For many small business owners, the relationship they have with their accountant is very transactional. In other words, they meet with their accountant at year-end to file their taxes; and maybe on a quarterly basis to file their employee withholding or pay their quarterly estimated income taxes. At least that’s how I approached my accountant as a small business owner and I think I left profits on the table as a result.
One of my best friends is a CPA. Although he wasn’t my accountant, he often tried to give me advice (great advice had I paid more attention to him), but I interpreted what he was saying as accounting mumbo jumbo and while I didn’t ignore him, I didn’t pay as much attention to him as I should have. Hindsight being what it is, had I been more engaged in what he had to say, he could have helped me build a more profitable business.
Over the years since then, I’ve come to appreciate the value of the accounting perspective; and were I to start another business, I would expect a more consultative relationship with my accountant.
Does it Make Sense to Consult with Your Accountant?
My focus, as a business owner, was to produce the best product I could and get as many customers to buy it as possible (with a big enough margin to make a profit). Probably not very different than where many business owners focus their time. Had I given my accountant more heed I would have seen more opportunities to reduce costs, invest my profits more efficiently, and ultimate make more of them—make more profits, that is.
My friend argues that every business needs what he calls “A Profit Expert.” I think he’s right. And, although that expert doesn’t necessarily need to be an accountant, your accountant could play that role—or at least help you master that role.
Because an accountant likely has more access to what’s happening inside your business than anyone else (next to you), they’re in a position to see things or notice trends that you might not.
Their training gives them a different perspective when they look inside your business. This is a valuable perspective that has the potential to make additional profits for your business, if you allow it. Because they offer a dispassionate pair of eyes and can look at your business without the distractions of day-to-day business operations, they may recognize trends in production costs, inventory costs, or other areas of your business that you might not notice in the heat of battle.
How to Initiate a Consultative Relationship with Your Accountant?
The good news is that this will likely be easier than you might think because there are many accountants who would welcome the opportunity to do more than file your taxes. With that in mind, here are four things you can start now to initiate a broader relationship with your accountant:
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When I think back on the many conversations I had with my accountant, I now recognize there were times when he tried to engage with me at a more consultative level, but I wasn’t interested or wasn’t paying attention and therefore didn’t recognize those opportunities.
Take the first step. Ask if they see anything in your books that could be a red flag, which would demand immediate attention. Taking the relationship with your accountant to the next level could be an invaluable part of building a successful small business.