In the previous blog, you just fired your CPA. Now, comes the hard part. How do you find a CPA who focuses on delivering you an ROI? Even better, how do you find someone who actually understands business and doesn’t just crunch numbers? You need someone who understands how to plan for the future, not just respond to the present.

Background and pedigree aren’t everything, but here is the ranking if that’s essential to you. The hierarchy of the accounting world is the “best students” usually go work for the Big 4. Right outside this is BDO and Grant Thornton (who are also billion-dollar companies). Then you have the regional firms and local firms.

There are plenty of CPAs who worked for the big 4 who aren’t very impressive, and plenty who are small business or local firms and are awesome, so it’s imperative you learn how to interview CPAs.

You should also really pay attention to those that dig into your business. What kind of questions are they asking? Typically, those that ask good questions have the ability to gain a better understanding, due to their stronger communication skills. Questions and listening are a huge part of being a good tax CPA. Are they asking you questions about where you plan to be in the future? Are they truly digging into your business to understand it?

Strategies for someone who wants to grow his or her business’ worth of $10 million per year can be significantly different than the “mom and pop” business’ whose owner is content with slow growth and doesn’t think they’ll ever exceed $2 million in revenue. You want to make sure they understand your goals, and each party is aligned with that mentality.

Also, observe if they ask questions outside of your business. The skilled tax CPAs understand your whole financial picture, including businesses, personal investments, real estate, etc. They take a holistic approach and understand the entire family picture.

As mentioned above, questions are an important thing to observe in people. Here are a few questions that will help make sure you are finding a CPA who is going to focus on tax-savings.

• “Do you consider yourself to be conservative or aggressive?”
  If you hear conservative as an answer, run away fast. If you hear aggressive, make sure you understand what that means in that CPAs eyes. Being aggressive isn’t necessarily good either. The correct answer should be that they use the existing tax code, along with how you are currently spending your money, in order to minimize your taxes as much as possible.

• “Do you work with other CPAs, attorneys, or financial planners?”
  Unless you are working with a very large company (unlikely) that has all of this in-house, the answer should be yes. In order to do the best job, it is common for CPAs to utilize other professionals such as tax attorneys, estate planners, etc.

• “When should we meet during the year?”
  The main answer here is more than just at tax time. You should meet with your CPA a minimum of twice a year, and it is not uncommon to have 3-4 meetings throughout the year. If you have a lot going on in a certain year, there could be more infrequent meetings.

• “What are some of your best success stories or great strategies you have implemented for other clients?”
  Listen for what was done here (it is okay if you don’t understand it) and don’t be scared to ask questions and dive in further. You are looking for background on what was setup and why, along with something unique, not just run of the mill items, like changing entity structures or having a client invest in a 401k.

• “What is the best tax strategy or tax shelter/loophole?”
  The best tax strategy is simply to earn more profit. It is simple, make more money. Revenue and profit should always be more important than taxes. Having “tax problems” are good problems to have, and can be corrected, but always keep your eye on the prize of having a profitable company and generating more cash.

• “Is it better to pay $500k or $5 million in taxes?”
  The correct answer would be $5 million, as you are earning a lot more money. You want to make more money to grow your wealth.

• “What do you think about 401ks and IRAs?”
  Keep this question open ended. What you are looking for is for the CPA to address tax deferral strategies, and to see if they are thinking through items like this.

For some backgrounds: tax deferral strategies are not necessarily bad, they are just the worst kind of tax-savings tools. You are saving money now and paying it at a future point. The US has historically low tax rates, and debt is compounding like crazy, plus the trillions in new debt added during COVID. Do you think taxes are going to stay the same or increase in the future?

If they increase like most people think, you could potentially be saving money now, only to pay a much higher tax rate down the road.

You want to see if your CPA considers issues like the one above. That will show if they are a forward-thinking individual/company. Sometimes, CPAs simply just want to “save” you money now, not considering that it might rob your future self of dollars during retirement.

While you may not be a tax expert, it is critical for your business and wealth picture, that you have the ability to interview and successfully find a CPA who understands more than just immediate savings and filling out forms. Strategy is key to delivering a significant ROI. Don’t underestimate the amount of money a strong CPA can bring in. It can be a complete game changer for your financial picture.