to save her effectively$50,000 in taxes. So it's that kind of proactive thing. That a tax strategist will do. This should have been done a year ago or two years ago, but the person she was with wasn't a tax strategist. They were just preparing the taxes. They weren't looking for ways to minimize the taxes and say, hey, we should be doing this. So in my estimation, she overpaid her taxes, and she could have paid less had she had a strategist in place. Now, the strategist may create plans, but not prepare the tax returns. So you need to realize that they're different. When you have these conversations with hiring someone, you want to understand where their lane is. Make sure they stay in their lane. If all they do is bookkeeping, I. Don'T want them doing tax planning for me because they don't understand the tax law. So if you look at tax preparers. Tax strategies, those are the tax professionals. They primarily deal with taxes. Now, let's look at this idea of a CPA. CPA stands for Certified Public Accountant. Okay? These are individuals that have degrees, college. Degrees, and sometimes advanced degrees. Some states require advanced degrees. They have gone through a uniform exam, which is typically a three or four day exam. At least it was four days when I did it. And they can do a lot of different services. This is the misnomer is that people believe that just because they're a CPA, they understand everything about taxes. They understand everything about business. Fact is, they don't. There are CPAs that all they understand is how to put together a financial statement. They're auditors. They don't know anything about taxes. So just because they have a CPA after their name, you need to understand where their expertise is in doing it. The big thing with the CPA is, you know that they have more education, they've got more testing. They have to have continuing education on an ongoing basis to demonstrate their technical chops, to make sure that they have that and they have strict ethical standards. That they have to adhere to. Every time I renew my CPA license, I have to take an ethics test. I have to make sure that I submit all my continuing education. So I'm constantly staying on top of the rules. Bookkeepers don't have that. Some tax professionals, tax preparers don't have it. Enrolled agents have some of that. Okay. So it's important to understand where they come from, but also to realize that if you're looking for a CPA to help you from a tax standpoint, then you need to have a CPA that has specialization in tax, not a CPA that has a specialization in audit. They're very different. And so just because they have the. Letter CPA doesn't mean that they're the right professional for you. You want to understand their expertise, but you also want to understand what your needs are. If I'm looking for someone that's a tax planner, a tax strategist, and I'm looking for someone that can help me cash flow project, cash flow plan, help me scale my business, then I need someone that is much more of a. CFO type of CPA that will allow. You to do that. Most CPAs spend their time looking backwards at what you did. You may want someone that's looking forwards at what you're going to do to help you do that. Okay. The other accountant that I think that. You might see is what we call a forensic accountant. Hopefully you never need one of these. And it is exactly what it is, if you will. They're going in forensically and recreating and trying to figure out it's like an. Autopsy on your numbers most of the time. What these types of forensic I do. Some of this forensic work I used to. I don't anymore. They get pulled in because there's fraud, there's embezzlement, there's litigation, there's bankruptcy. So typically a forensic accountant gets pulled in when stuff goes bad. So hopefully you never have or need a forensic accountant. So what does that mean for you? Where do you look at and what is it that you need to think about? Well, I think that there's a set of questions and things you need to consider. But just in general terms, what you. Need to make sure you have is. A partner in your business. Not a literal partner, but someone that is willing to stand by your side. Okay. Not someone that just wants to see you once a year, do the things that they do and then go home. If that's their business model, great. They just may not be for you. If you're in the growing business, if you're in growing income, if you're trying to maximize your wealth and minimize your taxes, you need someone that is involved and in the game with you. Now, you're going to have to pay. For it, because they're not going to. Do it for free, but they should. Pay for themselves in spades with the savings they get, the growth you get, and the peace of mind that you have. Okay, so when I look for a. CPA for a client or when I'm looking for someone, I want to make. Sure that they understand one, they understand my business. So it's really important that they truly, one, understand your business, and hopefully they've worked with businesses like yours. Now, there's plenty of CPAs that don't understand the online space, the online world. And so it's important to make sure that they understand your business. They also need to understand your vision, where you want to go, why do. You want to go there? Okay. They need to understand your vision. They're not there to judge it. They're not there to criticize it. They're there to help you facilitate achieving it. And if they're not willing to help. You facilitate achieving it, probably not the. Right one for you. You want a CPA or a CPA. That is actually forward looking? I don't want a CPA that can tell me what, listen, I already know. If I had a good year or a bad year. The question is, how are you going to make sure that I have a better year and a big year the next year? Can you help me on that journey? They may not be equipped to do that. They may not be willing to do that. My old tax partner was phenomenal at taxes, at tax strategy and tax planning. He didn't want to do any of the business stuff. That's okay. It just may mean they may not. Be the right one for you. So I want to make sure that. The CPA is forward looking. I want to make sure that the CPA is accessible. If I misspell it, don't judge me. Accessible? In other words, will they call you back? Can you get a hold of them. When you need to? Are they there for you? And if they're not accessible when you need them, then it becomes a little. More problematic, and you'll see some of the questions that come into play with this. So when it comes to asking the. Questions, here's some of the questions that I would tell you to ask. First off. When it comes to accessibility. I'm going to ask them how available will they be to answer your questions via phone or appointment? Do they make themselves available? How does that work? One, two. Another question to understand is, are you. Working directly with them? Are they going to pawn you off on a staff member or someone else? Who is that person? What are their qualifications, and what is their oversight of the things that you're doing? The real question, if we dial it down, is, who are you really working with? The one in the firm that you talk to or one of their people? Because if you're trying to create that relationship with someone, you want to make sure you know who that someone is. Okay. I would ask how, because this is one of the major complaints for most people around CPAs. How quickly do they return phone calls? 48 hours, 24 hours? Typically, I try to return calls within. 48 hours unless I'm traveling. Another question that I will ask is, how often will they contact me? How often will we meet to look over things? How proactive are we? I actually think that, especially if you're. In business, you should meet at least at the six month mark to see where you're at, see if there's any tweaks that need to be had. And at the nine or ten month mark to do your final year end planning and tax projections and tax planning so you can have things done before. The end of the year. Then you'll meet at the beginning of the year to prepare the taxes. Look back on the full year when you have all the stuff and look forward in the full year. Now, if they don't want to do. That, if they don't want to have those conversations, but you want that, remember, here's the deal. They work for you. They have to earn the right to. Have your business, not the other way around. You're paying them, and you have a. Right to say, this is the way I want to work. And if it's not their way of working, it doesn't fit their business model, that's fine. We find someone else, obviously. How do they bill? What's their billing rates is important? Will you get charged for additional expenses if they're nickeling diming you for copies and phone calls? It frustrates me. Okay. They're still antiquated in this swapping hours for dollars kind of mentality versus sitting back and saying, what's the value we're creating? What's the service we're providing? And doing it in a different way. What are their professional designations? What's their education? What's their background? What's their experience? Okay, those types of questions. If you're. In a different state than them, you may want to ask, are they familiar with your state provisions, your state laws, and are they licensed to operate in that state? To do that and then looking at. Are they involved in any of the other organizations? Do they do any teaching? Do they need to do any writing? What are their unique skills? All of those questions I'm going to. Ask before I hire someone. And how in tune are they with new laws, new tax laws, new obligations? Okay, if they're not staying in touch with the changes, then they're not going to be up to speed to be able to proactively guide you to do things to make that happen. Okay? And so these are the questions that I would ask to start with that will help you start to understand how. To choose a CPA. But when it comes down to it, there's one big word that comes into mind, and that is trust. What you're truly buying is trust. You have to trust them. You have to trust their work. You have to trust their advice. You have to trust their experience. You have to trust their expertise. You have to trust you can communicate with them. You have to trust that they will be there for you. And if you have any doubts in. That trust, then you need to find someone else because this is your financial future that we're talking about. This is the person that you're going to look to to guide you. And if you have a hesitation in. Your trust, then you either won't execute. What they tell you the way you. Should, or you'll execute something and it falls apart. Now, I'm not saying that they're infallible. I have made mistakes. The question is, what have they done? When they make those mistakes, how do they remedy them? How do they show up? How do they fix it? No one's infallible. But the first thing first when you. Get done with all the questions, when you get done with all of the work, is to ask yourself, do I trust them on these levels? And if the answer is a definitive, absolute heck yes, then great. If there's any hesitation, we go looking elsewhere. All right? I hope this gives you a little bit of light, a little bit of understanding, a little bit of a way to look for that person that can stand by your side and help you grow your income, grow your wealth, grow your path to building a business that matters again. I'm going to do a series of these. I'm going to talk about how to find an attorney and how to find an advisor also, so you get clear on it. Remember, I'm not selling investments. I'm not taking on accounting clients or tax clients. I just want to make sure that you do the right thing for your future. I want to make sure that you're safe. I want to make sure that you're safeguarded. I want to make sure that you're doing things that actually move the needle for you, move you forward. After all, it is your financial legacy we're talking. So let's do it the right way. And if I can guide you in that process, let me know. If you have questions, send me your questions, go to askmelnow.com. We'll make sure that we get them answered. That's my job is to help you light the path. I can't give you specific advice, but I can certainly give you a direction. And give you guidance with respect to what you're doing. All right? I hope you found this valuable. I hope that this helps you on your journey to find the right person to stand by your side and walk. The path with you. And I look forward to seeing you in another episode, all right? Either on the road as I'm speaking or on another episode on YouTube, wherever. It is, I look forward getting a chance meet you, see you, have a conversation with you. And until that time happens, always, always strive to live a life that outlives you. Cheers. See you soon. Thank you for listening to the affluent Entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur facebook group now by going to melabraham.com/group, and I'll see you there.