5 Financial Decisions That Are Better When Your CPA and Wealth Advisor Coordinate

By: Jack Skrzycki, CFP® with Guest Blogger John A. Sanchez, CPA

For many business owners, financial planning happens in two separate conversations.

The CPA understands the business: revenue, expenses, tax liabilities, entity structure and cash flow. The wealth advisor sees another part of the picture: personal liquidity, investments, retirement, insurance and long-term financial goals.

Both perspectives matter. The challenge comes when decisions made on one side affect the other without the professionals having an opportunity to coordinate.

For business owners in particular, the line between business finances and personal wealth can be surprisingly thin. A decision about how much cash to retain in the company can affect investment opportunities. Compensation decisions can influence taxes and retirement-plan contributions. A major equipment purchase may change the tax picture enough to warrant revisiting other planning decisions.

Greater coordination does not mean every decision becomes more complicated. Often, it means asking better questions before acting.

Here are five decisions where having your CPA and wealth advisor in the same conversation may be especially valuable.

1. How Much Cash Should Stay in the Business?

Business owners understandably value liquidity. Cash can provide a cushion for payroll, taxes, inventory, equipment purchases, hiring and unexpected expenses.

But there is a difference between maintaining an appropriate operating reserve and allowing cash to accumulate without a defined purpose.

The appropriate amount depends on the business. A CPA can help assess anticipated tax obligations, operating expenses, capital expenditures and the company’s overall financial position. A wealth advisor can help evaluate how the owner’s personal liquidity, investment portfolio and long-term goals fit alongside those business reserves.

That conversation can help answer an important question:

How much cash does the business actually need, and what should happen to capital beyond that amount?

For an owner whose net worth is already heavily concentrated in the business, the answer may also have implications for diversification. The SEC’s Investor.gov notes that diversification across investments can help reduce overall portfolio risk, although it cannot eliminate the risk of investment losses.

The objective is not simply to move money out of the business. It is to establish an intentional framework for deciding what the business needs and how additional capital fits into the owner’s broader financial plan.

2. How Much Should the Owner Take From the Business?

The next question naturally follows: once cash is available to leave the business, how should it reach the owner?

That can be both a tax decision and a personal financial planning decision.

For example, S corporation shareholder-employees who provide services to the company generally must receive reasonable compensation before taking non-wage distributions. The IRS specifically identifies reasonable compensation as an important issue for S corporations.

Owners may also need to consider estimated tax payments. Sole proprietors, partners and S corporation shareholders generally must make estimated payments when they expect to owe $1,000 or more when filing their individual federal income tax return.

Meanwhile, the wealth advisor is looking at what those dollars need to accomplish after they leave the company. That could include building personal liquidity, reducing debt, funding investments, supporting lifestyle needs or pursuing longer-term objectives.

Rather than choosing a distribution because it simply “feels right,” the owner and both professionals can consider the amount, timing, tax implications and intended use of the money together.

3. Which Retirement and Investment Accounts Should Be Funded?

Business owners have several potential retirement-plan structures available to them, and the plan that made sense when a company had five employees may not necessarily be appropriate when it has 25.

SEP IRAs, SIMPLE IRAs, 401(k) and profit-sharing plans, and defined benefit arrangements each have different rules, contribution structures and planning implications.

Those differences can be significant. For 2026, for example, the basic employee elective-deferral limit for a 401(k) is $24,500, while the overall defined-contribution limit is generally $72,000 before applicable catch-up contributions. SEP contributions can generally reach the lesser of 25% of compensation or $72,000 in 2026. SIMPLE plans operate under a different set of contribution limits and employer requirements.

Those numbers are only part of the decision.

The CPA may be considering deductions, employee demographics, compensation and business cash flow. The wealth advisor may be considering the owner’s savings objectives, investments inside and outside the plan, asset allocation and how retirement assets fit within the broader portfolio.

A coordinated review can determine whether the retirement plan still fits the business and the owner’s financial strategy rather than simply continuing a structure that was established years ago.

4. Which Decisions Need to Happen Before Year-End?

Some planning opportunities have deadlines. Others become more difficult once the calendar turns.

That makes the months before year-end an especially useful time for coordination.

Depending on an owner’s circumstances, the discussion might include retirement-plan contributions, charitable giving, Roth conversions, realized investment gains and losses, business purchases, depreciation, compensation and other tax-planning considerations.

Recent tax-law changes make this conversation particularly relevant for business owners. Current IRS guidance provides a permanent 100% additional first-year depreciation deduction for certain qualifying property acquired after January 19, 2025. Taxpayers should work with their tax professional to determine eligibility and whether taking available deductions makes sense for their particular circumstances.

The investment portfolio can create additional considerations. Realized capital losses can generally offset capital gains, with individuals potentially able to deduct up to $3,000 of excess net capital losses against ordinary income and carry remaining losses forward, subject to applicable rules.

A Roth conversion presents another example of why coordination matters. Converting untaxed traditional IRA assets to a Roth IRA generally creates taxable income in the year of conversion. A wealth advisor can evaluate how a conversion fits the retirement strategy while the CPA evaluates the resulting tax implications.

Charitable planning can cross the same boundary. Depending on the circumstances and applicable limitations, donating qualifying appreciated property to an eligible charity may produce different tax consequences than selling an investment and donating cash.

None of these strategies is appropriate simply because the calendar says December. Their value depends on the owner’s individual circumstances. That is precisely why the conversation should happen before the decision does.

5. How Should Your CPA and Wealth Advisor Work Together?

Perhaps the most important decision is not financial at all. It is deciding how the people advising you will communicate.

Coordination does not require constant meetings. A practical approach may involve a few intentional touchpoints during the year, particularly before significant financial decisions and before year-end.

The owner can help facilitate that relationship by making sure both professionals understand the broader picture and have permission to communicate when appropriate.

That could mean bringing both professionals into the conversation before:

• changing owner compensation or distributions;
• establishing or redesigning a retirement plan;
• making a significant business purchase;
• completing a Roth conversion or major charitable gift;
• selling a business or other highly appreciated asset;
• making significant changes to an estate or succession strategy.

The purpose is not to have two professionals give the same advice. They bring different disciplines to the table.

The value comes from allowing each professional’s perspective to inform the other.

Better Planning Starts With a Better Conversation

For business owners, tax planning, business decisions and personal wealth planning frequently intersect.

Your CPA may understand an important decision from the tax and business perspective. Your wealth advisor may understand how that same decision affects your personal balance sheet and long-term financial objectives.

When those perspectives are considered together, you have an opportunity to evaluate more of the consequences before making the decision.

If any of these five questions are unresolved in your own financial life, consider bringing them to your next meeting with your CPA and wealth advisor.

Download our Five-Decision Coordination Guide for a simple set of questions you can bring to the conversation. To access the guide, please complete the form below,

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DISCLOSURES:

This material is provided for educational and informational purposes only and is not intended as individualized investment, tax, accounting or legal advice. The appropriateness of any strategy depends on your individual circumstances. Consult your financial, tax and legal professionals regarding your specific situation. Diversification and asset allocation do not ensure a profit or protect against loss. This material is for general information and educational purposes only and is not intended to provide specific advice or recommendations for any individual. Investing involves risk including the loss of principal. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

Advisors associated with Spartan Wealth Management may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Spartan Wealth Management; or (2) solely investment advisor representatives of Spartan Wealth Management, and not affiliated with LPL Financial. Investment advice offered through Spartan Wealth Management, a registered investment advisor and separate entity from LPL Financial.