SUMMER SCHOOL: CPA (Q&A WITH CGC Accountants and Advisors)

Welcome to month two of our Summer School Blog Series! 

This month we are spotlighting all things tax… just when you thought tax time was over, right?! Well, think again! Our guest teacher this month is Kelli Cox of CGC Accountants and Advisors! We have worked with Kelli in many different capacities over the years, including having shared clients (we do the books, she does the tax planning & filing), as a consultant (invoking Kelli’s expert knowledge on business structure & our own tax strategy!), and as a peer (in mastermind groups focused on growing each of our small businesses!)… and let’s just say folks, Kelli does not disappoint on any front! 

To give you a bit of (actual) background, Kelli’s firm is located in Palm Desert, CA and provides a full range of services including tax planning and preparation, accounting, bookkeeping, business consulting and advisory, business services, and exit-strategy planning. CGC as a firm prides themselves on providing outstanding service and attention to detail, incorporating innovative technology, offering straightforward pricing, and last but certainly not least, maintaining responsive communication with clients. That last bit is worth its weight in gold all on its own! 

So, without further ado, dear readers, let’s jump into a Q&A with Kelli Cox of CGC!

1. First & foremost, what led you to start CGC & what did we miss in our intro spiel that you want our readers to know?!
• "I spent the early part of my career managing a small business and learned every aspect—from running payroll, to managing cash flow, to handling clients and staff. Then when I started working at CPA firms, I saw that I could provide more to business owners than just tax returns. I started CGC to meet that goal. Owning a business is a tough road and I want to be able to provide support to help my clients meet their financial and life goals."
2. What are the most common financial mistakes you see small businesses make & what tactics should they use to avoid them?
• "The biggest mistake I see is lack of planning—for cash flow, for taxes, for future needs and goals. Then when a big tax bill hits, or an opportunity for an investment that would benefit the business, the cash isn’t available. Budgeting and cash projections are crucial if you want to manage your growth. Tax planning is crucial so that you can meet these cash goals and aren’t surprised by a big tax hit when you can’t afford it."
• "Then next biggest mistake is not planning for your own future. Business owners need to be putting money into a 401k and into other investments not related to the business. Business growth cycles up and down, and if you are financially independent of your business you will be able to make better decisions."
3. Should a small business start with an exit strategy in mind? How does that shift the trajectory of the business?
• "Yes! Your business should have a life of its own. It should run without you if you are sick and allow you to go on vacations! A business that can do these things will grow naturally because you have a good structure and good management staff to support you. Whether you want to sell in the future, pass it on to your kids, sell to employees, or simply become financially independent in order to retire, your goal should be to increase the value of the business. Increasing the value will allow you to meet any of these goals because you will be financially solid."
4. What are some common business write-offs that people miss?
• "Having a good 401k plan that allows you to put away the most money and reward staff is a big one. People don’t want to spend the money on profit sharing, but that’s the best way to put money away tax advantaged."
• "Other common write offs I see missed are the benefits that S-Corp owners are eligible for—health insurance should be written off through the company, and they can reimburse themselves for a home office and mileage if they have an accountable plan. The pass-through entity tax is an important deduction that many business owners don’t know about."
• "The most important thing to know is that you have to have good bookkeeping for your business! If you don’t, I can guarantee that you won’t capture all of the write-offs you are entitled to, and you won’t be able to manage your finances."
5. At what point should a small business consider hiring a CPA vs. attempting to file their own taxes using a SAS app such as Turbo Tax?
• "These days there are so many compliance issues and new laws that I would recommend hiring a tax professional if: you have a complicated balance sheet (including assets, loans, etc), you are feeling the hit of taxes and want more options (such as the pass through entity tax), and/or if you are ready to start tax planning. CPAs do much more than just the tax returns and may give you feedback on areas you didn’t even know you needed help in."
• "Another thing I see a lot with business owners is regarding lending—if you are applying for a loan, almost always the lender will ask the CPA to provide a letter stating that they have prepared the tax returns for the last few years. If you’ve been self-preparing this could be an issue."
6. What should a small business look for when hiring a CPA? And/or what are some red flags to watch out for during an initial conversation?
• "Working with a CPA is all about communication. Find someone that you feel comfortable with and that understands your needs. If you are someone who prefers Zoom calls to writing emails, make sure that CPA also prefers communicating that way. You want to find someone who you are going to feel comfortable working with long term."
  
• "That being said, look early! Try to find your tax preparer during the year before your next tax return is due so that you can have time for them to get to know you and do tax planning before the deadline season hits. Give yourself time to connect with several different CPAs so you make sure you have the right fit."
• "Some red flags would be: They don’t ask you about your business structure and at least a little bit about what you do. They pressure you right away to change structures without learning more about your financials. You don’t want a cookie-cutter approach because the ideal tax situation is different for different businesses."
7. How can a small business maximize their relationship with their CPA?
• "Communicate! If your income is up, you are looking to make a big investment, take on a partner, or if you have any financial concerns, reach out to your CPA. That’s what they are there for. After the year ends, there is very little anyone can do to change your tax situation. Your CPA can help you make major decisions that are financially sound and that are tax advantaged."
8. Looking ahead, are there any tax trends that small business owners should stay ahead of?
• "The Tax Cuts and Jobs Act of 2018 is set to sunset after the 2025 tax year, with many changes on the horizon. Tax rates are set to go up, and many of the current laws will expire. It’s important to plan now if you expect income growth in the next few years, so that you are achieving maximum tax savings when the rates go up. If selling is on your mind, you might be better off doing it sooner rather than later."
• "Again, the pass-through entity tax is a big savings if you live in a state that participates in it. California’s deadline to opt in for 2024 is June 15, so if you haven’t done this yet discuss it with your preparer."
9. And lastly, if someone is interested in working with you and your team, what’s the best way to start the convo?!
• "Go to our website cgcbiz.com and fill out the contact us form. We would love to talk to you"

Thanks Kelli! We always love her words of wisdom – so professional and spot on, and yet always so approachable. We hope you feel the same way! 

Well kids, that’s all we’ve got for you today... now get outside and enjoy that summer weather! Unless of course you’re like Kelli & I (Taylor) who live in the blistering desert – then enjoy a popsicle inside with your BFF, the air conditioner! 

And of course... see you next month for round three of our Summer School Blog Series with LeiLani Quiray of Be The Change HR!