facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
How Do You Find a Good CPA? Thumbnail

How Do You Find a Good CPA?

By: Rob Cook

As a CPA myself many people have asked me “Do you have a recommendation for a good CPA?” Luckily I’ve worked with many great CPAs in my career but ultimately I feel like I’m just giving them a fish instead of teaching them how to fish. In today’s article I’m going to provide you with a few tips on finding a good CPA who will hopefully do more than just spit out a return once a year for you.

Make Sure They Know Their Stuff

First and foremost, make sure your CPA is well educated in tax law. The level of competency an education between CPAs and tax preparers is as varied as the fish of the sea. Some focus on one particular area of the tax code, some focus on one particular type of client, and some are generalists.

Any tax preparer can be highly educated in their specific area, but there is a general trend to be aware of that is best represented in this visual:

 

The most highly qualified CPAs usually come from what is known in the industry as the Big 4 (EY [my alum], PWC, Deloitte, and KPMG). These are multinational CPA firms that handle the most complex and most difficult tax issues of the day. They tend to have the most overall knowledge but can also be more specialized.

On the opposite extremes are the Enrolled Agents. They have some formal tax training and knowledge but one can easily become an enrolled agent in about two months. This isn’t to say that an enrolled agent is a bad option, many are very good tax preparers.

Also, just because they work at a local CPA firm doesn’t mean they don’t have deep knowledge. Once of my favorite CPA referrals is a guy I worked with at EY but now works for his father at a local CPA firm. Just know the education and expertise of your tax preparer when you hire them.

Make Sure They are Passionate About Reducing Taxes – Permanently!

Like most professions there are those in the tax preparation world who just are there to get a tax return done and there are those that really care about doing taxes. It should go without saying that when you’re looking for your next CPA, choose the later.

The CPA who is passionate about taxes will stay abreast of new tax laws and their impact on you. They are more likely to be proactive and reach out to you about opportunities instead of completely reactive to you coming in asking them for help. And they will view the tax law as different opportunities for you to reduce your taxes and not a list of ways in which the government can take more from you.

The last thing that a passionate CPA will likely provide is permanent tax savings. In my experience, when discussing tax savings options, most tax preparers default to some form of temporary tax deduction. Essentially, they save you some taxes now but you will eventually have to pay for it down the road.

Deferring income into your 401(k) or other employer sponsored retirement plan is one such option. These aren’t bad options and can be the right thing in certain situations, but there is so much more you can do than just put more money away in these types of accounts.

If all your CPA says is put more money away in these types of plans when you ask for tax savings advice, it might be worth looking for a new one. A passionate CPA will know what those other options are available to permanently reduce your taxes and will be more than willing to help you organize your business and your life in such a way to be able to take advantage of them.

Make Sure They Know You

When you meet with your CPA do they briefly shoot the breeze and then ask for your documents and start to do your return? Or do they take the time to also ask you about your business or get into the details of your personal financial situation?

Much of what we regularly do in our lives can be turned into a tax deduction given the right situation. For example, if you regularly vacation in Hawaii your trip can become fully deductible if you own investment properties out there and are “working” half the time you’re there. And work could be as simple as looking up or visiting properties or networking with deal makers in the area.

However, in order to be able to do these types of things your CPA needs to know you on more than a superficial level. Your CPA is the expert, just make sure they are using the full gambit of their tax knowledge to help you by asking you more than surface level questions about your life.

Hopefully these few tips can be helpful to you as you begin your hunt for a good CPA. They are an invaluable team member for any serious business owner and investor, and it is time well spent searching for a good one. However, these are just a few of the qualities a good CPA will have, what else would you add?

Check the background of this firm/advisor on FINRA’s BrokerCheck.