Our View from

Canal Street

Our View from

Canal Street

Why having a reputable CPA firm matters. It’s more than taxes.

by | May 14, 2024 | Blog

As a business owner, do you ever wonder whether it matters who prepares your taxes?

As a business owner, you should. Below are three reasons why it matters who signs your taxes as your firm’s tax preparer.

1. Advice

Preparation of your taxes should not be the sole function of your accountant or CPA firm. They should be an advisor for you and your business to look ahead and strategically plan.

Do not fall into the trap of limiting the role to looking in the rearview mirror to file your taxes. That limited perspective is limiting your business.

2. Access to professionals

Your accounting firm should be an essential resource to introduce you to other professionals who can help you achieve your business goals, from real estate attorneys to employment attorneys, recruiters, property managers, bankers, wealth managers, and marketers. Reputable accounting firms include well-connected professionals who can make important introductions and work with these professionals to benefit your business.

If your current accountant is not well connected, it may be time to make a change.

3. Access to financing

Today’s lending market is tight and can make funding a business challenging. Interest rates are relatively high, and banks are generally risk averse.

There are 5 C’s that lenders focus on:

  • Character
  • Capacity/cash flow
  • Capital
  • Conditions
  • Collateral

Of these five, most lenders will agree that the most important one is character – thankfully, you can affect this one relatively easily!  From a lending perspective, components of character include your credit score, your experience as a business owner/operator, and how well you run the “business of your business.”  A hallmark of how well you run your business is who signs your tax returns. 

If you need access to financing, the lender is going to evaluate each of the above 5 Cs. If they have never heard of the accountant or firm name who prepared your taxes, that is not going to work in your favor. As commercial loans and lines of credit are renewed each year, working with a credible and reputable accounting firm can provide additional benefits, including access to financing. The bank develops a comfort level with reputable accounting firms whose work quality they know. While that is not the only factor a lending institution will assess, if you are on the margins for approval or renewal, it may work in your favor.

Now is the right time to evaluate if you have the right accounting firm working with you for the benefit of your business. Don’t limit your thinking just to tax preparation. Think bigger and broader as the right firm will play a much bigger role in your achieving your goals and growing your business.

Contact us.