251: Traditional CPA vs. Strategic CPA: What Helps You Grow
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Welcome back to another episode of The Richer Geek Podcast. Today we are joined by Chris Hervochon, CPA, CVA, a numbers-driven advisor who helps growth-minded entrepreneurs make smarter financial decisions. Chris shares how good accounting goes far beyond tax season, why advisory-based CPAs can save you tens of thousands, and the real difference between bookkeeping, controllers, and fractional CFOs. He also breaks down how to prepare your business for a future sale and the hidden risks most founders never check. If you're ready to run your business like the asset it should be, this episode will help you get there.
In this episode, we chat about…
Chris shares how his career went from accounting to pro golf and eventually to running his own CPA firm.
He explains why traditional CPAs focus on volume and often can’t offer real advisory or proactive support.
Breakdown of the differences between bookkeeping, controllers, and fractional CFOs.
Discussion on how upcoming tax law changes may impact business owners in the next few months.
Chris talks about what makes a business valuable and how owners can reduce risk to increase that value.
Key Takeaways:
A strategic CPA gives advice year-round, not just during tax season.
Growing businesses need consistent check-ins, quarterly at minimum, monthly if possible.
Your finance function should stay within 1–3% of your revenue to stay effective.
Entity structure and tax planning are major sources of missed savings for entrepreneurs.
Buyers pay for stable, low-risk cash flow, not a business that depends on the owner.
Resources from Chris
Resources from Mike and Nichole
+ Read the transcript
Mike: Hey, everybody. Welcome back to another episode of The Richer Geek Podcast. Today, we have Chris Hervochon, CPA, CVA, sole proprietor of his CPA firm, and he provides, uh, outsourced accounting tax prep services primarily. Listen all you founders for growth-minded entrepreneurs, primarily in the marketing creative agency space. In 2018, he was only one of 41 CPAs honored by the American Institute of the CPAs as a member of the Leadership Academy's 10th graduating class. Unfortunately, he's a Phillies Eagles fan. Steeler Nation. Here we go.
Chris: Oh no.
Mike: But he does listen to Metallica, which I love. How are you doing Chris?
Chris: Doing great. Mike. Thanks so much for having me on.
Mike: I almost wore my Steelers hat, but I was, that's all right. You know, I grew up in Indianapolis when we didn't have the Colts. Okay. And you know, it wasn't gonna be a Browns fan.
Chris: Nope.
Mike: Cincinnati Bengals, Cleveland Bears, but Jerry Green. Terry Browns also had the choice, you know, it's like going, "I love the dirty grit Jack Lambert."
Steel curtain. Alright. That's enough of that. And then you have the Philadelphia Eagles. Yeah. You know, whatever. Yeah.
Chris: You stopped. I just won the Super Bowl.
Mike: Oh, I know, I know. That's why I'm teased. I was waiting for you to say that.
Chris: Y'all, got Aaron Rogers though, so you got something going for you, right?
Mike: Lots of drama, I think.
Chris: Lots of drama. That going for a lot.
Mike: I think we're gonna have a lot of drama. Maybe he'll get hurt in the first preseason game and then we can start winning, you know? So I'm crossing my fingers for that. Chris, before we get into the meat of the podcast, tell us a little bit about who you are, how'd you get into your CPA, CVA role? And why did you decide that growth-minded entrepreneurs are your niche?
Chris: Yeah, good question. So, I majored in accounting in college. My dad was an accountant and he kind of steered me in that direction a little bit. I played college golf. So when I graduated I actually turned pro and did that for a minute. And actually my dad's very sage advice was, "Well, you'll know when you go broke." And so as inevitably happens, right? The golf thing didn't work out. And so decided to go use my accounting degree, worked my way up through forensic accounting, corporate accounting, corporate finance, started what is now Better Numbers as a side hustle 14 years ago, and just kind of grew to the point where it's like, "Alright, either I'm gonna do this full time, or I'm gonna quit this and focus on my nine to five." And decided that I had something to offer to small businesses and have a relatively unique skillset, and so decided to pursue that and been fulltime doing this. It'll be seven years in a month, actually. I've enjoyed it. How we landed on our niche. We started out really in professional services. My first client was a marketing agency and my second client was a marketing agency. And kind of lean into that over the last few years. As it is now, probably about 40% of our business is marketing creative agencies. About 40% is trades and trade-related, home service-based businesses. And the other 20% is pretty much everything else. And it's just become obvious over, you know, since operating my firm that the growth-minded entrepreneur mindset, those are really the folks that, that we can help and feel most interested in helping. Those are the folks who are interested in taking what they have and trying to grow it into something more. And that's interesting to me. So that's kinda what we lean into.
Mike: So tell me a little bit about when I first started in my business, I just had a regular CPA. How do you differ from the regular CPAs being just number crunchers and things like that? Do you do any type of advisory work or do you do anything else than let me know if I owe or get a refund?
Chris: Historically speaking, the traditional CPA is gonna be somebody who does tax and or audit. That's just kind of what they do. So the traditional CPA firm, I would say, is gonna tend to be a volume shop. Whenever you're a volume shop, your prices are gonna tend to be lower. You're gonna make all your margins based on volume. Whenever you are cranking out a ton of volume, it's really hard to lean into that advisor. You just don't have time. This is my opinion, you can probably do one individual that's good at what they do in the tax world and can probably handle about a hundred clients. That's about it. If you kind of think about historically tax prep prices. I mean, if you're in the $250 range, the $500 range, and you're only doing a hundred clients, like you're not really making much money, right? That's a struggle bus. So what you have is a lot of CPAs who are handling multiple hundreds of clients, and when you do that, you just don't have room for the advisory. You don't have the time to sit down and talk to the client. You don't have time to dig into the 1040. You don't have time to be proactive. You just don't have time for those things because you can't do that and simultaneously make money. So where we are, like we, our prices are a little bit higher, especially on the tax side. But we've structured in a way where we build in that advisory piece throughout the course of the year. So we do that on the tax side, and we also do that on the outsourced accounting side as well. So we've got fewer clients. We're only, we're at 66, I think right now in total. We do about 110 returns is what we'll probably do this year, something like that. But it leaves plenty of time for that advisory and it, we include it in our packages too. Everything we do is a package. So it's not like you're gonna get a bill. You're not gonna call me and say, "Hey Chris, I have this question," or whatever, and get a bill for it. It's already baked into your price. So that's the way that we've structured our firm, which I think is the way that probably the newer, younger firms are probably going more that way. I would say there's most definitely still room for that, you know? 1040 kind of grind type of firm. But that's just not us. And that's just not, it's just not, we are.
Mike: Yeah. At some point, ladies and gentlemen, you know, as I grew my business and as you grew your business, you're gonna sit there and say, "I am now an entrepreneur, not W-2." What is the difference between different tax strategies? Because they're very, very different. And that person, and I've gone through a lot of CPAs, those types of high volume people. To me, it was so worth it. At first, I was like, how much do you know are you gonna charge me per entity? Or you know, I mean, tens of thousands of dollars. But then, a year later it's like, "Wow, they just saved me $85,000 that first year. So that $10,000-$15,000 I paid them that year. It was, yeah, all day long. If you can save me that type of money. So at some point, ladies, gentlemen, you're gonna have to get to that point where it is so worth it to have somebody that gets into more of the advisory. Also, you know, I love the quarterly calls. I don't know if you do some quarterly calls or monthly calls with your clients, but sitting there saying and telling us how that works a little bit. I know how it works with me about, hey, we're seeing this and you're getting ahead of things, right?
Chris: For sure. That's a really great point too, the difference between the W-2 individual and somebody who owns their own businesses are, they're very, very different sports. Somebody who's just got a W-2 who's got a mortgage and you know, a spouse and a a kid or couple or whatever, like that's either a turbo attack situation or that's gonna be, and if you're just really super uncomfortable with apps or whatever, maybe you're just not tech savvy, then you go to your local tax preparer, who is gonna charge you $250, $500, whatever, and you're just gonna give 'em their stuff. It'll take 'em 20 minutes, they'll grind it out. You're done. That's great. But for somebody who's got a more complex situation, which is pretty much every business owner ever. It needs to be a little bit different. And the thing about tax planning and those quarterly meetings is that the advice that you're gonna get compounds. So yeah, you're gonna save money in year one, but then you're gonna probably save money in year 2, 3, 4, 5. All the way out. And there's also a time value of that money as well. That's gonna be kind of your standard environment. Where we're at right now is an interesting environment because we know that we're gonna get tax legislation as we sit here in probably two months, something like that. It'll be the biggest tax change that we've had since 2017. The conversations we're having with our clients right now, kind of twofold. One, you know what we're hearing economically 'cause we pay attention to that. How does that impact our clients? Is our client base as a whole? Are they experiencing similar things across the base and as it pertains to that economic environment? The answer is yes, which is very mixed right now. So that's the first piece. And the second piece is, well, what are we hearing about the tax legislation? How's that gonna impact you? So it's really interesting over the last couple weeks we've been doing quarterly estimates 'cause they were due on the 16th. And so we're having these conversations. It's like, well, we're operating under one tax law right now. Under that tax law, you should be paying this and you should be thinking about these things. But we also know that in two months that might not apply. We just don't know. So it's really kind of a wild situation right now. I think it was yesterday, the Senate came out with their version of what the bill is gonna be. The house has their version. They are two very different things. So we'll see what happens, but those are the conversations that we're having. So you just need somebody, especially if you're a business owner with a more complex situation, you just need somebody who's paying attention to these things and that can take those things and then apply it to you. What does that mean for you exactly?
Mike: And that is true. I'm kind of holding off on a sale of one of my assets right now 'cause I was like, well, it might be more favorable in two months, you know? You just don't know.
Chris: Yeah.
Mike: And then in, and almost four years from now, you know, it just keeps, I do not envy the CPAs because I know the Code is not that thick.
Chris: 70,000 pages.
Mike: 70,000 pages. I'm just like, "Oh my God."
Chris: Yeah.
And that's not even the worst part of it. The worst part of it is all the state and local stuff. Everybody skips past all that, right? Especially in the environment that we're in now, post-COVID has a lot of remote workers. We've got businesses that are creating Nexus in multiple states where they may intend to do so. Maybe I didn't. I just got a notice from California from one of my clients this morning who you know, three, no, what was it five years ago? Hired an employee in California, didn't know that they were gonna create Nexus in California. Now California's after them for tens of thousands of dollars, that sort of thing. But everybody says the IRS tax code is very complex and it is. It's true. It's 70,000 pages. It's a lot. There's nobody out there that knows the full thing front to back. But you have another element there, which is state and local too. And it's income tax. It's sales tax. Business licenses. It gets very, very complex, very, very quickly.
Mike: Yeah. Now, at what point should we start thinking about, ladies and gentlemen, this is the other next step after finding the correct CPA and advisor, there's this thing called fractional CFOs. And then if you're big enough, you can actually get maybe a controller. Talk to us a little bit about when that might be good. Because the fractional CFO and then maybe like a CPA that does advisory work, they're kind of the same, maybe different roles, you know? Maybe a little more complex. What's the difference between those two and when should you start maybe thinking about the CFO route?
Chris: A CPA most definitely is gonna be in the tax realm, and that's not gonna be somebody that you're gonna hire internally. Now, CPAs can fill a bunch of different seats. They can fill your bookkeeping seat, they can fill your controller seat, they can fill your CFO seat, in some cases. It just depends on what that particular accountant skillset is. In general, our advice to our clients is that you wanna be somewhere between 1% and 3% of revenue on your finance function, okay? So think of it like a million dollar business, maybe $30,000 something like that is what you wanna be spending. Now, $30,000 is not gonna get you a fractional CFO probably, and it's most definitely not gonna get you an internal CFO. Most definitely. To hire a CFO, a good one full-time, you're looking at several hundred thousand bucks for sure. To hire and I guess, you know, the kids that are coming out of college right now, you're looking at somebody with, if they're coming outta college, no experience. They're talking about their salary is gonna be about $70K plus benefits and all that good stuff. So that kinda gives you a frame of reference of what an accountant full-time is gonna cost you. I would say businesses that are sub a million, you're gonna need somebody who you're for sure gonna need a bookkeeping role. And then, you know, probably, at that range, you're gonna be looking at some sort of a fractional controller type of skillset. Maybe not a fractional controller per se, full boat, but a fractional controller skillset. The difference between the bookkeeping and the controller is gonna be a bookkeeping's, mostly a data entry function. But really good bookkeepers are very good at quality control. But that controller level function is really gonna be focused on the quality control, and then how do we package the financials so that they're meaningful to the business. Once you get past the controller function, now you're into the CFO function. The CFO function or the finance function, which is different from accounting, is gonna be focused on things that are future focused. Like, how do we do forecasting? How do we do budgeting? How do we get you funding? How do we raise funds? Where should we be doing that? Banking relationships, things like that. So it really just depends on where your business is and its life cycle. Hiring sooner is always better than hiring later. But also you don't want to overspend on your finance function because it's gonna take resources away from the other pieces of your business that you're using in order to scale, which is gonna make it difficult for sure. And you probably just don't need it until you're several million dollars in revenue.
Mike: Yeah. And you know, once I got our CFO, there's all of sudden you start hearing terms that I've never even heard before in my entire life, you know, and I took accounting and things like that, but I remember one, because it's my favorite golf course. He goes, "Hey, I see that you're not doing like Augusta or something." And I'm like going, I've been there, the Augusta Rule. But he is like going, "No, you need Augusta." And I'm like, you know, I'm waiting for him to like
Chris: What does that even mean?
Mike: So talk to us a little bit for these entrepreneurs out there, because kind of the CFO is kind of, you know, they can do your taxes, they can do your financials, but they also look at the founder themselves, say, "Hey, this is how you can maximize you being an entrepreneur, maybe creating generational wealth by saving or deferring things." What are some of the different ways that I know that our entrepreneurs may not know about that you can tell us, you know, a little bit about, "Hey, you should be doing these different types of things." And who, it's not the CPA does that 'cause the CPAs really don't provide ROIs, right? I mean, they just kind of punch out.
Chris: They might. A good CPA for sure is gonna give you an ROI for sure. Anybody that you hire really should give you an ROI in the finance function. It's easier to measure some of it than others, but you should be getting an ROI on the tax side, like the CPA, fairly simple to get an ROI and to figure it out. So what am I paying my CPA and then what are the tax savings that I'm gonna realize by using that person and having them explain to me the different tax strategies that I can implement. And then actually implement them. So yeah, there's a definite calculable ROI, with working with a CPA. I think it gets harder in the bookkeeping controller, fractional CFO space. It's just not tangible. Some of it is, some of it's not. But it makes it just a little bit harder. On the CFO side, it depends on what sort of skillset that CFO has. Not every CFO even has a financial background. So some of them come out of the tax world. Some of them are CPAs, some of them aren't. Some of them come out of operations, some of 'em come out of sales. It's kind of wild. So you just need to understand exactly what that person's skillset is. And what exactly that they can help you with. You know, things that founders really should be thinking about. I would say the lowest-hanging fruit is gonna be entity structure. Most businesses I would say are LLCs, there's a smaller population that's gonna be a corporation. But then looking at how your entity is formed and then how you want it to be taxed, that's gonna kind of tie into what our long-term strategy is gonna be? What's our exit strategy gonna be? You should be thinking about that earlier than later. I would say entity structure is probably the biggest low-hanging fruit that you should be. You should be thinking about it.
Mike: Yeah. And you know, I also realize that a lot of the number crunching CPAs, I guess there's, I didn't know this either. There's two different offices, an in-home office. There's like a short form deduction than there's like the longer form and most of them that I dealt with just due the short. It's an easier version of your home office deduction. And there's this other one. They're like, well now you're losing a lot of money because, and you know, there's a lot of people that are virtual offices now and it's like if they took the extra 5 or 10 minutes or however long, it doesn't do the long form way of the home office deduction. So is, you know, is that true? There's two different ones.
Chris: Yeah. You know why that usually happens? Because there's no conversation on the front end. So when you're thinking about your tax prep and how that goes, your CPA probably gives you some sort of a tax organizer and it probably asks you about the home office deduction. You may or may not answer the questions depending on, like you just may or may not, right? Everybody's different. You may or may not. If you don't, what the CPA's gonna do is they're gonna look at whatever last year's tax return said, and they're gonna do the same exact thing. Right? Because the rationale there is, well, I'm getting them this tax benefit, I don't have the rest of the information. We're probably up against the deadline. They're not gonna give me what I need or they don't have what they need or whatever the reason is, right? So at least the CPA's got you some sort of benefit. The way that we handle things like that is we send out a standardized tax organizer. We make sure that all of it gets filled out relative to the home office deduction. We send you a template, like we want this template filled out for sure. We need to know square footage of the home. We need to know what you're spending on electricity or you're spending on the internet, blah, blah, blah, blah, blah. So you finish your organizer. Great. Cool. Then we have another conversation and we go through the organizer together. And that conversation is key because then we make sure like what you provided makes sense, and we got everything that we needed. We've already got a relationship with you, so we know kind of, sort of what we're expecting. I know that you work for me, or I know that you've got three kids, or I know whatever we have because we have a relationship. So if I know these things, and it doesn't make sense with what you put on your organizer. Now, I can say, "Hey Mike, what's going on here?" He's like, "Oh yeah, you know, I forgot about whatever." So we can kind of work through this together. So you take the first blush at it, we make sure that it's fully baked together, and then you end up with a tax return that's gonna benefit you the most because we've taken all these things into consideration. So that's another really good example of what kind of a tax account you are looking for? Is it gonna be somebody who's just gonna churn and burn through a bunch of 1040s in the tax season? Or is it somebody who's gonna, you're gonna have that relationship with, you're gonna pay for it. But in theory you're gonna get that ROI.
Mike: Absolutely. I can't believe I kind of bitched about, it's like, "Oh my God, it's so expensive for these guys," you know? And then like, I wish I could have paid that five years ago and found those guys, you know? 'cause it's so, so worth it, everyone. To actually have someone listen and get to know you and get to know your business and talk about listening and talking how often as a business owner, entrepreneur, minimum, or, and then how often should we discuss with you our CPA or advisor on a yearly basis?
Chris: It's a good question.
So we have business owners that talk to us like once a year. They're gonna tend to either be micro businesses or they're gonna tend to be lifestyle businesses. Generally.
Mike: Okay.
Chris: If that's you, that's fine. Once a year is probably good enough. Things aren't really changing that much. You kind of are where you are, you're doing what you're doing. Once a year is probably fine. If you're trying to grow a business, I would say that quarterly is probably the bare minimum. Monthly is better. Yeah. So our preference is to meet monthly. We start every conversation with the same three questions. What's going well in the business? What's not going well in the business? How can we be most helpful? Then the conversation kind of goes from there. So you build that relationship, you start to understand what's going on in the business. I tell all of our clients that good accounting and especially good advisory cannot happen in a silo. It's just not possible. We try really, really hard. We cannot read your mind even a little bit. If we don't know what's going on in the business, if we don't know what's going on in your life, like we just can't advise you. It just is what it is. We see what's happening in the numbers, but that doesn't tell the whole story. You have to have that context to really bring it together. So monthly is most definitely better. Having those conversations is absolutely crucial. After we ask those three questions, then we go through critical issues. Those are things like, "Hey, you've got an estimated tax payment coming up." "Hey, you had this really weird transaction last month, you know, stuff like that." And then what we do is we get into the financials that happen last, we tell the story. These are things that I'm noticing. This is what I'm paying attention to. This is what you need to be paying attention to. And then that's pretty much the meeting. But having those meetings once a month is super crucial. Especially, if you're trying to grow a business.
Mike: Yeah. We've talked about the CPA advisory side. You're also a CVA. You told me earlier, you can actually evaluate the businesses for sale or
Chris: Correct.
Mike: Potential.
Chris: Yeah. Value of business, essentially.
Mike: Value of the business.
Chris: So, what's your business worth?
Mike: What's it worth? So what are some of the things? Here's what I've known, you know, after buying and selling businesses, that most entrepreneurs don't think about selling their business until they're selling their business.
Chris: Yeah.
Mike: You know, they should start before they open the business, what their exit strategy is, right? So, talk to us a little bit about what are some of the things that business owners should be thinking about while they're working and then as they're planning to sell, so that you can evaluate and get them the most out of their business?
Chris: Really good question. One thing that I would be doing on a consistent basis is talking to my financial advisor. Different from your accountant, different from your CPA. Your financial advisor. Your financial advisor's, gonna have a picture of like, what is my retirement gonna look like or what's my next chapter gonna look like? That conversation. So one of the things that you wanna know in the back of your head is, what do I need to sell this business for? What do I need to save along the way, so that I can be comfortable in whatever the next phase is of my life. So having that number in the back of your head, super important. So that's number one. Number two is gonna be just understanding what somebody is gonna be buying when they're buying your business. Most probably what that's gonna be is cashflow, really, is what they're looking for. They're really buying cashflow. There are instances where they're just buying the assets and the assets are worth, the business is worth whatever the assets are worth in total. That does happen. But for the most part, you're looking to buy either a process or a client base or underlying assets that aggregate it together, generate cash flow above and beyond what those things are worth, right? So somebody's gonna be buying the cash flow, okay? How do we get cash flow and how do we make our cash flow more valuable? So the obvious answer is there is some sort of a revenue number and some sort of a profit number on that revenue. And we want that profit to be actually turning into cash. We don't want it to just be book profit. We want that to actually be turning into cash. Okay, cool. So we have this cash flow machine. That's great. In order to increase the value of your cash flow machine, what you need to do is de-risk your cash flow machine. So what does de-risking look like? It looks like it has really good policies and procedures. It looks like having a trained team. It looks like the owner is not having to be working in the business and being crucial to the operation of the business. In other words, the owner doesn't have a job, the owner actually owns a business. Those are two very different things. But just thinking about how you can de-risk those cash flows to make it so it's not necessarily dependent on you. It's stable, it's growing. A buyer can come in and they can just say, "Oh, this business kicks off a million dollars in cash." That's what I'm gonna get when I come in and it's not gonna be this risky thing, it's gonna blow up in my face. So those are really the things you should be paying attention to. Also paying attention to the working capital, but I would say that's probably like the third consideration. But knowing what you need to sell it for, knowing how to get your business to that level and what that's gonna look like for you. Super important.
Mike: Perfect. Chris, how can people get a hold of you?
Chris: Yeah, absolutely. Best way to find me is on our website and that's betternumbers.cpa. betternumbers.cpa.
Mike: Is there anything else before we leave that you'd like to inform our listeners? Something that maybe I didn't hit on?
Chris: I don't think so. You did a great job of hitting all the important points. The one thing that I would just say is, it's super important to have a relationship with an accountant, somebody who is gonna have your best interest in mind, somebody who's gonna be proactive, somebody that you've got an actual relationship with. It's worth its weight and gold for sure. And just find that person that you really click with who has an operating model that is gonna be similar to what it is that you need.
Mike: Yeah. And ladies and gentlemen, it has saved me hundreds and hundreds of thousands of dollars, once I realized that I needed a better CPA. It is absolutely worth it. Chris, thank you so much for coming on The Richer Geek Podcast. Have a wonderful day.
Chris: Thanks. You too, Mike. Appreciate you having me on.
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ABOUT CHRIS HERVOCHON
Chris Hervochon, CPA, CVA is the founder of Better Numbers, a firm that provides outsourced accounting and tax services for growth-minded entrepreneurs, especially marketing and creative agencies. Before running his own firm, he spent a decade in forensic and corporate accounting and finance. Chris has been featured in major industry publications and is a frequent speaker at accounting conferences. He was selected for the AICPA Leadership Academy and was named to CPA Practice Advisor’s 40 Under 40 five years in a row. Outside of work, Chris enjoys family time, golf, Metallica, and cheering for the Philadelphia Eagles.