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Tax Strategist vs. Bookkeeper vs. CPA: Which Is Right For You?

Updated: Mar 14

Bookkeepers, accountants, tax preparers, tax strategists… There are so many roles concerning the finances of a business, but what the heck is the difference between them?

Loriann Kuntz and I got to chat on the Profit Priority Podcast about exactly that. In the episode, we discuss the difference between these roles, why you should hire each of these separately, and the importance of a good tax strategy. Check out the full episode here.

Key Roles

As an ‘accountant,’ there are many different areas of practice you can go into, but the most basic key financial roles that small business owners need to know about are:

  • Bookkeeper: keep track of the numbers throughout the year. Most people have this.

  • CFO (Chief Financial Officer AKA Controller): someone who works in the day-to-day financials, and works hand-in-hand with the bookkeeper.

  • Tax Preparer (AKA Tax Professional): Some tax preparers, like me, do tax preparation and tax strategy, but most tax preparers are only on the tax preparation side.

  • Payroll provider: some accountants only do payroll.

Bookkeeper, CFO or Controller, and some sort of tax professional will be your key players for a small business as many bookkeepers or CFOs will also oversee payroll. You might have a tax preparer you go to at the end of the year, but I highly recommend using a tax strategist throughout the year.

Tax Strategy Defined

I like to explain the difference between a tax strategist and all other financial roles using the metaphor of doctors.

If you need brain surgery, you want the neurosurgeon to do it. You don’t want the primary doctor you see once a year to do it; you want the person who has studied and specialized in neurosurgery. That’s what a tax strategist is: someone who specializes in this specific kind of planning.

When I’m helping clients with tax planning, our goal is to reduce the overall amount they’re paying in income taxes. Tax planning means creating a strategic and proactive plan, so you can take whatever tax liability you have and make it as small as possible - legally & ethically.

If you’re just bringing your numbers from your bookkeeper to your tax professional every year, there’s nothing they can do to go back and be proactive. But if we start tax planning all year long and we check in every month - or at least every quarter – we can begin to plan for your business’s benefit.

But the key is that you HAVE to have those numbers. Your tax strategist cannot do their job if you don’t know your numbers for the year.

Mindset Shift

One aspect of tax strategy is shifting your mindset in your business. When you go from being a W-2 employee to being a business owner, you have to shift your mindset to think about what could possibly be a deduction on your tax return.

Once you start to do that, the next mindset shift is strategizing to turn something that normally wouldn’t be a business expense into a legitimate business expense. Different streams of income can give you many different options for business expenses on your tax return.

My firm says we execute, we educate, and we advise. We educate business owners about these strategies, because it’s not something you learn in school!

The Journey from Audit to Tax Strategy

I was a chemical engineering major when I started University. I’m an Enneagram 3 (any other Enneagram fans out there?) so changing my major felt like a failure… but after 3 1/2 years and an internship in chemical engineering, I knew I had to change to accounting.

I finished that degree in a year, and when I applied for an internship, they asked, “Audit or tax?” I said “Audit,” because everyone hates tax… so into the audit department I went!

For me, the audit work was a little too cookie cutter. You did a lot of the same things over and over again. The work is incredibly important; it just wasn’t for me.

I spent time in our special matters group in our firm in Atlanta, and it was there I started doing tax returns. When my husband and I decided we would move back to New Orleans from Atlanta, I opened an accounting practice: I did bookkeeping, consulting, CFO work, tax preparation, and was unknowingly doing tax strategy and planning.

Within 2 years, we were expecting our second child and I. Was. Burnt. Out.

I never marketed; I had SO many clients who came by referrals, and I said “yes” to anyone and everyone (that’s the wing 2 enneagram in me). In 2018, I found The American Institute of Certified Tax Planners (or rather, it found me) and I got my second license. I slowly morphed my firm by letting go of my bookkeeping and consulting clients so I could focus more on the tax planning and tax strategy aspect. I not only loved doing the puzzle-piece work that is tax planning, but I also saw the benefit it was bringing to my clients – they’ve paid off mortgages, put money towards their kids’ college funds, massively grown their businesses, traveled and so much more … and there is something just so rewarding about that.

Now, I require my clients to do tax preparation and reduction in one monthly maintenance agreement, and the clients who are using this package are soaring – and that really fills my cup professionally.

The Importance of Tax Strategy

So why be so proactive with tax strategy? Why can’t you just sit down with a tax preparer once a year?

When I first started doing tax strategy, I structured it as a VIP day. Over time, I realized that my clients needed to have more education and accountability – hence our monthly check-ins.

I also noticed that, especially for female business owners, many of these tax planning days were a $15,000 or $20,000 investment, and that was a huge barrier to entry for many of them. I hated when people would tell me they couldn’t afford a tax strategist, because in my mind, they couldn’t afford not to have a tax strategist.

At that time, I started wondering how I could help people – especially female service providers. The solution I found is splitting our new monthly tax preparation, planning, and check-ins into a manageable monthly amount. It’s a one stop shop for everything income tax related, and we even collaborate with our clients’ other professionals, like their bookkeepers.

Tax strategy and reduction is an investment back in your business – not an expense. You do it to get something back in your business. It’s a worthwhile investment that typically brings you MORE IN SAVINGS than you’re paying for all of the tax services COMBINED.

Should You Separate Your Bookkeeping, Accounting, and Tax Prep Between Different Professionals?

The short answer: yes. LoriAnn and I both agree on this!

Most of the accounting firms that claim to do all the tax preparation, strategy, bookkeeping, CFO, payroll AND ‘everything accounting’ really aren’t experts in anything. They’re just dabbling in everything.

Let’s go back to the physician analogy. You don’t see a physician who’s a pediatrician, AND a cardiologist, AND a neurosurgeon. The doctor you want isn’t trained in everything; they’re trained very well in one thing.

You need to be working with an expert in whatever you need help in, and then let your experts work together.

Want more? Check out the full conversation here.

If you want to find out more about how we can help your business, download our services guide!

*Disclaimer: This article is not meant to be tax advice. This is not an all-inclusive list of business deductions. Different rules may apply to each individual taxpayer’s specific situation. Please consult with your accountant.

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