The strength of the relationship between a Certified Public Accountant (CPA) and their client is crucial for financial success. A strong, ongoing partnership allows the CPA to provide timely advice, identify opportunities for tax savings, and assist the client in navigating complex financial decisions. ARB has previously covered how a client and their advisory team can work together to effectively tackle the tax preparation process. In this article, we will dig deeper into the benefits of strong client-advisor engagement and the importance of sustaining these vital connections. We aim to highlight the impact this special dynamic can have on both the client and accountant over time.
The Engaged Client
Consider Andrea, a small business owner who operates her own retail store in Portland, Maine. From the beginning, Andrea recognized the importance of clear communication with her CPA. She proactively informs her CPA of significant financial decisions before undertaking them, schedules regular calls to discuss strategic planning, and seeks updates about tax and financial regulation changes.
Benefits of Consistent Communication
- Effective Strategic Planning – Andrea’s open and consistent communication with her accountant allows for proactive planning of an audit, tax, or assurance engagement. There is more time to review financial records, large changes during the year, and any potential issues that arise. This early preparation helps minimize surprises as year-end approaches.
- Informed Decision Making – By consulting with her CPA before making significant financial decisions, Andrea ensures she is informed about any changes in tax legislation or relevant financial regulations. Regular check-ins, even for seemingly minor matters, helps keep the business on track and mitigate potential issues before they arise.
- Streamlined Engagement Process – Prior communication and timely provision of documentation creates a smooth and efficient process for both parties. This holds true regardless of whether a client is engaged for tax return preparation, a financial statement review or audit, or consulting services.
From the accountant’s perspective, a client who maintains regular communication is an ideal partner. Being up-front with your accountant allows for stress-free filing and completion of deliverables. Additionally, maintaining contact throughout the year enables more time to plan for changes and can lead to beneficial consulting opportunities. With more time to adapt to business changes, both parties can avoid last-minute surprises and ensure optimal outcomes.
The Disengaged Client
In contrast, consider Michael, who owns his family’s construction company. Unlike Andrea, Michael’s communication with his CPA is sporadic and typically limited to the periods surrounding his financial statement audit and tax return. He seldom reaches out for advice or updates during the year, which can lead to a range of complications.
Consequences of Minimal and Inconsistent Communication
- Missed Tax Planning and Strategic Opportunities – Throughout the year, many opportunities may arise for reducing your tax burden or improving overall financial health. A lack of regular communication with the CPA means Michael may miss out on valuable strategies for reducing his tax burden, maximizing deductions, or planning for upcoming expenses. Without proactive engagement, these opportunities may go unnoticed until it’s too late.
- Lack of Preparation for Major Financial Changes – If Michael’s future plans include any significant financial moves, his CPA should be one of the first to know. Early involvement ensures that his accountant can provide guidance on structuring these changes to maximize financial benefits while minimizing potential tax implications. Delayed communication restricts the CPA’s ability to offer well-informed and timely advice, potentially leading to unfavorable outcomes.
- Increased Stress During Year End – Year end is inherently stressful, and without consistent communication throughout the year, both the client and CPA may find themselves scrambling to meet financial statement and tax deadlines. Last-minute document gathering and financial statement and tax preparation can lead to avoidable mistakes and delays. Starting the process early by maintaining contact with the CPA throughout the year helps reduce stress and ensures timely and accurate filing, minimizing the risk of penalties.
Moving Forward Together
Staying in regular contact with your CPA, particularly ahead of year-end, offers significant advantages, from tax savings and strategic financial planning to peace of mind and stress reduction. By proactively engaging with your CPA, you gain access to expert guidance that ensures you’re well-prepared for both the tax season and the financial challenges of the coming year. Rather than leaving key financial decisions until the last minute, maintain consistent communication with your CPA to make the most of every opportunity and safeguard your financial well-being.
By Leanne Hett, Jake Natalizia, and Sally McMichael
