How To Hire A CPA That Will Save You THOUSANDS 💸 in Taxes

the CPA you hire for your business will either cost you money or save you more money than what they cost you there is a big difference between the two your CPA will either be an investment that provides you with a return or a money sucking expense that leaves you with a huge tax bill to pay Uncle Sam when I earned my master's degree in accounting one of my professors told me something that always stuck with me throughout my career he said a great CPA will always pay for themselves a great tax professional will more than pay for their fees by the amount of money that they are able to save you and there is an art to hiring this person so today I am going to help you identify the characteristics of a great CPA that will be an asset to your business we're talking about how to evaluate their fee structures their experience what services they should provide what their communication should be like and so on and along the way I am going to give you some questions that you should be asking yourself and the professional you decide to hire in the future my name is Sherman and yes I am a licensed CPA that has worked in this field for over a decade if we're including my family then we've worked in this field for over a half century in my work I have been exposed to some great CPAs some terrible CPAs and tax professionals that claim you don't need to be a CPA because they aren't one and so on and today I just want to cut the crap and help you pick the best professional for your business so let's go ahead and dive in foreign [Music] so first of all we need to talk about your largest expense and that is taxes taxes are the single largest expense that you will pay in your lifetime the average person spends 25 to 35 percent of their life working to pay taxes that's three months of every year that's 10 to 20 years of your life all going to taxes now these taxes come in all different forms there's income tax sales tax employment tax estate tax property tax and so on together these taxes will likely cost you more money than any other expense in your life more than your housing more than your children more than your transportation and so on so when we talk about hiring a CPA or any tax professional we're talking about hiring someone to attack your largest expense taxes and the person you select could be the difference of you paying millions of dollars in taxes over the course of your life so this is an extremely important decision now let's talk about how you can pick this person number one scope if you want to reduce your tax expense which is your largest expense the person you hire should offer a service that directly accomplishes this not indirectly for example most tax professionals today only do compliance work or in other words they will only help you file your tax return correctly so what happens is that people go out and hire CPAs to file their tax return and they think that just because they hired a CPA they're going to pay less money in taxes but unfortunately this is rarely the case especially if all they are doing is tax preparation for you tax prep just means that they're going to take the information you provide them with and slap it on your tax return and you are just going to pay tax based on the information you report on that return but if you want to pay less less taxes like most people you need to modify the information you report on your tax return if you want to change your tax you have to change your facts and this can only be done before the tax year or at the very least before the tax year ends and most importantly this is not tax preparation if you want to change your facts to reduce your tax you need tax planning and unfortunately only 18 percent of firms do proactive tax planning only one in five tax firms CPAs included do any tax planning at all which means that if you already have a CPA then there is an 80 chance that they cannot help you reduce your own tax bill and if you are unsure on if your tax professional does tax planning just ask yourself these three questions number one have I ever received a tax plan that shows me everything I need to do to reduce my taxes in the future number two does my tax professional ever ask me questions questions to help me minimize my tax bill or do they just take the information I provide and number three do I ever talk to my tax professional about ways to reduce my taxes during the tax year or do I only hear from them when it's time to file a return if your answer is no to any of these questions then you are likely a victim to a lack of tax planning which means that there is a good chance that you are paying thousands more in taxes than you would otherwise pay especially if you own a business or earn a large amount of income so to prevent this in the future make sure you hire a CPA that specializes in tax planning which actually leads me to my next Point here number two experience there are different types of tax professionals and you need to make sure that the one you select has experience in handling clients just like you for example if you own a business then why would you choose a tax professional that Prime merely files individual tax returns or if you know you need tax planning why would you choose someone who primarily does tax preparation if ninety percent of their working experience is unrelated to what you need why would you trust that person to produce enormous results for you in my experience I see people made this mistake all the time because they simply like the person that files their tax return really that simple maybe there's a good relationship there and you've worked with them for several years so you find it easier for you to continue working with that person now this is all fine and dandy if it's not costing you thousands more in taxes when you filed those returns and the less experience they have in working with people just like you the more likely you are going to overpay in the taxes that you owe so don't let a good relationship be the reason why you allow taxes to cost you millions of dollars over your lifetime it is okay to Simply outgrow your tax professional But ultimately you want to hire a CPA that has experience and number one saving people a lot of money in taxes and number two serving people just like you some very easy questions you could ask is one how much money do you save your clients on average and two do you work with clients similar to my situation and if so how many also another big note when it comes to experience find out the experience of the exact person who will serve you this is important for people who are considering a firm to work with I have seen people fall victim to being sold by the experience of the firm instead of the experience of the practitioner they will be working with so if you are not hiring a solo practitioner then you need to make sure that whoever you're being handed off to at that firm is skilled and experienced in serving people like you as well you don't want the fate of your largest expense to be in the hands of a college graduate with no experience other than following some basic procedures tax is so complex and it is incredibly difficult for firms to hire exceptionally great talent so to save yourself the headache you might find it easier to work directly with a solo practitioner number three communication there is nothing more frustrating than slow response times from any service provider let alone your CPA but unfortunately this is very common in the tax industry even some of the best CPAs are terrible with communication and in my experience the number one reason why communication is so poor is due to their High client volume most firms want as many clients as possible to earn as much income as possible which directly results in them communicating as little as possible with their clients and it is not uncommon for communication to stop completely and your CPA becomes totally unresponsive to you so let's talk about how you can avoid this when you hire your next tax professional first ask them directly how soon will you be able to respond to any questions that I have anything longer than two to three business days would be a concern to me as their client secondly get a feel for your CPA's client volume specifically you want to know how many clients do they serve on an annual basis what you're trying to get a feel for here is how busy your main point of contact is so that you can gauge whether or not it is even realistic for them to have a chance to communicate back with you personally I would say it is a red flag if your main point of contact is serving more than 150 clients at one time number four fee structure your CPA's fee structure can make or break the engagement but may maybe not in the way that you would expect so naturally When selecting a CPA people want to pay as little as possible I mean after all that's the key to Building Wealth right if you cut expenses you would have more money that simple math that works for 99 of expenses but unfortunately this is not good logic to use for hiring a CPA and that's because a great CPA is an investment not an expense remember you are paying your CPA to save you money you are paying them to add money to your bank account and they do this by reducing your tax expense therefore you should want to hire the person who is going to save you the most amount of money in taxes not the least amount so instead of looking for the cheapest CPA you want to look for the best CPA if you hire the best CPA in the world then you could assume that you're going to save the most amount of money so when it comes to fees you have to understand that the best option on the Shelf it's normally not the cheapest option as with any investment the more you invest the more money you will earn so if you truly look at your CPA as an investment you will be looking to invest the most not the least now no two Investments are created equal and there's always risk so when you evaluate different options you should choose the one that is most likely to generate the highest return on your investment with CPA is the best way to do this is to choose a fee structure that is directly correlated to the results you want to achieve you can easily do this by requiring a contingency or a guarantee with your investment that is related to your primary goal so if you want to save money in taxes you can pay them a percentage of the money that they will save you in taxes so if they're going to save you so much money in taxes then surely a fair percentage of those tax savings would be more than fair to them as a fee an alternative to this would be to ask your CPA for guarantees so if they're so good at saving you money and taxes then they should be able to guarantee your results with your investment this aligns both parties with the main goal here and only adds more certainty to your investment otherwise you could end up spending a lot of money with no results to show for it so I would shy away from CPAs who charge High hourly rates retainers or fixed fees with no promise of results so when it comes to hiring a CPA these are the biggest things you need to look out for because taxes is your largest expense you should have the best CPA to help you reduce it and this is how you can accomplish that in one sentence which summarizes this entire video hire a highly experienced CPA that guarantees tax savings through proactive tax planning that is not too busy to communicate with you and if you just so happen to own a highly profitable business then consider applying to work with me directly at mycpacos.com as always thank you for watching and I look forward to seeing you in the next episode here

Channel: LYFE Accounting

Views: 8,975

Keywords: lyfe accounting

Id: rkatR8scVK8

Length: 13min 0sec (780 seconds)

Published: Wed Aug 16 2023