What should your CPA be doing for your business?
For many business owners, the relationship with an accountant begins with a practical need: the books need to be closed, financial statements need to be prepared, or a tax return needs to be filed.
Those things matter. But they should not be the end of the conversation.
Your financial information tells a story about what is happening inside your business. A good CPA should help you understand that story, identify what deserves your attention, and use the numbers to make better-informed decisions.
That requires looking beyond individual transactions and asking a much more important question: What are the numbers telling us about the business?
Start with accurate books.
Good financial guidance depends on good financial information.
The general ledger is the foundation. Transactions need to be properly recorded and categorized, accounts need to be reconciled, and the books need to be closed consistently.
From there, financial reports become much more useful.
Monthly reporting gives us an opportunity to look at revenue, expenses, cash flow, liabilities, and other areas of the business while the information is still relevant.
The objective is not simply to produce another report.
It is to understand what is happening.
Look for what doesn’t make sense.
One of the most valuable things an experienced CPA can bring to a business is the ability to recognize when something deserves a closer look.
Why did an expense increase substantially?
Why is revenue growing while cash in the bank is not?
Are receivables taking longer to collect?
Does something in the current financial information look significantly different from the prior year?
Are the financial statements telling the same story the business owner thinks they are telling?
Sometimes the numbers confirm that the business is operating exactly as expected. Other times, they raise questions.
Both are valuable.
Identifying an issue early gives the owner an opportunity to understand it before it becomes a larger problem.
Connect accounting and taxes.
Your accounting records and your tax return are not two unrelated pieces of your financial life.
Looking at prior-year returns alongside current-year financial information can provide important context. It can help identify changes, inconsistencies, areas that deserve additional attention, and questions that should be addressed before the end of the year.
Tax planning should not begin when it is time to prepare the return.
The better your accountant understands what is happening inside the business throughout the year, the better positioned you are to have useful conversations before decisions have already been made.
Understand the effect of business decisions.
Accounting is not only about documenting what has already happened.
Financial information can also help an owner evaluate what happens next.
Can the business support another employee?
Is cash flow keeping pace with growth?
Are expenses increasing faster than revenue?
Does the company have enough working capital?
What effect could a major purchase have on the business?
Is the company financially prepared for an unexpected downturn?
These are business questions, but the answers often begin in the accounting.
That is why I believe a CPA should understand more than how to produce financial statements. The real value comes from understanding how the different pieces of the business connect and helping the owner see those connections as well.
Expect questions from your CPA.
A good accounting relationship should involve conversation.
Your CPA should ask questions about what has changed in the business, what you are planning, where you are seeing challenges, and what you expect in the months ahead.
And business owners should be asking questions, too.
If you receive financial statements but do not understand what they mean, ask.
If the bank balance does not seem consistent with the revenue the company is producing, ask.
If you are considering a significant financial decision, have the conversation before making it whenever possible.
The numbers become considerably more useful when they are part of an ongoing discussion.
Your accounting should help you run the business.
At Redfish, we approach accounting as more than transaction processing.
We start with the fundamentals: accurate books, a disciplined monthly close, useful reporting, and a thorough understanding of the company’s financial information.
Then we use that information to look deeper.
We review prior-year returns and current-year activity. We look for red flags. We ask questions. We consider cash flow, tax implications, business structure, financing, and the decisions an owner is trying to make.
Because ultimately, the purpose of accounting is not simply to tell you what happened last month or last year.
It should help you understand where your business stands today and make more informed decisions about where it goes next.
If you have financial statements but aren’t getting meaningful insight from them, it may be time for a deeper conversation about what the numbers are telling you.
