One of the most important relationships that any business will establish is the one it forges with its accounting firm. Often, however, CPAs are underutilized. CPAs offer much more than tax preparation. They can provide expert advice in a number of areas, including estate planning, wealth transfer strategies, and mergers and acquisitions.
“There are many ways that clients can benefit by utilizing their CPA as a business adviser,” says Shreedhar Kothari, vice president of Gumbiner Savett Inc.
Smart Business spoke with Kothari about what types of services a quality CPA brings to the table, how a company should go about finding a suitable CPA and the importance of establishing a long-term relationship with one’s accountant.
Why is it important to consult with one’s CPA before making financial decisions?
Business owners’ financial decisions may affect their banking relationship, their credit facilities, and their corporate, personal or estate income taxes. Financial decisions have a far-reaching effect on both the company and its owners. I would rather have my client call 10 times a day rather than six months later. This gives me the time to plan and strategize before it is too late. It is vital that they pick up the phone and call their CPA before they make important financial decisions.
In what ways can a business benefit from utilizing its CPA as a business adviser?
CPAs are an important piece of the puzzle. They have access to the client’s business and personal information and are in the best position to interpret numbers and analyze them. A qualified CPA brings unique insights that help clients understand the numbers and aids in the decision-making process. I tell my clients to look beyond the financial statements and tax preparation so they can utilize our full potential to their benefit.
What types of services should a quality CPA bring to the table?
A quality CPA should understand the nature of his or her clients’ business and their needs. We handle a variety of businesses and have intimate knowledge of how businesses operate. A CPA should be a trusted adviser — clients should feel comfortable sharing their business concerns with their CPAs and look to them for advice. Apart from preparing financial statements and tax returns, we can help clients with their estate planning, wealth transfer strategies, buy-sell agreements, and mergers/acquisitions, identifying weaknesses in internal controls and ways to overcome them. Most importantly, a CPA should have the guts to tell clients if they are wrong and hold the line if necessary in interest of the business’s long-term success.
How should a company go about locating a CPA that understands its needs?
Companies should be very careful in choosing a CPA; the relationship with one’s CPA should be a long-term relationship. It is important to look at your needs five to seven years from now rather than just your needs today. Will your CPA be able to handle your business’s needs when it has grown manifold? I have seen many instances where a new business just getting off the ground hires a small accounting firm. This works for a while, but when the business grows, it outgrows the accounting expertise and resources it is being serviced with. These businesses don’t know what they are missing; they don’t know what could be done with their businesses to get the maximum financial benefit. It is important to make sure that you aren’t missing out on anything.
Pricing is important when making a selection, but that should not be the only factor. Other factors that should be considered include quality of service and timeliness. Business owners are experts at what they do, but rely heavily on their CPA to advise them when it comes to their financing and taxes. Make sure that your CPA has the resources and expertise to handle your business.
How often should business owners meet with their CPA?
I like to meet my clients at least two to three times a year. Most of my meetings are at their offices or their warehouse or their manufacturing facility, because I like to get firsthand knowledge of how their business operates and talk to management. This puts me in a better position to understand a company’s needs and offer my solutions.
There is no magic number on how often one should meet with an accountant. I would say as often as necessary. I meet with some clients two times a month and others a couple of times a year. It depends on what their needs are.
SHREEDHAR KOTHARI is vice president of Gumbiner Savett Inc. Reach him at (310) 828-9798 or firstname.lastname@example.org.