CPA/Tax Strategist or Just Plain CPA?

What is the difference between a Tax Strategist or a CPA? We hear that question all the time. I’m a CPA trained as a Tax Strategist and I’ve been doing that for over 15 years now.

First, let’s look at the many different faces of a CPA. A CPA could specialize in financial reporting, in SEC work, in auditing, in management or cost accounting or tax. So, just knowing someone is a CPA, doesn’t really tell you whether they are skilled enough to help you with a specific tax challenge.

Your choices start to focus when you make the decision to find an expert to work with you regarding your taxes. An average tax CPA is trained on how to complete tax forms. The work is done after the fact and there is no tax planning available (because the year is always long gone.) At this point, a good tax CPA (a step above the average) will spot places that you can change your tax plan so that you don’t repeat the same tax mistakes. There is an assumption that your income and expenses will be similar, though.

When the next year’s tax return is done, a good tax CPA will be able to further refine the strategy. In general, it takes about 3 years to get a good tax strategy set up for an existing business this way. In the case of a new business, it takes 3 years of stabilized income and expenses to effectively plan a strategy.

Now contrast that with a Tax Strategist. A Tax Strategist is a CPA who has studied how to predict tax consequences from business and investment decisions. It’s part art, along with the science of business. The primary difference between a good CPA and a Tax Strategist is time. A CPA/Tax Strategist can lay out a course of tax loopholes that steer you clear of tax situations, legally. A good tax CPA catches you after you’ve run into the problems and then helps you get out of them.

Let’s look at a quick example of what the cost of waiting might be.

Let’s say a Tax Strategy appointment with me found you the average tax savings of $14,500. If you instead had a really good tax CPA, chances are he would find the same the savings after the average time of 3 years.

You’ve lost 3 years times $14,500…or $43,500. Plus, of course, you’ve lost the opportunity to grow that money during those three years.