WHY YOUR CPA SHOULD BE YOUR FINANCIAL QUARTERBACK

HOW ENTREPRENEURS BENEFIT FROM THIS APPROACH

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Most entrepreneurs I work with are busy people who are confronted with more decisions than they have time or the desire to research.  The implications of making the wrong decision or of not fully executing on the right decision can be severe.

My colleague Darsi Casey recently wrote an article about why entrepreneurs need a close relationship with their CPA and why they shouldn’t wait until tax season to build this relationship.  There is another important idea I’d like to introduce with this article.

I believe that a relationship with your CPA should be one of the most important relationships in your life.  If you are a time-starved entrepreneur with too much on your plate, I believe the right relationship with your CPA can make a world of difference.  Here are 5 reasons I believe A CPA should be the quarterback of your financial life.

 

A Story To Illustrate My Point

I was working with an entrepreneur a while back who was facing an important decision.  This individual was in his early 50s.  For a variety of reasons, most of which were beyond his control, this person had not saved enough for retirement.

This scenario is more common than you might realize with entrepreneurs.  Many business owners make a lot of personal sacrifices as they are building their business.  One area that can be easily deferred, when money is tight, is saving for retirement.

But like many entrepreneurs, this person’s sacrifices were beginning to pay off.  He had realized a very good year in business that yielded about $50,000 in discretionary income.  He had to decide what to do with this money.

This individual wanted to put all $50,000 into a tax-deferred retirement account.  I conducted some research on his behalf and recommended a SEP.  When I explained the reasoning and the benefits of this approach, this person wanted to move ahead quickly to meet pending deadlines.

But we soon ran into issues.  This entrepreneur was travelling on business and was not available to attend meetings in person with the financial advisor who could help setup and fund the SEP.  Here is where I made a mistake and learned a lesson I’d like to share with you.

I turned over the process of setting up the SEP to the financial advisor, providing insight into what the client wanted and why.  I knew the entire situation needed to be addressed in about 90 days to meet IRS deadlines.

I checked in with the client a couple of weeks before the deadline to see how things were progressing.  Things had not gone well with the financial advisor.  This was unfortunate.  The client ultimately decided just to invest $6,500 of the $50,000 into a standard Roth IRA.

The outcome for this client was less than ideal.  He ended up paying more taxes and putting less money towards retirement than he would have if our original plan had been executed.  But that may not be the worst part!

I shudder to think of the difference, 25 to 30 years down the road, between the $6,500 he did invest and the $50,000 he should have invested.  Given reasonable rates of market return, this delta could be in the tens of thousands.  This is an opportunity cost that he will not recover.

Out of this experience, I learned a painful lesson.  It’s not enough to do the research and provide great advice.  I need to be the quarterback, the person taking responsibility to execute the details and ensure outcomes, on behalf of my clients.  This is crucial to my clients realizing their dreams.


Key Take-Away

Research and great advice are not enough.  You need someone to be your quarterback, to execute details and ensure outcomes on your behalf.


 

Reasons Your CPA Should Be Your Quarterback

After reflecting on this situation, and so many others like it that I’ve encountered over the last several years, I’ve come up with the top 5 reasons I believe your CPA should be your financial quarterback:

  • You’re busy.
  • Your CPA is your most trusted advisor (at least they should be).
  • There is complexity in the execution of plans.
  • The details matter.
  • You need one resource to bring it all together.

Let’s take a look at each of these.

 

You’re Busy

Entrepreneurs are some of the busiest people I know.  I imagine that you would agree with me that there is no way you can do everything yourself.  This is the reality that entrepreneurs face.  Time is precious.

Energy and focus are precious too.  Many entrepreneurs have to make difficult choices when it comes to time management.  Since you probably can’t get everything done, you have to choose where to focus, what gets your full mind-share and what does not.

My son is a football player who loves the game.  I know how much it means to our family to be involved in his life, to watch him play and to see him grow into an amazing young man.  The last thing we want to think about during our family time is details on financial matters.  I’ll bet you’re the same way.

This is the single biggest reason you need a financial quarterback.  You don’t have time to deal with all of the plans that need to be created, details that need to be analyzed and steps that need to be executed.  But you’ll think about them anyway.  They’ll gnaw on you.  They’ll eat away at your peace of mind.

When you have a financial quarterback working with you to get the details right, you are essentially adding time to your days.  It’s like giving yourself greater peace of mind and uninterrupted focus, whether on work, on family or on whatever matters to you.  When you know that someone capable has your back and is managing details you don’t have time to manage, you gain peace of mind, clarity and the increased ability to focus.

 

Your CPA Is Your Most Trusted Advisor – At Least They Should Be

I believe the relationship with your CPA should be one of the most vital and most trusted relationships in your life.  Too often CPAs are seen as people who just crunch some numbers and then tell you how much you owe on your tax returns.  If that is the kind of relationship you have with your CPA today, let me tell you that there are much better alternatives.

Because my clients trust me, they tell me things that they don’t tell hardly anyone else in their life.  During one of these conversations recently I had an epiphany.  You can’t separate love and money.  The decisions people make with their money telegraph what they love and what they value.  This goes way beyond tax returns.

Because my clients share with me what matters to them, I can help them in so many areas.  I can work with other professional advisors to ensure the details get properly executed.  This allows me to serve as the quarterback to my clients – to ensure the job gets done.  If you don’t have this kind of relationship with your CPA, you are missing out.  Your job is so much harder than it needs to be.

 

There Is Complexity In The Execution Of Plans

The scenario I described about the entrepreneur who wanted to invest $50,000 is representative of the kinds of situations my clients face.   Business owners, especially those who are enjoying success, have numerous options for achieving their goals.  But here’s the challenge.

Each of these situations requires a plan with details that have to be executed – often on a timetable.  Miss the deadlines and you miss the benefits and potentially realize the penalties.  One thing all of my clients share in common is a hatred of paying more than their fair share of taxes.

But it’s not just tax strategies and planning that involve complexities.  Retirement planning, estate planning, business formation and exit strategies, college funding, real estate acquisition and financing and so many other situations all come with details that have to be executed.

Do you have the time, the energy and the focus to make the best decisions in each of these areas and then execute all of the appropriate documents, setup accounts and work with professional advisors?  If not, the right relationship with your trusted CPA can help you tremendously.

 

The Details Matter

If you’ve ever been through an audit, you know how important it is to get the details right BEFORE the audit.  Getting the details right on tax returns and other documentation is the difference between smooth sailing during an audit or rough waters.

The details matter when it comes to tax, retirement, estate planning and other areas.  This is one major reason your CPA should be your quarterback.  We are very good about digging into the details and getting them right.  It’s something we’re known for.

 

You Need One Resource To Bring It All Together

This may be the biggest reason of all that your CPA should be your quarterback.  You need one resource to turn to for the financial matters in your life.  The more successful you become, the more complexity there will be in your financial life.  But there will also be less time and more advisors clamoring to be in your inner circle.

I’m not suggesting that you shouldn’t have financial advisors, estate attorneys, insurance specialists, bankers or other advisors.  All of these relationships matter.  But how will you know that the advice you are getting is in your best interest?  To whom do you turn to get an objective and unbiased assessment?  More importantly, if you don’t want to be, or don’t’ have time to be, the quarterback of all of these advisors, who can do this on your behalf?

At the end of the day you need one advisor who knows the whole picture – inclusive of financial advisors, attorneys, insurance and bankers – who can assist you in your decision-making processes.

 

Next Steps

If you don’t have this kind of relationship with your CPA today, we should talk.  Please reach out to me on LinkedIn or call our office.  I know you’ll be glad you did.

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Suzanne-blog

POSTED BY

Suzanne Olsen – CPA
Suzanne Olsen has been with Casey Neilon since its inception in 2006. She has worked in both the private and public accounting sectors for the past 14 years. Suzanne has her Bachelors degree in Business Administration with an emphasis in Accounting from the University of Phoenix.
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