A certified public accountant (CPA) firm should contribute to client growth. That’s been my view for over fifteen years. Unfortunately, many accountants still operate as if it were 1995. Their technology is outdated, as is their concept of how modern business is conducted. Is your legacy CPA killing your business? This article can help you answer that. Some key takeaways:
- Business owners tolerate mediocre CPA relationships because they don’t fully understand what a good accountant can do for them.
- Many of the client service problems legacy CPAs experience are due to outdated systems and processes, not malicious intent.
- Business owners often fear the disruption of switching CPAs, particularly if their financial data is housed in a legacy desktop system.
Last year, I was approached by a business owner whose previous CPA consistently blocked efforts to expand the business. I took the company on as a client, and we saved them $272,000 in federal taxes by streamlining operations. This “growth mindset” proved more effective than the “compliance” approach of their previous CPA, positioning them for regional growth.
There are hidden costs to one-sided relationships.
Business owners tolerate mediocre CPA relationships because they don’t fully understand what a good accountant can do for them and are afraid to ask their current CPA uncomfortable questions. Our clients know they can rely on us for accurate tax preparation, but we also provide financial leadership, strategic guidance, and systems that drive business decisions. This approach eliminates the following concerns:
- Financial anxiety: The client I referred to above wasn’t able to make confident growth decisions because they didn’t trust the data coming from their previous CPA. Sporadic communication and unreliable financial statements created financial anxiety that eventually caused them to seek a new accountant.
- Lost growth opportunities: It’s impossible to evaluate new markets when you don’t have accurate and timely financial data. Growth can’t be achieved when you’re flying blind. Worse yet, your competitors can acquire a larger market share because your company is unable to move forward.
- Compliance issues: When CPAs fail to communicate properly, deadlines are often missed. Inaccurate information, even if taxes are filed on time, can subject you to penalties, interest, and potential audits. Legacy CPAs with strained client relationships and outdated technology are more vulnerable to these issues.
- Inefficient tax planning: Inefficient might be too kind a word here. Effective tax planning is impossible without accurate financial data. It’s also a process that requires regular communication between the CPA and the client. Legacy firms with large client bases don’t typically do that well. Our firm does. That translates to tax savings.
We’ve rescued a lot of floundering businesses. Here are the red flags to watch for.
To clarify, this article is not intended to denigrate any of my peers in the accounting industry. Many of the client service problems that legacy CPAs experience are due to outdated systems and processes, rather than malicious intent. Others are caused by apathy or burnout. If you’re a client of one of these firms, these are some of the red flags to watch for.
1. The team uses outmoded software and is slow to integrate.
A common misconception in accounting and finance is that desktop software is more secure than cloud-based applications; this is a fallacy. A desktop computer with an internet connection is more vulnerable to a cyberattack than most cloud-based software. Even without an online connection, hardware can be destroyed by floods, fire, or electrical surges.
Real-time access to financial records is another advantage of cloud computing. Transitioning my firm to QuickBooks Online has resulted in a 50% reduction in time spent on data entry and eliminated 100% of the errors we experienced with the desktop version. Ask your current CPA about that. If they’re opposed to an online approach, they’re stuck in the past.
2. Communication happens on their schedule, not yours.
Legacy CPAs tend to communicate quarterly and go radio silent for the other eight months of the year. That might get your taxes filed on time, but it doesn’t leave any room for tax planning or streamlining your accounting systems and processes. This “transactional” approach to accounting is one of the most common reasons clients change CPA firms.
The importance of regular communication should not be underestimated. Business owners need a CPA who is accessible, responsive, and informed about tax law changes. My clients know they can call me anytime for help with their business decisions. That includes making major purchases, growing their workforce, or expanding into new markets.
3. Firm leadership shows limited knowledge of business structure and tax liabilities.
Accounting firms often target specific business structures because the tax filings are simple. The business I mentioned at the beginning of this article is an example of that. They were operating as an LLC when a C-Corp election would have been more beneficial to their growth plans. We made the change in October 2024, and we’re already seeing massive tax savings.
Ask your CPA to explain how your current business structure impacts your tax liability and whether an alternative structure would be a better fit. If they can’t explain that, it’s time for a change. My team would be happy to answer any questions you might have. We’ll evaluate your current business structure and show you what an entity change could mean.
4. Financial reports are not being used to make better business decisions.
Financial statements are historical documents. They’re useful because they show what your company has accomplished during the previous reporting period, but they’re not strategic planning tools. Modern accounting can show you which departments are profitable, how to cut costs, and how seasonal fluctuations can affect cash flow.
We applied these principles to the business above by implementing departmental tracking with QuickBooks Online’s class system. It immediately showed them which departments were the most profitable and helped them focus resources on activities with the highest returns. This exercise increased their overall profit margin by 20%.
5. Billing is sporadic. Leaders struggle to articulate the value of their services.
Transparency is a modern concept in accounting and finance. The “old school” philosophy was to tell clients to “trust” their financial professional and not worry about the details. Client access to online tools has changed that. Unfortunately, legacy CPAs often have billing systems that don’t itemize services or note when they were performed.
Sporadic billing is another problem. Accounts payable departments operate more efficiently when they expect bills on a certain cycle. Staggering or sending bills only when it’s convenient can disrupt a client’s cash flow. This isn’t just poor business practice; it’s a sign that your legacy CPA firm doesn’t view itself as a strategic partner delivering measurable value.
Staying with a sluggish legacy firm comes with cost—in dollars and opportunity.
Business owners often fear the disruption of switching CPAs, particularly if their financial data is housed in a legacy desktop system. That’s understandable, but staying with an underperforming CPA can be far more damaging to your business, whether from incompetence or laziness.
A two-year client of ours knew they were not receiving adequate services. That’s bad, but it’s much worse when you see that services = dollars.
So, let’s lead with the outcome, then show the service.
- Saved $272,000 in taxes with an entity structure change that the legacy firm had missed for years.
- How? Strategic Tax Planning
- Boosted profit margin by 25% after moving from manual entry of spreadsheets to new software with meticulous internal accounting controls for precise reporting.
- How? Financial Leadership and Monthly Accounting
- Reduced payroll hours by 50% with efficient workflows and automated data entry.
- How? Accounting Technology and Business Advisory
Want to see more outcomes? You can check out the case study here.
Rather than focusing on the challenges of changing CPAs, focus on the opportunity cost of staying.
Every year you delay is another year of missed tax savings, operational inefficiencies, and obstacles to growth. Is that really what you want for your company?
What about the transition? How burdensome is it?
Communication is more responsive, the software is better, and tax planning is a year-round exercise, not just a quarterly obligation. These are compelling reasons to leave a legacy CPA firm that is stagnating your growth and leaving your company in the dark.
So, with these considerations in mind, we make the transition process easy because we have better tools and know-how to make it happen. When we took on the client I’ve been discussing, we had their new systems operational within two weeks. They didn’t have to sacrifice months of productivity to upgrade their accounting relationship. You won’t either.
Growing businesses need growing firms.
Growth-stage businesses can’t afford to be held back by legacy relationships that prioritize compliance over strategy. Every day you stay with an underperforming CPA is another day of missed opportunities and operational inefficiencies. It’s not a question of whether you can afford to make a change; it’s whether you can afford not to.
If your current CPA isn’t delivering that type of measurable value, it’s time to find someone who will. Schedule a discovery call to get help and bring dynamism to your tax and financial strategies.
Talk soon,
Jeremy A. Johnson, CPA