Signs Your CPA Is Underserving You
Not opinions about service quality. Things you can check on your own return in twenty minutes.
Whether a tax relationship is serving a profitable business is checkable rather than a matter of impression. Most of the indicators appear on the returns you already have, and each points to a specific gap: an election never made, a plan never designed, a structure never revisited. This is a diagnostic rather than a complaint list.
Check the Return Itself
Officer compensation is zero or token on a profitable 1120-S. This is an audit trigger sitting on the face of the return, and it means nobody produced a reasonable compensation analysis.
No PTET is reflected and you are in a state that offers it. Worth $15,000 to $30,000 a year at this income level, and missed years generally cannot be recovered.
The depreciation schedule shows only 27.5 or 39-year property. If you own a building and nothing has been reclassified into 5, 7, or 15-year categories, no cost segregation study was ever done or considered.
Retirement plan contributions are small or absent. A profitable owner with a $7,000 IRA contribution and no plan has the largest available deduction sitting unused.
Estimated payments match prior-year safe harbor exactly. Safe harbor avoids penalties; it does not reflect a projection. Exact matching means nobody modeled the current year.
Check the Relationship
The only substantive contact is between February and April. Planning decisions are made before year-end. A relationship that activates during filing season is structurally unable to deliver them.
You have never received a written projection. Planning produces documents: multi-year projections, entity comparisons, plan design studies. If nothing in writing has ever arrived, nothing was modeled.
Prior years have never been reviewed. A three-year lookback is standard when a planning engagement begins and absent from compliance relationships.
You learn about strategies from other business owners. If peers raise cash balance plans or cost segregation and your advisor has never mentioned them, that is a scope signal.
Questions get answered but nothing is ever proposed. A responsive advisor who only reacts is still not planning. Planning is proactive by definition.
Check the Structure
Your entity has not been reviewed since formation. A structure appropriate at $150,000 of profit is frequently wrong at $700,000.
You own real estate inside an S-corp or C-corp. A structural error that suspends losses and is expensive to unwind, because distributing appreciated property from a corporation triggers gain.
Your operating agreement has never been reviewed against your election. Special allocations or preferred returns are a second class of stock and can invalidate an S election from day one.
You have entities nobody can explain. Each entity costs a return and a set of books. Ones with no identifiable purpose are pure cost and added audit surface.
Weigh What You Find
Not every item is equally serious.
Fix immediately: zero officer compensation on a profitable S-corp, real estate held in a corporation, an operating agreement conflicting with an S election. These are exposure, not just missed opportunity.
Address this year: a missing PTET election, an absent or undersized retirement plan, an unstudied building. Each is recurring money.
Raise at the next review: safe harbor estimates, the absence of written projections, an entity structure that has drifted. Real, and not urgent.
What This Does Not Mean
Finding several of these is not evidence of incompetence. Most indicate that the engagement was scoped for compliance and delivered compliance. That is a legitimate service and it is what most clients need.
The useful conclusion is not that your CPA is bad. It is that your business has outgrown the service level you are purchasing, and the fix is to add or change the service rather than to assume the strategies do not exist.
Key Takeaways
- Most indicators are visible on returns you already have.
- Zero officer compensation on a profitable S-corp is exposure, not just a missed strategy.
- Estimates matching prior-year safe harbor exactly mean nobody modeled the current year.
- Real estate held inside a corporation is a structural error that gets costlier to unwind.
- Finding several of these usually means outgrown scope, not incompetence.
Start With the Pillar Guide
Frequently Asked Questions
What is the clearest sign of a problem?
Zero or token officer compensation on a profitable S-corp return. It is an audit trigger visible on the face of the return and it means no reasonable compensation analysis was performed. It is exposure rather than merely a missed opportunity.
How do I check whether cost segregation was ever considered?
Look at the depreciation schedule attached to the return. If you own a building and every asset is on a 27.5 or 39-year life with nothing in 5, 7, or 15-year categories, no study was done. A study produces distinctive shorter-lived asset classes.
Should I change CPAs if I find several of these?
Not necessarily. Raise them directly first and ask whether the firm offers a separate planning engagement. Many owners add a planning relationship alongside their existing preparer rather than switching, which avoids losing institutional knowledge.
Can prior-year mistakes be fixed?
Often. Amended returns generally reach back three years, and a Form 3115 accounting method change allows missed depreciation to be caught up in the current year without amending. Missed PTET elections are the main category that usually cannot be recovered.
More in This Series
Talk Through Your Situation
Every situation turns on its own facts. Schedule a discovery call and we will walk through what applies to you, what it is worth, and what it would take to put it in place.