WHY YOUR CPA IS FAILING YOU (AND IT’S NOT THEIR FAULT)

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I have conversations with business owners all the time about their accounting and finance teams, and more often than not, people are confused about the role of their CPA. They’ll say things like, “My CPA handles my books,” and assume that means every financial need of the business is covered. Others proudly post jobs for controllers, CFOs, or even staff accountants, and list “CPA required” as a qualification, when in reality the license often adds nothing to their ability to do the job being hired for.

This confusion is understandable. CPAs are highly trained, licensed professionals, and for many small and medium-sized businesses, they’re the most visible financial partner an owner interacts with. But if you don’t understand what CPAs actually do, and just as important, what they don’t do, you’ll set yourself up for disappointment.

To get clarity, I like to frame the discussion around the three big financial needs of any business: transactional, tax & compliance, and strategy.

• Transactional work is the day-to-day entry and reconciliation of numbers. That’s bookkeepers, accountants, and controllers.
• Tax & compliance: making sure the IRS, state regulators, and banks are satisfied. That’s where your CPA lives.
• Strategy is using numbers to make decisions, forecast outcomes, and drive profits. That’s your CFO or finance leader.

The CPA’s role is essential, but it’s squarely in that second category.

At their core, CPAs are compliance professionals. They’re licensed by state accountancy boards, trained in public accounting, and tested on tax, audit, and financial reporting standards. Their mindset is shaped by those rules. Accuracy and compliance come first, because that’s what regulators, tax authorities, and lenders require.

For most small businesses, when you bring a CPA into your business, their primary focus is taxes. They prepare and file your returns, structure your entity for tax purposes, and look for ways to minimize your liability. A good CPA will save you money on taxes and protect you from problems with the IRS or your state department of revenue.

In some cases, CPAs also prepare what I call “compliance financials.” These are GAAP-compliant statements (Income Statement, Balance Sheet, and Statement of Cash Flows) presented in a way that external parties like banks or bonding companies expect to see. These financials are about credibility and comparability. They help you get a loan, prove your financial health to outside parties, or satisfy an investor. But they’re not built for you to run your business. They strip out detail, collapse useful categories, and present numbers in a format designed to check boxes, not guide decisions.

One point worth noting: if a bank asks for audited financials, don’t just take is “gospel.” Ask if Reviewed Financials or something else can work? Audited financials are expensive and CPA firms can do Reviewed Financials for a fraction of the cost. Also, ask to reduce the frequency of which these are required too. Both these will save you real money and headache.

COMPLIANCE VERSUS STRATEGY

Some CPAs offer advisory services such as entity structure planning, succession planning, or broad guidance about financial practices. This can be confusing, because they’ll sometimes even call it a CFO or Controller service. But even in those situations, the advice usually comes through a compliance lens: “What’s the safest way to avoid penalties?” rather than “What’s the boldest way to maximize profit?” There are exceptions to this, but this is why we can’t rely on the words used alone!

And lets be clear: the compliance focus is not a flaw. It’s what they were trained to do. But it’s why you shouldn’t expect all CPAs to also be your strategic partner.

So why does it matter? Compliance financials aren’t strategic financials. The difference is subtle but important.

Compliance financials are designed for regulators and external audiences.

Strategy financials are designed for you. They include the detail, context, and analysis that help you actually run the business and make decisions.

When you expect a CPA’s compliance financials to serve as strategy financials, frustration is inevitable. You’ll look at the reports and feel like they don’t tell you anything about how the business is performing, and you’ll be right. They weren’t designed to.

This is also why it’s misguided to say “CPA required” in job postings for roles like CFO or controller. A CPA license signals deep technical training in tax, audit, and compliance. It does not signal the ability to run a finance department, design reporting systems, or think strategically about growth. There are plenty of excellent CFOs who are not CPAs, just as there are plenty of CPAs who would make terrible CFOs. Confusing the two roles only sets you back.

DEFENSE VS OFFENSE

The best way I know to explain the difference is through a sports analogy.

A CPA is your defense. Their job is to minimize taxes, reduce risk, and keep you compliant.

A CFO is your offense. Their job is to maximize profits, optimize operations, and drive growth.

Both roles matter. You can’t win a game with only defense or only offense. But if you ask your CPA to run the offense, you’ll get a defensive-minded strategy… one that’s safe, compliant, and focused on minimizing liability, but not one that helps you score points (profits and cash).

Understanding this distinction frees you up to get the most out of each partner.

HOW TO GET THE MOST OUT OF YOUR CPA

To really benefit from your CPA, you need to use them for what they’re best at. Don’t expect them to forecast your cash flow or design your pricing strategy unless they have deep experience inside businesses doing this.

Instead, lean on them to protect your downside:

• Keep your taxes filed accurately and on time.
• Give you a clear plan for minimizing taxes due and liability within the law.
• Provide financial statements that meet outside requirements like lenders, regulators, or investors.

When you see them as a compliance partner, not a growth partner, you’ll have fewer frustrations and better outcomes.

PICKING THE RIGHT CPA

When you’re evaluating a CPA, whether you’re hiring a new one or reconsidering your current one, think of it like interviewing for a key leadership role. You’re not just checking boxes on technical ability. You’re trying to understand whether they’re a fit for your business.

1. Do they just file taxes or do they do tax planning too?

Filing returns is reactive. Proactive planning is where the real value lies. You want a CPA who doesn’t just show up in April with a bill, but who reaches out during the year to talk about strategy, tax-saving opportunities, and upcoming obligations. If they’re not proactive, you’ll constantly be behind. Having quarterly meetings with your CPA can be helpful in setting up a proactive strategy, but more than this: REACH OUT BEFORE YOU MAKE CHANGES. Buying something big? Changing your business significantly? Call your CPA and proactively ask if there is something you should consider. They’ll love you if you do this as it makes their job easier.

2. Who is their typical client?

A CPA who mostly serves sole proprietors or W-2 employees isn’t going to bring the same value to a $15 million contracting company. You want someone who regularly works with businesses of your size and complexity. If they know your industry, even better. Their client base tells you whether they understand your world or whether you’ll be educating them along the way.

3. How do you communicate with clients?

Some CPAs operate like black boxes. You drop documents in, wait months, and get a tax return back. Others maintain regular communication with quarterly check-ins, annual planning sessions, or timely reminders. Ask how they work. If responsiveness and accessibility are important to you, make sure their style matches your needs.

4. What’s your approach to working with other advisors?

Your CPA is one piece of a larger financial team. You may have a bookkeeper, a controller, and a CFO. The best CPAs collaborate, share information, and respect other professionals in the process. If your CPA sees everyone else as competition, you’ll end up with turf wars instead of teamwork. I’ve seen too many CPAs refuse to engage with me because they saw another advisor as a threat. It almost always ends with the business owner getting a worse outcome.

5. What’s your philosophy on balancing tax minimization, business goals, and audit risk?

Different CPAs can have vastly different approaches in what they want claimed. Some just want to minimize audit risk as much as possible, where others are more willing to “take risks” with strategies to minimize your taxes. Understanding their approach will help make sure you and. your CPA align. Also, not every decision should be made with taxes in mind. Sometimes taking a bigger tax hit today creates flexibility and long-term value tomorrow. Ask your CPA how they think about minimizing taxes, business goals, and audit-risk trade-offs. If they only ever talk about minimizing taxes, you may end up with an audit or with strategies that save you money short-term but cost you opportunities long-term. If they’re all about avoiding audits, you could pay significantly more in taxes. Alignment of their mindset and yours is key!

6. How do you stay up to date with tax law changes?

Tax law changes constantly, and sometimes dramatically. A good CPA should have a clear process for staying current, whether through continuing education, professional groups, or industry updates. You’re not just asking if they know the law today. You’re asking how they’ll stay sharp tomorrow. This also helps you see how “in it” they are. Do they love it? Or is it a job? Those ones who are in love with the work will be “all in” in this area.

FINAL WORD

Your CPA plays a vital role, but it’s not to grow your business. Their value is in compliance, not strategy. They keep you safe, they keep you legal, and they minimize your taxes. That’s defense.

If you want offense…maximizing profits, scaling operations, and building enterprise value… you need someone else in the strategy seat. The best-run businesses understand this. They build a finance stack where each role has its lane: transactions, compliance, and strategy.

We’re going to talk about this next week, as we talk about the role of a CFO/FCFO.

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Thanks for reading–see you next week,

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