What Your CPA Can't Do For You

A Pathwright Partners blog post

There's a challenge I've noticed business owners facing that I don't think we talk about enough. And that is this question of what you need to be responsible for yourself versus what you can hand off to someone else.

Accounting and finances are a great example of this. Especially this time of year when taxes are on everyone's mind.

I see problems coming up at both extremes. Some entrepreneurs try to be completely DIY with their finances. No outside support, bookkeeping done in panicked bursts before tax season, scattered receipts and records, just kind of hoping they're not missing something important. And unfortunately, they usually are. This leads to expensive catch-up work and missed opportunities for tax savings.

The other extreme is when a business owner hires a CPA and just completely checks out. They hand everything off and don't think about it again until the bill arrives. I heard a story recently about someone who got hit with a $14k tax liability because he hadn't been in communication with his CPA during the year about changes to his income. His CPA wasn't incompetent. He just didn't have the information he needed to give good advice.

So both of these fail for the same underlying reason. And the way I think about it comes down to the difference between responsibility and execution.

You can delegate execution. That's the bookkeeping, the filings, the technical work. That's what you're paying for and it makes sense to hire expertise you don't have.

But you can't delegate responsibility. You're the one who pays the bill at the end of the day. You're the one bearing the risk. No matter how good your CPA is, they can only work with what you give them. And they're never going to care about your business as much as you do.

So what does this actually look like? You don't need to become a tax expert. But you do need to understand your finances well enough to know if your books are current. To communicate when things change in your business or personal life. To ask questions like "what should I be doing differently?" or "what am I probably missing?" You need enough understanding to evaluate whether your accountant is being proactive or just processing paperwork.

The business owners who get burned usually aren't the ones with bad CPAs. They're the ones who assumed "handled" meant "handled well" without ever checking.

I know finances aren't the most exciting thing to think about. But staying in the loop, asking the questions, taking ownership of the outcome...that's part of what it means to own a business. Your success relies on it.

Curious to learn how Pathwright can help your business grow? Visit www.pathwrightpartners.com to learn more.