Don’t Fear Change – Replace Your CPA!

by Oct 27, 2021Blog, Vlog0 comments

Why are people reluctant to switch CPAs?

The main reason is simple, people fear change. There are multiple statistics that show the average client stays with their CPA for over 7 years.

This is an extremely long time, especially when you factor in many common criticisms of clients and their current CPA. One complaint is that CPAs frequently take their client’s financial data and merely enter the numbers into the tax return. Those are called “numbers-in-a-box-type-CPA”. Another frequent issue, due to CPAs having such a large client load, is lack of communication and not enough time to spend on tax planning. Tax planning is essential for the CPA to deliver maximum ROI to their customers.

At Upside, we frequently have clients come to us with some or all of the issues mentioned above. Even with a lot of frustration, the answers are always very surprising when the question gets asked “how long have you worked with your CPA?” The answer is often, “oh, this is our third year, fifth year, or even ninth year.”

The main cause for tolerating poor service is, quite frankly, people fear change.

You shouldn’t fear change when it comes to switching professional service providers. This doesn’t just include CPAs, it could be bookkeepers, CFOs, or financial planners.  As your business grows, typically your professional service providers grow with you. That commonly means “upgrading” your professionals over time.

Additionally, people are reluctant to make the switch because they are concerned it is going to involve a lot of work.

Recently, Upside performed a very high-level review for a business owner and the moral of the story was, “hey, potential prospect, we know we can save you a lot of money based on what we’ve seen.”

His estimated savings were around $20,000 per year. The prospect’s feedback was essentially, “thanks for this, we were very impressed. However, we’re not going to make the switch at this time. You know we’re very busy right now, so let’s look into this next year.”

That’s fine. Not everyone is going to switch but, it’s critical to you as the business owner to think through that potential change. This gentleman is a homebuilder so, if you know much about real estate in Austin, you know he is really busy.

However, the amount of time needed from him would’ve been about four to six hours. Much of his financial/tax information would have been provided by his CPA and bookkeeper.

A transition to a new service provider can be a pain in the ass.

This business owner would have had to explain a few things again, participate in some tax calls, and provide some documents.

Let’s estimate it was five hours of time. If this gentleman saved $20,000 per year and spent 5 hours of time, he earned himself an additional $4,000 per hour on this work. As a business owner, you must strongly consider when those annoying transitions are worth the benefit to both you and your company’s checkbook.

As mentioned above, tax planning is where the customer gets their maximum ROI. It is important to dive into this area a little more. The primary issue in the CPA space today is most of them do not provide actual tax planning.

An important clarification of two things that are not tax planning.

  • If you put money into your IRA/401k, you will save on taxes. That is such basic level advice it shouldn’t even count.
  • Telling a client how much money they owe on their taxes is not tax planning, it is a tax projection. While that is a useful service, it provides $0 in your pocket.

Tax planning is proactively working with not just this year but, also future years, understanding your business, long term goals, and knowing which strategies can be implemented to ensure maximum ROI.

A good tax planner can save you a substantial amount of money.

A lot of this money can frequently be saved on a recurring basis. A customer that recently worked with us was presented with a strategy that would save them over $200,000 per year in taxes. They were doing about $5 million in top line revenue, so that added a very large portion to their bottom line. Annual savings vary based on the unique business needs and investment options of the business owner.

People don’t like to this hear this, but it is true. You are responsible for your taxes. It is a fact that you aren’t going to be an expert on the tax code. The responsibility lies on you, as the business owner, to make sure you are working with a group who is proactively tax planning. If you are uncertain if your current CPA is doing this, ask other firms for a 2nd opinion. In fact, it is prudent to do this every 3-5 years.

Business owner’s often wait a year or two to engage a tax planner after they consider making a change. This often costs that business owner tens to hundreds of thousands of dollars per year, depending on their situation.

Can you afford to wait to make a change in your CPA?



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