Most business owners only talk to their CPA between February and April. While it’s a no-brainer to communicate during tax season, the real value comes from the conversations you have the other nine months of the year.
In fact, we meet with every business client at least quarterly.
What do we talk about?
From tax planning and compliance to adjusting projections due to changing economic conditions, there are many scenarios that warrant extra face time with your CPA.
Here are three conversations that can help move your business forward.
What are my numbers telling me about my business?
Dig into which products or services are profitable — not just generating revenue. For example, understanding how quickly you turn sales into actual cash reveals critical insights about your operations, and knowing the difference between profit and cash flow can transform how you run your business.
Questions to address with your CPA:
- What patterns do you see in my numbers?
- Where am I leaving money on the table?
- Are there any red flags in my financial trends I should address now?
It’s easy to misinterpret a P&L, for example, if you’re not clear on accrual vs. cash basis and not realizing that some of your “income” hasn’t been collected yet.
What happens when I want to grow?
If you’re looking for financing, you need to plan ahead. Your CPA can explain what lenders and investors expect to see in your financial statements and whether your current business structure supports or limits your expansion goals. Different growth strategies carry different tax consequences, and deciding between bringing on partners vs. taking out loans has long-term implications for your business.
What to ask:
- If I wanted a $500K line of credit next year, what needs to change in my books?
- What specific numbers in my financials do lenders focus on, and where do I stand?
- When expanding, what’s the tax difference between hiring W-2 employees vs. contractors?
With growth comes compliance issues, so be careful you’re clear on employment laws, especially if you employ remote workers outside your geographic area.
How can I get to where I want to be in three to five years?
Exit planning starts way before you’re ready to sell. Many effective tax strategies require years to implement properly, and your CPA can help ensure you’re building wealth both inside the business and in your personal finances.
Talk to your CPA about:
- What steps should I take now to maximize my business’s value at exit?
- What would a buyer want to see in my financials?
- How do I start pulling money out of the business tax-efficiently?
It’s never too soon to start planning for a profitable exit.
Making conversations count
If you’re not touching on these topics when meeting with your CPA (or worse, not meeting at all), you’re missing out on an informed perspective to help move your business forward.
At Magone & Company, we provide year-round support and solutions to help your business grow. Touch base with us if you’re interested in a partnership structured to create value, build wealth and foster a long-lasting relationship.
This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance specific to your unique circumstances.