How to Find Your Perfect Tax Pro (and Why You Should Find Them in November, NOT January… or April…)
As I went to bed last night, I asked my spirit team to help out with some creative tasks. As in, what the hell was this blog post going to be about? A theme emerged. And while I’ll keep the corresponding dreams to myself, I do want to discuss your relationship with your tax pro.
More importantly, let’s talk about whether you need to change that relationship or lean into it a little bit more than you did in years pre-COVID.
Businesses I have worked with this year are all over the board. Yes, some have closed. 😞 There are some that had a couple of months of reliving that “start-up hustle” of the early days in order to pivot, regroup, and look for alternative funding. And then there are the ones that are pretty much on track to repeat 2019, or do even better.
AND all of those scenarios I just pointed out have some type of tax-related situation that needs to be planned for.
In a year that has had moving targets, pandemic-only tax rulings, unusual business funding options, and well, there are still officially two months to go - do you really want to add being blindsided by some unplanned tax liability come April 2021?
Even pre-pandemic, I have always encouraged all businesses that I work with to meet with their tax professional for a rough estimate in November or December. So yes, even if your tax pro just finished up your 2019 return on October 15th, or if you don’t have one, I still recommend having a sit down to review and plan for 2021.
Consulting vs. Tax Processing
A common complaint I hear from business owners is the lack of consulting, conversation and planning that they receive from their tax pro. Normally, I hear this after the business owner has gotten their taxes back and the liability owed is staggering.
“If only my tax pro would have reached out to me”
“Why didn’t my tax pro warn me?”
Or something along that line.
Here’s the thing - not all tax pros provide consulting services. It’s not a requirement for them to do so. In fact, some are simply tax return processors that work during tax season only, love their numbers, and they like it that way!
You have to actually ask them if they do provide it and to make sure it’s on your radar to schedule the appointment.
Granted, things in the tax world are changing, and consulting is becoming a more common offering. That means it will be easier for you to find a new tax pro if it’s not in your current provider’s wheelhouse.
Communication Skills
There was a time, early in my career, that the world was very black and white. It was the only color I wore and life was based on whatever the numbers showed on a report - no connection to emotions or feelings. The only other color allowed in this accounting world was red, and that was never a good color.
In today’s world, there are number-focused people and relationship-focused people. Occasionally, like myself, you will be able to find someone that bridges the gap, but it is rare.
Now, we definitely want the number-focused people in our lives. They are the ones who love to play with the numbers, create different scenarios, dive into tax law, and remember all the due dates and filing requirements.
The more number-focused the tax pro, the less touchy-feely skills they will have. AND yet, business owners want both.
So how do you find them?
By talking to multiple tax pros and using a set of “interview” questions (no worries, I have a resource for that). Problem is, most business owners resist the extra step to talk to more than one tax pro before deciding.
Personally, I am a fan of giving three referrals. Sort of like Goldilocks and the Three Bears - one will talk down to you, one will be too soft and not enough substance, and one will be just right.
Ask them questions like:
What is your normal response time?
How best can we reach you?
Do you have another team member that will be the lead or will we work directly with you?
Will it be all via email or do you provide hard copies?
How often do you normally advise businesses during the year?
In a true partnership, you will be interviewing each other. So rather than going into the conversation with all the negative baggage from your prior relationship, ask for the things that you need to create a healthy partnership.
Will You Call Them?
It is one thing to hire a tax pro with perfect consulting abilities, easily accessible on your phone... but actually calling them is another thing entirely!
“I don’t want to bother them.”
“They are too expensive. I get dinged for every minute they talk to me.”
Why hello there, lack mindset, nice to be aware of you! Now, how willing are you to shift that?
Yes, tax pros have businesses too and thus are paid for their expertise and time. Those with above-average communication skills will have the “Money” conversation at the beginning stages of your relationship.
The great thing these days is that more and more tax firms are able to offer retainer packages. You pay the same amount each month to avoid big spikes in vendor payments a couple of times per year. Retainer packages will normally include a couple of conversations throughout the year.
For example, the tax firm I work with here in Portland (shoutout to All Sorted, a Tax Boutique) has a couple of packages to choose from that bills you in 12 monthly installments. There is always the option to go à la cart, with a deposit down, and be prepared to pay for the work once it is complete.
Gone are the days when you had no idea what your tax pros fees would be. (That is unless you enjoy unexpected surprises like that!)
Your shiny new consulting relationship needs you to feel like they are a trusted partner in your business. If you aren’t willing to call them, then you need to keep looking.
AND, that bookkeeper you are working with - hell no, they are not a replacement for a strong collaborative working relationship with a tax pro! While they may be able to do a mean simple tax estimate, they are not spending their time getting their educational groove on learning all the new tax laws. Making this choice is an example of your lack mindset showing back up again.
Permanent Switch or Kicking the Tires?
You may not realize this, but it doesn’t have to be an all or nothing type of relationship.
You can have your powerhouse tax pro processing the return AND a tax pro that is your consultant - at different firms. At some point, you may realize it would be easier to have them under one roof, but there is absolutely no rule that says they have to be.
In fact, one way to test out the communication style is to hire your new consultant style pro to review and evaluate your prior-year tax return and provide a current year estimate. Yes, you will be paying them for their time, probably 1-3 hours. Depending on the complexity of your return, where you live, etc, ask for a quote first and for planning, I would expect it to be along the lines of a Q&A session with an attorney so $250-500 (a deductible business expense!).
That way you’ll be able to see how their brain thinks. Do you need someone that is a little more conservative or one that pushes the boundary a bit? Did they take the time to explain the options in terms you understand, or did you leave feeling bowled over?
If they find nothing wrong and no suggested tax planning is needed, then you know your current provider is doing well. Or, you’ll be in the beginning stage of a brand new relationship.
So to summarize:
Evaluate your current relationship with your tax pro, what’s working and what’s not.
Get up to three referrals - ask your bookkeeper, strategic partners, and other business colleagues.
Set-up meet and greets with each of them and use the same interview questions for each meeting.
Make sure to have the “Money” conversation - what are their rates, do they offer retainer packages, how often do they bill, payment terms and methods.
Pick and ask for a tax return review and planning services - kick the tires to see what their style is.
Make a decision - do a pro/con list, ask a colleague.
A profitable business has a cash reserve that is kept for, well, times like our current pandemic! Since you keep cash in the business, you will owe tax. And since you want a business that is healthy and has longevity, then you need a strong collaborative relationship with a tax pro!
Now is the time to make the switch.Not January 2021 and especially not April 2021. Make the switch and have the conversations now when everyone is well-rested, resourced, and you actually have time to not only make an informed decision but also shift cash reserves if needed.
Still not sure where to begin? Book a free call with me, bring your questions, and I’ll share my best tips and resources for helping you find your perfect tax pro!