Finance SmackDown: CFO vs. CPA

How to make sure YOU win the match

Your CPA and your CFO may be telling you two different things and believe it or not, both may be true.

As a CFO, your finance professional, I am trying to maximize your profits.

Your CPA, your tax professional, wants to minimize your tax liability because the more you make, the more you pay.

Even though it might seem like we have opposite goals, we both want what’s best for you. The secret to success is combining the advice to your best business benefit.

Here’s an example. In going through your P&L, I’m going to look at every single line item you are spending money on.

  • Me: “I didn’t know you had an office”
  • You: “Yeah, it’s a coworking space, but I never use it, everyone is remote now”
  • Me: “Great, let’s kill it!”

You reduced your expenses by getting rid of the co-working rent. Now you’re making more money, YAY!  But you’re also increasing your tax liability, BOO! So, what’s a business owner to do??? 

Your CPA can still deduct certain home-office expenses to mitigate your tax liability, so while our endgame is the same, our approaches are different. What happens, though, when we give you opposite advice? Whom do you listen to? (Me, obviously =)

I have a new client whose CPA advised her to take a pretty significant salary at the end of last year. My client is entitled, and required to, take a “reasonable” salary. Sounds great, right? Except she doesn’t have the cash to pay herself.

The CPA looks at things and advises clients based on tax guidelines and what is “allowed.” They follow certain rules and advise you on the maximum tax deductions based on those rules. But this approach doesn’t always align with what’s actually going on in the company.

Don’t get me wrong, the client should have the money to pay herself, but she doesn’t. Which is why she hired me. Next year, when her CPA tells her to take a big salary, she’ll be able to do it because we’re instituting a more aggressive cash management strategy for 2023.

My WWE title reference notwithstanding, it’s not a fight between your finance and tax pros, it’s a delicate dance. A successful business needs a great CPA and a great CFO.

And just in case you’re nervous about having to run back and forth among your service providers to determine whose advice is “best,” relax. To mix sports metaphors, (is WWE really a sport?) I will quarterback your financial team, speaking directly with your CPA and/or your bookkeeper to help determine the best course of action for you and your business. We’ll wrestle, we’ll dance, we’ll throw the ball around— whatever it takes to ensure you “insert sports metaphor here”.

Still confused? Your next play is to contact me.

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