Skip to main content
Webinar: Shaping Success: Strategies for Nurturing Your AE Firm’s Project Managers
Wednesday, June 12th, 2024 | 1PM ET | 10 AM PT | Register Now
Financial Health

Why Your Tax Preparer Should Be Talking With Your Retirement Planner

The vision you develop for your financial freedom is step one. Step two is understanding your role and the other players that you’ll need to bring in.

You are the creator of your business. You’ve got a vision that is custom-made and has plenty of blank canvas to paint. Part of that canvas is your financial picture. After all of this building your business thing comes to an end and you set your sights elsewhere, where will you go?

Chances are you started your own business for reasons rooted in time and money. You had grand ideas and the enthusiasm to back them. The vision was there, and you could see it clear as day. Then somewhere along the line the enthusiasm dimmed, and the idea of being financially free was put at the bottom of the pile of papers in the corner of your office. You stopped giving time to the thought of retirement.

Part of growing and scaling is knowing which key players are going to make the shots that count. Truth of the matter is, if you’re not going to do it, no one else is going to do it for you.

Certain hats we rotate as a business owner can be overwhelming when you’re not familiar with the moving pieces. It can create a mind block that’s challenging to push through and that directly halts or stunts your growth as a person and in your business. When I started out, I experienced the same feelings around marketing. I thought I could hire one person to do all the things. Create the website, make it look nice, make it work (whatever that meant), do the Google things and the Facebook things – you know, easy peasy stuff.

HAH! I quickly discovered that my one-person idea was actually more like a five-person team.

I use the word team on purpose because that’s what it is and, as with any team, it needed a coach to see the bigger strategy and picture (that’s you). It’s your job to define that bigger picture and communicate it with your team. Planning to retire or move on from your business takes more than one player, it takes a team.


Your Key Financial Players

One of the hats that often collects dust is the CFO hat (Chief Financial Officer). If you’re not doing this for your business, no one else is. Not your bookkeeper, not your accountant, not your tax preparer, and not even your retirement planner. Understanding that there is a difference is key. 

Each of these key financial players are limited to the bits and pieces you throw them every once in a blue moon. If you’re not communicating with them about your vision and your progress, you’re not going to be as effective in your financial journey.

The vision you develop for your financial freedom is step one. Step two is understanding your role and the other players that you’ll need to bring in. At a minimum, here are some functions you’ll want to consider:

  • Comprehensive monthly accounting (Bookkeeper or Accountant)

  • Quality time under the CFO hat (or outsourced CFO services)

  • Ongoing Tax Strategy (Tax Preparer)

  • Regular retirement health check meetings (Financial or Wealth Advisor)

  • Gross margins. Understand the profit margins for each type of revenue stream you’ve created. The CFO knows which offerings yield the highest profit margins and observes trends over time to identify patterns and, ultimately, understand how to forecast cast predictions.

  • Expense control. We live in a day and age where shiny object syndrome is a thing. If you don’t put controls on your spending, I can guarantee you cash is going out the door and doesn’t need to be. Unnecessary or not well thought out spending adds up over time and becomes a line item that’ll make you blink twice before asking questions.

  • Marketing metrics. It’s 2020 folks, if you’re not actively managing a marketing strategy you’re going to die on the vine. Staying relevant and in tune with what your market is asking for means monitoring all the things. A CFO looks at what is working and re-directs funds from what’s not working and into what is.

  • AR average days to collect. Way too many businesses have cash tied up in unpaid invoices. (if this is you, you’ll want to watch this video An effective CEO knows to keep a pulse on how long it’s taking to collect on invoices to keep cash moving.

Get Clarity Around Where You Are

You can’t measure what you can’t see, and what you see may need to be interpreted by someone who knows more than you do. If you’re going to measure your financial data you’ve got to keep up with those dreaded books. Not having them means you are financially blind, and you can’t do anything in terms of financial planning. Tony Robbins refers to accountants as having the most boring job ever, so it’s a pretty normal feeling to hate the books. But get it done, because it’s required IF you really want to get to where you’re going.

Keeping the books up to date means you can see your current financial positioning. The monthly financials are there and presented in a way that helps you understand where your money is coming from, where it’s going, and enables you to analyze your cash flow patterns. Armed with this financial clarity, it’s up to your CFO hat to push it in the desired direction.


Know Where You Want To Go and How To Get There

When you have clarity around where you are, you can begin to move in the direction of where you’re headed. The CFO hat is responsible for taking the current financial picture and understanding how to move it into the next milestone. It must understand which financial KPIs to pay attention to including:

The CFO hat is a common dust collector when it should really be a solid #2. If you have yet to confront your numbers in this way, I suggest you grab the duster.


The Two Tax Systems

“In America, there are two tax systems: one for the informed and one for the uninformed. Both are legal.” – Judge Learned Hand. Taxes are a certainty right up there with death. And it’s typical to feel as morbid about them.

There are two ways to experience taxes in this country. If you talk to your tax preparer once a year, race to get everything done by the due date, answer twenty five different emails or calls during crunch time, and gawk at your tax bill while your preparer says “I’m sorry but we’ve done everything we can”, you may be on the wrong tax system.

You should be consulting your tax professional throughout the year and planning for the next three to five years. There should be a strategy that maximizes your business deductions and the flow of your taxable profits. Taxes suck, yes, but they can certainly be managed.


The Exit Game Plan

You are the artist of your life and your business. If you’re going to ask others to help you fill in the colors, you’re going to have to provide them with an outline. Have you ever stopped to think about what it is you want to extract from your business both quantitatively and qualitatively?

Ask yourself the question, what does financial freedom mean to me?

That’s your goal, whatever that picture looks like to you. As with any goal, you must then reverse-engineer them into tangible milestones. Your financial or wealth advisor needs to understand what your goals are and what is at play in your business. This may mean having your financial or wealth advisor consult with your tax professional. Now we’re bringing your key financial players to the same table. 

Planning to retire or just move on from your business can be done so profitably but it requires the time to understand how it all works and sourcing the key players to make it happen. Yes, it’ll take time and resources but hey, it’s one of the hats we choose and we can do it.


Similar posts

Get notified on the latest for your industry

Be the first to know the latest insights from experts in your industry to help you master project management and deliver projects that yield delighted clients and predictable profits.