How to Choose a Tax Advisor for Your Business

Finding the right tax advisor isn’t the same as hiring someone to prepare your returns.

Tax preparation is transactional—you provide documents, they file forms, you’re done until next year. Tax advisory is a relationship. You’re choosing someone who’ll guide major business decisions, help structure your entity, and potentially save you tens of thousands of dollars through proactive planning.

This guide focuses primarily on S-corps and partnerships (the most common entity types for advisory), though the principles apply to C-corps and Schedule C businesses as well.

That requires a different evaluation process.

Here’s how to find a tax advisor who’s actually right for your business—and how to avoid settling for someone who’s just available.

How Do You Choose a Tax Advisor for Your Business?

Choose a tax advisor based on six criteria: (1) specialization in your entity type (S-corps, partnerships), (2) proactive communication style, (3) experience with similar businesses, (4) transparent pricing approach, (5) year-round availability, and (6) implementation support beyond just advice. The best advisors aren’t the biggest firms—they’re specialists who work primarily with your entity type, communicate proactively outside tax season, and provide upfront estimates. Ask about their S-corp/partnership client percentage, communication frequency, and pricing structure before hiring.

Key Takeaways

• Specialization matters more than firm size – Choose CPAs who work primarily with S-corps/partnerships, not generalists
• Proactive communication is the best indicator – Good advisors reach out mid-year with planning recommendations, not just during tax season
• Ask about pricing upfront – Red flag if they won’t discuss pricing until after starting work; expect upfront estimates
• Year-round availability is critical – Tax advisory means access when you need it (July equipment purchase, September entity change)
• Implementation support, not just advice – Look for CPAs who help execute strategies, not just recommend them
• Questions reveal fit – Ask: “What % of clients are S-corps?” “How often will we communicate?” “What’s your pricing structure?”

What to Look for in a Tax Advisor

The best tax advisors aren’t necessarily the ones with the biggest firms or the most aggressive marketing. They’re the ones who specialize in businesses like yours, communicate proactively, and have the technical depth to implement strategies beyond basic compliance.

1. Specialization in Your Entity Type

Not all CPAs focus on the same types of businesses. Some specialize in individual returns, others in large corporations, others in specific industries.

For S-corps and partnerships, you want someone who:

• Works primarily with pass-through entities (S-corps, partnerships, LLCs)
• Understands entity-specific strategies like reasonable compensation analysis, partner basis tracking, QBI optimization, guaranteed payment structuring
• Files dozens of returns like yours annually (not just a few)

Why this matters: S-corp reasonable compensation is different from partnership guaranteed payments. QBI phase-outs work differently for S-corps than partnerships. Section 754 elections don’t apply to S-corps at all. If your CPA works mostly with W-2 individuals or C-corps, they won’t be fluent in the strategies that matter for your entity.

Question to ask: “What percentage of your clients are S-corps or partnerships? How many returns like mine do you prepare each year?”

2. Proactive Communication Style

The best indicator of whether a CPA will be a good tax advisor is how they communicate outside of tax season.

Red flags:

• You only hear from them in March/April
• They respond to your questions but never proactively reach out
• They provide one-word answers without context or explanation

Good signs:

• They reach out mid-year with planning recommendations
• They explain not just what to do, but why it matters
• They anticipate questions before you ask them
• They provide context around tax law changes that affect your business

Tax advisory requires ongoing dialogue. If your CPA goes silent for 9 months, they’re not advising—they’re preparing returns.

Question to ask: “How often will we communicate outside of tax season? What does proactive planning look like in your practice?”

3. Experience with Similar Businesses

Industry specialization isn’t always necessary, but experience with businesses similar to yours—in size, complexity, and structure—makes a difference.

A CPA who works primarily with $50K sole proprietors won’t have deep experience with:

• Multi-entity structuring for $500K+ businesses
• Cost segregation studies for real estate holdings
• Defined benefit plan feasibility for high-income service businesses
• Multi-state filing coordination for partnerships with distributed partners

Look for someone who regularly works with businesses in your revenue range and complexity tier.

Question to ask: “What’s the typical revenue range of your business clients? Do you have clients with situations similar to mine?” (Describe your specific complexity—multiple entities, real estate, multi-state operations, etc.)

4. Transparent Pricing Approach

How a CPA prices their services tells you a lot about how they operate.

Red flags:

• Vague pricing (“it depends, we’ll bill as we go”)
• Hourly billing with no estimate or cap
• Unwillingness to discuss pricing until after they’ve started work

Good signs:

• Upfront estimates based on your specific situation
• Clear explanation of what’s included and what costs extra
• Pricing that reflects the complexity of your situation
• Willingness to discuss scope changes before they happen

At SDO CPA, we provide upfront estimates after understanding your situation during an initial consultation. If scope changes significantly during the engagement, we discuss it before doing additional work. That’s how pricing should work—transparent and mutually agreed upon.

For a deeper look at what tax advisory costs and whether it delivers ROI, read our guide: Is Tax Advisory Worth the Cost?

Question to ask: “How do you structure pricing for advisory services? What’s included in your base fee, and what would be additional?”

5. Year-Round Availability

Tax advisory means having access to guidance when you need it—not just during tax season.

If you’re considering a major equipment purchase in July, changing your entity structure in September, or evaluating a real estate investment in November, you need a CPA who’s available and responsive.

Question to ask: “What’s your typical response time for client questions outside of tax season? Will I work directly with you, or will questions go through a staff member?”

6. Implementation Support, Not Just Advice

Many CPAs will tell you what strategies exist. Fewer will help you implement them.

The difference between “you should consider a Solo 401(k)” and “here’s how to set up a Solo 401(k), here’s the provider I recommend, here’s the contribution deadline, and here’s how we’ll document it on your return” is significant.

Look for a CPA who:

• Coordinates with other professionals (attorneys, financial advisors, payroll providers) when needed
• Provides step-by-step implementation guidance
• Follows up to confirm strategies were executed before year-end

Question to ask: “When you recommend a strategy, do you help implement it, or just provide the recommendation?”

Questions to Ask Before Hiring

These are the questions that reveal whether a CPA is the right fit for tax advisory—not just tax preparation.

About Their Practice and Approach

1. “How many S-corp [or partnership] clients do you work with?” You want someone who’s fluent in your entity type, not learning as they go.
2. “What’s your approach to reasonable compensation [or guaranteed payments, depending on your entity]?” This reveals whether they have a systematic approach to the most common planning opportunity for pass-through entities.
3. “How often will we communicate outside tax season?” The answer should be “at least annually for planning” or “quarterly” for more complex situations. If the answer is “whenever you reach out,” they’re not proactively advising.
4. “What’s your pricing structure for advisory services?” You should get a clear explanation of what’s included in their base advisory fee and what costs extra.
5. “Who will I actually work with—you, or someone on your team?” In larger firms, you may meet with a partner initially but work primarily with staff. Know what to expect.

About Their Technical Capabilities

6. “Can you help coordinate cost segregation studies [or defined benefit plans, or other advanced strategies]?” If they say “that’s outside our scope,” you’ll need to coordinate implementation yourself. Not necessarily a dealbreaker, but good to know.
7. “Do you help with multi-state filing if my business expands?” Many CPAs avoid multi-state complexity. If expansion is on your horizon, confirm they can support it.
8. “How do you stay current on tax law changes?” Look for answers like “I take annual CPE courses,” “I’m a member of AICPA tax section,” or “I subscribe to tax research databases.” Vague answers like “I keep up with things” aren’t confidence-inspiring.

About Working Together

9. “What do you need from me to provide effective advisory?” A good advisor will tell you they need access to accurate financials, proactive communication about business changes, and responsiveness to year-end planning recommendations.
10. “What’s your typical client tenure—how long do clients usually work with you?” High turnover can be a red flag. Good advisory relationships tend to last years, not one tax season.

What to Expect in the First Year

The first year with a new tax advisor involves more setup work than subsequent years. Understanding what’s normal helps you evaluate whether you’re getting good service.

Prior Return Analysis

A competent advisor will:

• Request prior year returns (typically 2-3 years)
• Analyze them for missed opportunities or errors
• Provide a summary of what they found and what it means

This initial analysis often uncovers opportunities like:

• Incorrect reasonable compensation (too high or too low)
• Missed elections (Section 754, Augusta Rule, QBI aggregation)
• Suboptimal entity structure
• Basis tracking errors in partnerships

Establishing Your Advisory Cadence

Your advisor should propose a meeting schedule based on your complexity:

• Annual advisory: One comprehensive planning session each year (typically Q3/Q4) plus tax preparation
• Quarterly advisory: Four sessions per year aligned with estimated payment deadlines
• Monthly advisory: Regular touchpoints for complex multi-entity situations or high-growth businesses

Be wary of advisors who don’t propose a specific cadence. “Call me whenever” isn’t a structured advisory relationship.

Implementation Timeline

Tax strategies don’t happen overnight. A realistic first-year timeline might include:

• Months 1-2: Prior return analysis, initial planning session, identifying opportunities
• Months 3-6: Implementing strategies (entity changes, retirement plan setup, documentation)
• Months 7-10: Mid-year tax projection, year-end planning recommendations
• Months 11-12: Executing year-end strategies before December 31
• Following year Q1: Tax preparation integrating all implemented strategies

If an advisor promises immediate dramatic savings without a multi-month implementation process, be skeptical. Real tax optimization takes time to implement correctly.

Learn what year-round advisory actually looks like in practice: Year-Round Tax Advisory: What Happens Each Quarter

Making the Transition from Your Current CPA

Switching CPAs feels awkward. You’ve worked with someone for years, they know your business, and you don’t want to offend them. But if you’re not getting the level of service you need, staying out of politeness is expensive.

When It Makes Sense to Switch

Consider changing advisors if:

• You’ve never received proactive tax planning recommendations
• Your questions go unanswered for days or weeks
• You discover strategies after the fact that could have saved significant money
• Your CPA doesn’t specialize in your entity type or industry
• You’ve outgrown their technical capabilities

How to Make the Transition Professionally

1. Have a final conversation with your current CPA Explain that you’re looking for a different service level or specialization. Most CPAs understand that businesses outgrow their practice or need different expertise.
2. Request final copies of all returns and workpapers You’re entitled to these. Expect to receive:
   • Prior year tax returns (typically 3-7 years)
   • Depreciation schedules
   • Carryforward calculations
   • Any documentation of elections or special tax treatments
3. Complete any outstanding work with your current CPA Don’t switch mid-year if possible. Finish the current year’s return, then transition for the following year.
4. Sign a new engagement letter with your new advisor This formalizes the relationship and clarifies the scope of services you’re purchasing.

The transition typically takes 30-60 days for the new advisor to review your history and get up to speed. Plan accordingly.

Red Flags to Watch For

Some warning signs indicate you should keep looking:

Avoid CPAs who:

• Guarantee specific dollar amounts of tax savings before understanding your situation
• Disparage other CPAs or say things like “most CPAs miss this” (this violates professional ethics rules)
• Push aggressive strategies without discussing risk or audit likelihood
• Are vague about their experience with your entity type
• Can’t explain their pricing structure clearly
• Don’t ask detailed questions about your business during the initial consultation

Trust your instincts if:

• Communication feels one-sided (you’re always initiating)
• You get simple yes/no answers without context or explanation
• They seem more interested in selling services than understanding your needs
• Their expertise seems mismatched to your situation (they specialize in restaurants, you’re a professional service business)

What Good Tax Advisory Looks Like

You’ll know you’ve found the right advisor when:

• They ask more questions than they answer during the initial consultation
• They explain concepts in plain language without unnecessary jargon
• They outline a clear service structure with defined touchpoints and deliverables
• They identify opportunities based on your specific situation, not generic strategies
• They provide transparent pricing with an upfront estimate
• They follow up proactively with planning recommendations outside of tax season

The relationship should feel like a partnership—not a vendor you contact once a year when you’re required to file returns.

Ready to explore whether SDO CPA is the right fit? Schedule a consultation to discuss your tax situation and service needs.

Entity-Specific Considerations

Different entity types have unique advisory needs. Make sure your advisor has relevant experience:

For S-Corporation Owners

Your advisor should be fluent in:

• Reasonable compensation analysis and documentation
• QBI deduction optimization (W-2 wage and property limitations)
• Distribution vs. salary timing
• S-corp health insurance rules
• Shareholder basis tracking

See our comprehensive guide: Tax Advisory for S-Corporation Owners

For Partnership Owners

Your advisor should understand:

• Partner basis tracking (inside and outside basis)
• Section 754 elections and step-up opportunities
• Guaranteed payments vs. distributive share
• Self-employment tax planning for general partners
• Special allocations and Section 704(b) compliance

See our comprehensive guide: Tax Advisory for Partnership Owners

Related Resources

For more on tax advisory services and strategies:

• Tax Advisory Services – Overview of what tax advisory includes and how it works
• Tax Advisory vs. Tax Preparation – Understanding the difference between service levels
• CPA vs. Tax Preparer – The difference between CPAs and other tax professionals
• Tax Planning Guide – Broader overview of proactive tax planning approaches

About SDO CPA: We provide tax advisory services for S-corporation and partnership owners, specializing in proactive planning and entity optimization. Our approach combines Big Four technical expertise with the accessibility of a focused practice.

Schedule a consultation to discuss whether we’re the right fit for your business.