#017 Jason Blumer on When to Hire an Accountant — and How to Pick the Right One for You

Summary:  In this episode of Smarter freelancing podcast Ed talks to Jason Blumer on When to Hire an Accountant.

There comes a point when most freelancers wonder if (and when) they should find a good accountant.

It's an important decision. And there's much more to it than finding someone to do your taxes.

But when is the right time to look? Where do you start your search? What should you look for when evaluating potential accountants?

My guest for this episode is Jason Blumer of Blumer CPAs — a firm that works with creative professionals and agencies. In this talk, Jason answers all these questions (and more!). And he gives you a framework and a set of criteria for making smarter decisions about your finances AND searching for the right accountant.

The notes that follow are a very basic, unedited summary of the show. There’s a lot more detail in the audio version. You can listen to the show using the audio player below. Or you can subscribe in iTunes or Stitcher to get this show delivered straight to the Podcasts app on your smart phone, tablet or iPod.

Tell us about your accounting practice

Jason’s dad started the firm in 1997. Jason started managing the firm in 2003. A couple years ago, the firms closed its physical office and went virtual.

The firm mostly serves brands, designers, agencies and developers. They provide payroll and tax services as well as business coaching.

Why did you decide to focus on creative types?

The firm had a great client who was a designer, and he referred other designers to them. The firm started to attract creative and experimental types because the firm itself is experimental. Business coaching as a service is also attractive to these clients.

When you get into a service niche, people will perceive you as delivering higher value. At some point, you have to declare it.

When should a freelancer consider hiring a CPA?

CPA stands for Certified Public Accountant.

clicktotweetHire a CPA when your time is better spent doing what YOU do best (rather than doing your taxes).

This is especially true is you’re starting to hire people to do the work you do.

Does today’s tax software make it easier for freelancers to do their own taxes?

Although there’s great tax software, great software can’t replace good advice. What you input into the software matters.

When you pay someone to do your taxes, you’re paying for years of knowledge. They know what questions to ask you. They can identify what’s missing. You’re paying for the relationship.

What should a freelancer look for when searching for a CPA?

clicktotweetWhen looking for a CPA, don’t just go with someone who says, “Send me your stuff.

Look for someone who wants to meet and talk about how they do things and what you need. They’ve set up that process because they’re looking for the right client. Not just any client.

We’ve talked about tax return preparation. When should freelancers get help with bookkeeping?

There are two kinds of tax services: tax returns and tax planning. Tax return preparation looks backwards. Tax planning looks forward. One is about compliance; one is strategic.

Offloading your monthly bookkeeping is a bigger step and investment than tax return preparation. Offload your bookkeeping when you’re ready to stop doing things that don’t make money and focus on the core of what you do well.

At that point, you should also start thinking about other advisors, such as an investment advisor and an insurance advisor. Start building a team of professional services.

Is it better for freelancers to have tax return and accounting done separately? Or both by the same firm?

When you do everything in one firm, the CPA can apply knowledge from each side to the other. They have the complete picture. You’ll get better service and more knowledge.

For freelancers working as sole proprietors, what is the next logical business structure to transition to?

If you need some liability protection, you can transition into an LLC. LLCs and sole proprietors have the same tax structure if you’re a single partner. You won’t save on taxes.

You could also transition into an S corporation. The only reason to do this is if it will save you money on taxes.

If: $ Clients Paid You — Expenses (not including your own pay) = $60K-$90K

Then: You might benefit from being an S corporate.

An S corporation is a pain to administer and comes with many requirements. You have to do payroll. You might need some accounting. You have to file a corporate return.

Jason’s video: Move to an S Corp to Save Taxes

This episode will air in September. What things should freelancers be doing now to prepare for the end of the year?

People often start thinking about tax season in January. That’s too late. If you get a CPA in 2015, he/she is going to be doing your 2014 return. By then, it will be too late to do anything about the taxes you have to pay.

clicktotweetThe best time to look for a CPA is Sept/Oct -- NOT in the middle of tax season!

Is it okay to work with an accountant located in a different state?

Most accountants serve only their local geography. To serve clients across the country, accountants have to have the processes, knowledge and experience to do it.

For those of us already working with a CPA, what can we do to make your work easier—so you can help us better?

First, recognize that you’re paying for knowledge and the ability to answer your questions. You’re paying for protection and freedom from fear. CPAs aren’t selling transactions, they’re selling relationships.

Second, you have to do your accounting! If your records are a mess, I can’t tell you what you owe in tax. If you can’t or don’t want to do it yourself, then hire someone to do it. It will be much more expensive if the CPA has to reconstruct your books after the fact.

Where can listeners learn more about you?

Jason’s website: http://www.jasonblumer.com

Jason’s CPA firm website: https://www.blumercpas.com


  • David

    Great episode. I'd also like to recommend Jason's podcast, The Businessology Show, which he co-hosts with Dan Mall: http://businessology.biz. Dan should be a guest on a future episode of Smarter Freelancing.

    • edgandia

      I agree, David. He's a super-smart guy. I'd love to pick his brain on other business topics. Thanks for checking out the show!

  • M. Sharon Baker

    Thanks for interviewing an accountant, Ed. I don't think many freelancers understand why they might need an accountant and how helpful they can be beyond tax time.

    My accountant has helped with payroll, quarterly taxes, cash flow, revenue projections, salary adjustments, overdue account collection, new hire reporting, profit and loss statements for mortgages, balance sheets, and year-end close, among other tasks.

    I don't agree that an S Corp is hard to administer – sure there's some upfront work, but the tax savings are worth it.

    And FYI, Freelancers don't necessarily need a CPA. An accountant can provide everything a CPA can, except company audits. Many great accountants don't get CPAs - the CPA accreditation only allows these accountants to do company audits, and some charge more for the accreditation.

    • edgandia

      Amen, Sharon! Thanks for checking out the show. You make some excellent points above. And I hadn't thought about the whole CPA designation thing. Interesting!