Why You Should Be Using Your Accountant for More Than Taxes

Early on in my career, I was a consultant for privately owned businesses — at least, I thought was a consultant. In retrospect, I was in a bit of a post-MBA daze and “consultant” had a nice ring to it. Still, I found that there was a huge market for business owners who needed a little bit of help from a financial perspective. During this time period, I worked with hundreds of privately held companies with a variety of issues, most of which were related to finance. Typically, I dealt with the company’s owner or CEO. These businesses varied greatly in size and had a range of problems, from how to scale effectively to how to stay solvent. The time spent with these businesses was extremely formative, because it gave me a window into what happens with a lot of private companies. Sageworks, a company whose core mission is to help businesses understand their finances, would certainly not exist today if it weren’t for that time of my life.

Some of the insights gained from the experience took several years to sink in, but some struck me almost immediately. One that fell into the latter category was how tragically underutilized outside accountants and CPAs are. Having worked with thousands of accountants and business owners over the years, I’ve been able to outline a few core personality differences that might cause friction (or at least a lack of understanding) between business owners (CEOs, founders, etc) and their accountants. Remember, these are very rough generalizations, but I’ve found them to be true in my experience: most CPAs tend to be linear thinkers, while entrepreneurs are non-linear. Accountants are inductive, but business owners tend to be deductive. CPAs may err on the side of caution and defense, business owners tend to err on the risk-taking side. To use a tired phrase, accountants tend to be “left brain,” while business owners are more “right brain.” For all of these reasons, I detect a certain disconnect between the “right brain” entrepreneur/CEO and the “left brain” accountant.

This saddens me for many reasons. CPAs tend to be very genuine people interested in their clients’ success, even if their demeanor doesn’t suggest this. However, they tend to get caught in the weeds, focusing on minute portions of a business rather than the big picture. Finance people often resemble an ant reading a newspaper. They recognize that the letter “A” is slightly off kilter, but they get so caught in the fine print that they forget to rise above and see the full story. This mentality can be devastating in terms of communicating with a business owner, CEO, or entrepreneur.

It’s totally understandable why you, as a business owner, manager, or executive, might be tempted to discount your CPA. However, if you do so, know that you’re depriving yourself of an incredibly useful source of insight, peer review and sound advice. A few common characteristics of the best CPAs I’ve worked with are outlined below, to help you identify the best accountant for your business:

1. They speak in a language you understand. Despite the difference in “dialects,” the best CPAs relate everything you discuss to what you can do to improve performance. There’s no use going to a CPA who says, “You don’t have profit.” Anyone can do that. I’m looking for: “Here are the six things you can do to improve profit.” The accountant you’re looking for will use direct, clear and often non-financial language.

2. They’re experienced. The older, the better. Seriously. You want an accountant who has seen thousands of business cases. You want someone who has had to help multiple businesses navigate very difficult (and often very messy) issues.

3. They connect operations with finance. Unfortunately, plumbers tend to plumb, lawyers tend to practice law and birds tend to fly. Similarly, accountants oftentimes think about accounting and taxes only. The great accountants look at business as a circle where sales and marketing and finance and HR are all tied together. They can pull data on the operations of all of the various areas of the business together to provide more meaningful insight and advice. This requires experience and information. By all means, avoid accounting firms that only talk about taxes. One of the deadliest things in the profession is the tendency for accounting firms to think of themselves as tax preparers. Accounting is a beautiful thing; it’s the basis for all business decisions. But beware of CPAs who get too wrapped up in the 1040s, 1120s, or whatever else it is that takes them away from being a true business advisor.

4. They’re a counselor and a friend. At Sageworks, we work with accountants every day. I love their earnestness and their domain knowledge, and I know most of them want to help. But you have to get someone you’re comfortable with, who views themselves as a friend. This simply comes down to a matter of personalities matching up the right way.

Unfortunately, the best CPAs are often introverts, and they won’t advertise their knowledge. They’re quiet, intelligent, methodical, self-effacing people. You may have a hunch that your accountant knows what he’s doing, but you’ll still have to proactively solicit his opinion and advice. It’s very unlikely that he’ll volunteer it on his own. Finding a good accountant is only the first step. Next you’ve got to pull the knowledge out of them with some consistent effort. However, that effort can often yield a tremendously insightful and valuable kind of business information.