Your accountant should know your business strategy because most of a year's tax and financial outcome is decided by choices made during the year, such as hiring, buying equipment, changing entity type or taking on a large customer, and a tax return can only record those choices afterward. An accountant who knows your plans can model them before you commit, which is when the numbers can still change.
If you only talk to your accountant in March and April, you are getting help with the one part of the year that is already over. Your return reports decisions you made months earlier. The planning value sits in the other eleven months, when those decisions are still open.
What can a tax return actually change?
Less than most owners hope. By the time a return is prepared, the year’s income has been earned, the equipment has been bought or not bought, and the payroll has been run. The return applies the rules to what happened. There is real skill in that, and mistakes are costly, but the room to improve the outcome is small.
Some of the most valuable decisions also have deadlines that pass long before tax season. Electing S corporation status is a common example. Under the IRS instructions for Form 2553, the election generally has to be made no more than two months and 15 days after the start of the tax year it is meant to cover, or at any time during the year before. An owner who first raises the idea while their return is being prepared has usually missed the window for the year just ended. The IRS does grant relief for some late elections, but that is not something to plan around.
What does strategy-aware accounting look like?
It means your accountant knows where the business is heading and connects the numbers to those plans before you act.
Here is an illustrative example. A Colorado design-build firm with $2 million in revenue and a 35% gross margin is thinking about hiring a second project manager at $85,000. With payroll taxes, benefits and equipment, the real annual cost is closer to $100,000. At a 35% gross margin, the firm needs roughly $286,000 in new revenue just to cover that hire. If the owner expects the new manager to unlock $400,000 of work the firm is currently turning away, the hire pays for itself. If the backlog is closer to $150,000, it does not, at least not yet.
That calculation takes an hour with current books. Made in advance, it turns a hiring decision from a gut call into a clear threshold. Made after the fact, it only explains why cash got tight.
The same approach applies to buying a building instead of leasing, adding a location or raising prices. It matters just as much when the decision looks like pure good news. Suppose the same firm is offered a $600,000 contract with a customer who pays 75 days after each invoice. The work is profitable, but the firm will carry several months of labor and materials before the first payment arrives. An accountant who sees the offer in advance can map that gap against the firm’s cash and line of credit, and can suggest asking for a deposit or progress billing before the contract is signed. Our article on cash flow for Colorado businesses walks through that kind of gap in more detail.
What should your accountant know about your business?
A short list covers most of it:
- Your plans for the next 12 to 24 months. Hires, expansions, new services, large purchases.
- Your margins by line of business. Which jobs, products or customers earn the most, and which you keep for other reasons.
- Your cash cycle. How quickly customers pay and how quickly you pay others.
- Your personal goals. A home purchase, retirement, a future sale or bringing in a partner all change the right tax and entity choices.
- What worries you. The thing that keeps you up at night is often where the most useful analysis starts.
A simple rhythm for the year
You do not need a weekly meeting. Four well-timed conversations cover most small businesses.
Early in the year. Review last year’s results and set targets. Confirm entity and compensation choices before any deadlines pass.
Mid-year. Compare actual results to plan. Update the tax projection so estimated payments match what you will really owe.
Fall. This is the planning meeting that matters most for taxes. Decide on equipment purchases, retirement contributions, bonuses and the timing of income and expenses while there is still time to act.
Year-end. Close the year cleanly and set up the next one, so the return is a formality rather than a discovery.
Between those, call before any decision large enough that you would lose sleep over getting it wrong.
What changes when your accountant knows the strategy?
Owners describe the difference in practical terms. Decisions about hiring, pricing or expansion are made with numbers in hand instead of instinct. Problems like a slipping margin or a slow-paying customer surface in a monthly review rather than at year-end. Tax season becomes an ordinary month. And the person you call already knows your business, so you are not starting from the beginning each time.
How to tell whether your current arrangement works
Ask yourself three questions. Has your accountant asked about your plans for next year in the last six months? Did you know roughly what you would owe in taxes before your return was prepared? When you made your last large decision, did you run the numbers with someone who understood your books?
If the answer to all three is no, your accountant may be doing exactly what you hired them to do. It may just not be what the business needs now.
SBA CPA works with owners year-round, combining accounting, tax and advisory work in one team so the person who knows your books also knows your plans. An introductory call with our client services team covers your needs, the scope of work and whether we are the right fit.
Common questions
How often should I meet with my accountant?
For most small businesses, a short conversation each quarter is enough, with an extra call before any large decision such as a hire, an equipment purchase or a new lease. The fall meeting matters most for taxes, because it is the last point at which year-end planning can still change the result.
What should I tell my accountant about my plans?
Share anything that will move revenue, costs or cash in the next 12 to 24 months. That includes hiring, large purchases, new locations or services, changes in ownership and your personal goals, such as buying a home, retiring or selling the business. Your accountant cannot plan around something they do not know is coming.
Is year-round accounting support only for large companies?
No. Smaller businesses often benefit more, because one decision, such as a single hire or a large contract, is a bigger share of the whole. The support can be as light as monthly books and a quarterly review.
What is the difference between a tax preparer and an advisory accountant?
A tax preparer reports what happened last year accurately and on time, which is essential. An advisory relationship adds forward-looking work, such as projections, entity and compensation planning and decision modeling, using the same numbers. Many firms, including ours, provide both under one engagement.