How to Break Up With Your CPA

Garrett Gunderson, Contributor, Forbes
March 18, 2016

They say breaking up is hard to do. Of course, “they” are usually referring to romantic relationships. But it’s also tough to break off professional relationships. In some cases, you’ve been friends for years. In other cases, switching to another accountant just seems like a hassle. And in almost all cases, having “the talk” is an awkward situation that you’d like to avoid.

But having the right CPA is critical, and can literally save you thousands or hundreds of thousands of dollars in tax. So here are 5 signs it’s time to break up with your CPA, followed by 5 steps to a smooth “break up.”

5 Signs the Relationship Is Over

Sign #1: They’re “conservative” to avoid audits. If a CPA tells you their number one goal is to keep you from getting audited, they may want to check a main objective of the IRS: to audit each business owner at least once during their lifetime. For accountants and CPAs, “conservative” is too often just another word for “lazy.” If they’ve filed your taxes properly, and everything is fully documented, tax audits are nothing to fear.

Sign #2: They let the tax-tail wag the dog. Most accountants are trained number-crunchers, not savvy business strategists. Their primary goal is to minimize your taxes, so they’ll sometimes recommend spending money at the end of the year to lower your tax burden, even if it wouldn’t be the most productive move for your business. Minimizing your taxes is a good thing, but not if it means spending money unwisely. Never let the tax-tail wag the dog.

Sign #3: Their tax knowledge is out of date. Laws and policies change all the time. If your CPA isn’t well-informed on new developments, it may be costing you thousands of dollars. Ask your CPA what tax changes, if any, have recently been enacted. If they seem behind the times, then you need a more mature, knowledgeable and savvier accountant.

Sign #4: They don’t play well with others. If your accountant refuses or just doesn’t communicate and coordinate with your attorney or anyone else on your financial team, that’s a major problem.

Sign #5: They’re reactive. The number one reason our Wealth Factory members outgrow their CPAs is because the CPA is reactive instead of proactive. Rather than strategizing throughout the year with their client, they simply prepare and file at year’s end. You should be meeting with your CPA and other financial professionals at least a couple of times a year to review your strategies and deal with any changes. It is also important that they are bringing you the ideas and not the other way around.

Then Get a Second Opinion

Sometimes it’s impossible for you to know if your CPA is utilizing all strategies available to save tax for your business. They’re supposed to be the tax expert, not you, so you have to take their word for it to some degree.

However, you can get a second opinion. I recommend getting a second opinion from another CPA at least once every three years because, if any tax savings are found, you’re still within the 3-year period that the IRS allows you to amend past returns.

Second opinions are important. My friend, Dr. Mike Gandolfi, was paying for a high-priced accountant because he wanted the best. But when he got a second opinion, he found out the IRS owed him $102,000 in overpaid taxes, and he went on to save around $20,000 per year after that. Just imagine if Dr. Gandolfi never worked up the courage to get a second opinion! That would have been a lot of money lost.

If the result of getting a second opinion shows that your CPA has been missing thousands of dollars’ worth of tax savings, then it’s time for you to break off the relationship. Yes, it may be a tough conversation to have. But this is your money, your life, your results and your prosperity we’re talking about.

This is one of those “hard-easy/easy-hard” things. It may be hard to have a conversation, but it’s easier to do it now before you discover you’ve lost hundreds of thousands of dollars over your lifetime that you can never get back. It’s hard to tell them you’re moving on, but your life will become much easier once you’re working with the right person and team.

5 Steps to a Smooth “Break Up” Conversation

It’s best to end the relationship without burning any bridges, especially if your CPA or financial professional is a friend, client or family member. So here is a simple, non-threatening five-step process to end the professional relationship on a good note:

Step 1. Focus on the assets of the relationship by communicating any characteristics that you appreciate and admire about the person. What can you authentically acknowledge the advisor for? What do you appreciate about him/her? Write this down. This step sets a more positive intention and context to start the conversation.

Step 2. Communicate any liabilities that you have brought to the relationship, by addressing where you have been inauthentic, out of integrity, or lacked proper communication. Write down anything that you could have done to make this a more productive relationship. Acknowledge or apologize for any shortcomings, lack of communication or ways you contributed to a less than ideal relationship.

Step 3. Communicate the issues that you would like to address, transform and overcome. Write down all the issues at hand and communicate your intent for addressing these problems. Then, ask the person, “How would you handle this if you were in my shoes?” Your financial advisor might provide a response that satisfies you and improves the situation. At this point, you might find you can move forward together. But it may be time to end this relationship. In this case, this is your opportunity to be straight about the reasons.

Step 4. Communicate what excites you about moving forward, by addressing the possibilities, strategies and commitments that are made as a result of Step 3.

Step 5. Re-address and engage in conversation between 24-48 hours after you start the first communication. This is critical. It is imperative to give the other party a chance to express what he or she has been feeling and thinking about since your first conversation. Focus on listening. If there are any unresolved issues, repeat the process.

Now Yank the Band-Aid Off

If it’s time for you to break up with your CPA, then it’s best to yank the Band-Aid off fast while it’s still on your mind. It will lead to less stress and a better situation for all, not to mention the increased tax savings you’ll enjoy when working with the right CPA.

This article was written by Garrett Gunderson from Forbes and was legally licensed through the NewsCred publisher network.

The strategies mentioned in this article will often have tax and legal consequences; therefore, it is important to bear in mind that First Republic does not provide tax or legal advice.  This information is provided to you “AS IS”, does not constitute legal advice, is governed by our Terms and Conditions of Use, and we are not acting as your attorney. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained here.  Clients’ tax and legal affairs are their own responsibility – Clients should consult their own attorneys or other tax advisors in order to understand the tax and legal consequences of any strategies mentioned in this article.