Does all the clothing in your closet fit? Probably not. You may be taller or thinner now, or you may simply have outgrown the style. Either way, you've stopped wearing them; they don't last forever.
The same can actually be true of your relationship with some of your clients. At times, businesses and even individuals outgrow their accountant.
Here are some warning signs this may be occurring:
No One Has Been Proactively Managing Cash Flow: Expenses and revenue change all the time. They seldom align the way the business owner wants. They either need cash to tide them over or a place to get the best return on excess cash until it’s needed. Their accountant has never discussed cash flow management. They assume the business owner’s banker has this covered.
It’s Time to Sell the Business: Realtors usually don’t just list a house and start showing it. Rather, they inspect it, specify required repairs, stage the property and so on. Similarly, a business owner needs an accountant with experience in selling companies and specifically with getting them ready for sale to maximize their value.
They're Experiencing Geometric Expansion: Many businesses open new locations at some point. They might even cross state lines, drive online sales or sell internationally. The neighborhood accountant they have been using may be a close friend, but different jurisdictions may be a steep learning curve for them. They need someone who has worked with these types of businesses before.
They Don't Feel Important: The accountant does filings, but that’s it. The business owner really only talks to them when they call their CPA with a question. Otherwise, the accounting professional isn't proactive and doesn't take an interest in the success of the business.
The Business Has Developed a Niche: Over time, small medical practices have become their niche. They buy buildings, renovating them specifically for doctor’s offices and privately run acute care facilities. Their accountant has a general practice with very few doctors and some clients who own some rental residential properties. The business needs one who focuses on the medical field as their niche, someone who understands the specific needs of doctors and their relationship to large health networks.
If any of these situations is occurring with one of your business clients, they may have outgrown your services and would benefit from finding an accounting professional who can meet their current needs. Alternately, if you have any expertise in these areas, make sure people are aware you're looking for new clients actively so you can get your foot in the door when one of these opportunities arises.
We should also take a moment to consider the millions of people who don't have an accountant but who have come to need one, since it's a similar situation. A person should give up online filing and get a CPA in the following situations:
When It Makes Financial Sense: When the value of the tax savings an accounting professional will find exceeds the cost they charge, it makes sense to step up to a professional.
When They Start a Business: Many people have a side hustle. In fact, according to a 2018 report from the Small Business Administration, there are 30.2 million small businesses in the US. The report, using 2015 statistics, indicated 24.3 million are non-employer firms. When you have a side business, even if it’s consulting or selling on e-Bay, your tax situation becomes more complicated.
When Life Gets Complicated:If you are a wage earner, living in a rental apartment with no children, your taxes are probably pretty simple. The people planning for a postcard-sized tax return have you in mind. Once you own rental property or have income not reported on a W-2 form, you will likely benefit from professional advice. Don’t reinvent the wheel.
When Financial Planning Is Necessary: You want independent financial advice suited to your unique situation. You have met many people in the insurance and investment business offering planning for free. You realize their goal is to sell the products they carry. However, you want a fiduciary who provides financial advice but does not sell investments. Many accountants fit that description.
When You're Not Sure: A little knowledge can be dangerous. In 2017, Forbes ran an article mentioning the US Tax Code is almost 75,000 pages! You have a special situation and are unsure about the rules. It’s best to seek professional advice.
Inertia is powerful. Some people muddle along, sticking with who they’ve got. Others get comfortable doing things a certain way, even though their circumstances have evolved. Sometimes, though, it makes sense to step back and re-evaluate the situation. This will ensure that, as the accounting professional, you are truly doing the best job you can for your clients.
Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides high-net-worth client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor, can be found on Amazon.com.