Most business owners do not go into business to become tax experts, bookkeepers, payroll specialists, or cash-flow forecasters. They start a business because they are very good at something. They might be skilled at serving clients, building products, leading a team, creating a better customer experience than their competitors, or solving a problem that matters to a lot of people.
But as revenue increases, the financial side of the business becomes way too important to treat as a mere afterthought. Money can stat to disappear through missed deductions, poorly kept records, late decisions, knee-jerk reactions, weak cash-flow controls, and a tax return that only reports what has already happened in the past. That is why the right CPA can be one of the most valuable professional relationships a business owner builds. In fact, in our experience, a good CPA can truly be worth their weight in gold.
For this feature, Healthy Lifestyle Media spoke with Sonia Narvaez, CPA, owner of CPA Accounting & Services of Orlando. Narvaez has operated her private accounting practice since 1997, after working as an auditor with Deloitte & Touche LLP and with Fortune 500 companies. A University of Miami School of Business graduate, she has built her firm around personalized tax planning and accounting guidance for both individuals and business owners.
Summary
Her main point is simple yet powerful: tax preparation and tax planning are not the same thing. Filing a return records the past. Planning gives an owner the chance to make better decisions while there is still time for those decisions to matter.
In an age when costs, payroll, financing, and compliance pressures can change quickly, keeping more of what a business earns is not simply about paying less tax. It is about understanding the financial foundation of the business, protecting cash flow, and using money intentionally. The right CPA does not just fill out forms. They help owners see the financial consequences of decisions before they become expensive surprises.
Michael Coudriet, editor of Healthy Lifestyle Media, sat down with Narvaez to discuss the mistakes she sees most often, why monthly planning matters, and what business owners should look for in a CPA relationship.
The Interview
What are the most expensive financial mistakes you see small business owners make on a continuing basis?
I think many business owners do not understand what they can write off or how to take advantage of the legal strategies available to lower their income tax. A lot of people pay much more tax than they should simply because they do not understand the tax rules.
Rightfully so, many clients are focused on doing what they do best: running their business. But they are not hiring the right help. I meet business owners and individuals all the time who tell me they went to an accountant, and the accountant basically just filled out paperwork without asking more meaningful questions.
Those people may owe $30,000, $40,000, $50,000, or even $100,000 in taxes, and they are simply told to pay it. There may be no discussion of solutions, even though there are probably things that were not taken into account in their books or strategies they could use to lower the liability.
Our goal is to help clients direct money into investments and strategies that benefit them, lower their taxes, and help them keep more of what they earn instead of simply sending it out in taxes. Typically, we save our clients an average of $100,000 in tax savings each year!
What should a business owner be doing every month, not just at tax time? Is there anything they typically overlook?
It depends on the size of the business, but even a small, new business should start with a tax plan and implement that plan monthly. It is surprising how often a business runs for six months without doing anything and without understanding that a tax plan needs to be put into action throughout the year.
At the end of the year, people forget half of what happened. We have clients who come in and we have to reconstruct the entire year. We do our best based on our understanding of the business, but we may miss data or the client might, and that process is lengthy, stressful, and expensive.
Having a tax plan from the beginning is important. If an owner cannot afford it right away, it should be one of the first professional investments they make. Otherwise, they may end up paying that money in taxes anyways.
Where do business owners most often overpay in taxes? Is there a certain category or type of deduction they are missing?
That is an excellent question. First, people need to understand that the rules generally allow deductions for expenses that are ordinary and necessary. But there has to be a specific tax basis, and someone has to take the time to truly understand the business.
For example, a restaurant can write off food purchases as a cost of sales. But a business like yours or mine cannot treat a dinner out as a cost of sales. It is a different type of expense altogether.
Every business has different treatment for certain expenses, and owners may not be aware of that. Administrative offices, corporate offices, automobiles, mileage, and home-office questions can all require careful consideration. What am I doing every morning for my business that I did not even realize? Is my home an administrative office or a corporate office? Do I have another office outside the home? How do I make those things work for my benefit within the rules?
There are judgment calls. A car dealer can write off a vehicle because they are a car dealer. But if someone buys a Lamborghini and calls it a marketing expense because they use it to meet clients, we have to look carefully at the facts.
If a realtor is making $5 million or $10 million a year, regularly meets with high-end investors, consistently uses the vehicle for client meetings, and is clearly marking and documenting it as marketing, that may be easier to support. But someone else buying the same vehicle may have a very different situation.
The expense has to be ordinary, necessary, reasonable, and well documented. People often say, “My neighbor did it.” But you do not understand your neighbor’s finances, business, or documentation. This can become complex, and professional judgment is very important.
There are no hard-and-fast rules for every situation. An actor may need to write off hair, clothing, and appearance expenses because that is part of the work. Most of us cannot write off our everyday work clothes. An influencer may be able to deduct hair, makeup, and some attire depending on what they do, because their appearance may be central to attracting business. It comes back to the specific business and the facts.
What records or financial reports should every business owner understand?
One of the biggest issues I see is people mixing funds. I always tell people, “do not commingle or mix the money.” Always open a bank account for the busines, even if you do not have a separate LLC or corporation yet. Open a separate bank account, put the business money in there, and use it for business expenses.
Get a credit card, even if it is a personal card, and use it exclusively for business. Mixing funds can be very difficult to defend. At the end of the year, owners may not know how much money they really made because they mixed it with other funds, including a spouse’s funds.
That can be difficult from both a tax standpoint and a legal standpoint. We have sat down with clients who put everything through personal accounts. With some transactions, we can reconstruct the records, but we may lose a meaningful percentage of legitimate deductions because the support is no longer there.
Once you keep the information in the same bank account, that account becomes a record. Keep mileage records, too. We give clients access to tools that can automatically track trips, and they can identify whether a trip is business or personal.
The business bank account and one or two credit cards used only for business only keep everything in the same line. Even if we have to go back a year later, it is much easier to trace. That is the easiest and best way to keep records. Refuse to not mix them.
At what point should a business owner stop doing their own books or taxes?
I think every person who gets into business should start with at least some guidance. They should understand what they should and should not do. It may seem like an easy field, but it takes a lot of professional judgment.
Before starting a business, or right around the time they begin, an owner should understand the basics. If they can prepare their own taxes and keep their books correctly, the tax return itself is not necessarily the difficult part. The difficult part is compiling months of activity correctly.
Whether you get a consultation or ongoing advisory support, get a CPA onvolves as soon as you can so you can start off on the right foot.
If you are going to start a business, you have to invest in it. If you are not investing in it, you are already starting with a problem.
How much do tax rules and compliance requirements change from year to year?
The IRS changes things back and forth, and notices for basic compliance or late filing are coming out more often because systems are getting better. The general audit rate is not enormous, but higher earners and businesses with significant income tend to receive more scrutiny.
Every new administration has an agenda, and tax laws do change. In recent years, there have been changes for new businesses that have made a difference for many clients, allowing more money to stay in the economy rather than immediately going to the government.
At the same time, many benefits do not disappear overnight. They are often phased down gradually because the impact on society cannot simply change all at once. But business owners should stay on top of the changes, but again, there’s a lot of moving parts and people like me do this 24/7. It can be difficult to keep up with.
For example, an owner may look back three years later and realize that a change began years ago and now they have a large tax bill. If a professional is following those changes for you, you are in much better shape.
What does good tax planning look like compared with simply filing a tax return?
A tax plan starts with implementation every month. Then, every three to six months during the year, you make a full evaluation of where you are and what your income tax liability is likely to be.
I have a client who doubled his income this year. We do the tax implementation and the books, but now we are looking at the situation and saying, “Oh my God, we may be looking at a million dollars in taxes.” The question becomes, what do we do now to lower those income taxes?
We look at strategies that fit the client’s goals and provide a future benefit, while also reducing the income tax liability. This is the basic process:
#1 – Get started with a tax plan
#2 – Implement it every month
#3 – Assess where you are continuously during the year
#4 – Prepare to invest money in strategies that may help you depending on your goals and lifestyle
Then the money can be used for something else. The investment and the strategies should put the client in a better position, and they should be able to enjoy the rest. They earned it.
How can an owner improve cash flow without simply trying to sell more?
Tax planning is one part of cash flow. Owners need to understand what, how, and when they use their money. They need resources they can draw on when they are cash poor without carrying debt long-term and incurring unnecessary interest expenses or possible late fees.
For advisory clients, we look at… at least a year of income history and tell them what they can and cannot realistically afford. Obviously, anything can change, but based on the client’s history, we can project up or down and start looking at how to make the best decisions.
For example, can I do this defined-benefit plan that may cost $100,000 this year? You may look great this year, but another year could be a cash-flow challenge. Things change year to year, and we get that. Owners need to understand how to leverage debt, how to use money at the right time, and how to manage receivables and payables. Those things can make a huge difference in cash flow.
What warning signs tell you a business may be headed for a financial problem?
I have seen businesses make a lot of money and still get into serious trouble. It is sad because the cost of putting the business back together can be enormous. A lack of organization and a lack of professional help are major warning signs to me.
It is like going to a doctor: you do not just hire the first doctor. You need to look for someone who fits, someone who understands your needs and is looking out for them. It takes effort, but it is worth the effort.
I saw a company make more than $20 million in its second year of business. There was no cash-flow forecast. Instead of taking a step back, they invested heavily in equipment and upgrades and became cash poor.
They did not pay employees properly and did not pay payroll taxes for six months to a year. Eventually the IRS came after them. They ended up owing a great deal of money, had to close the business, and went out of business after two very successful years. That’s sad.
The business was growing and looked great from the outside, but the infrastructure was weak. Nobody was saying, “We need help. We need to structure the foundation of this business properly.” They were building on air yet did not realize it.
For someone in that position, they may need CFO-level help. Someone has to sit down and examine receivables, payables, inventory, and the way the business is being run. It can become a complete reconstruction and a major management issue.
Organization and structural buildout are so important. I do not care how big you get: the fall can be very high. We have to get the foundation right. That’s super important!
What is foundational for building a business?
Gather the information first. Starting a business requires preparation. Learn how to run the books. Understand what you are allowed to do and what you are not allowed to do. Understand marketing and employee management, even if you are using contractors and do not have employees yet.
Understanding the business side of things is essential for success. Take courses if possible. Seek professional help. That is the foundation.
If the foundation is weak, you are going to overspend, overhire, or even underhire. There has to be a balance. Understanding that balance takes time and education, or you have to hire the professional help we have been talking about.
Like any building, the foundation has to be strong. If it is weak, then as soon as there is a crack, you can come right down fast and hard!
What should someone look for when choosing a CPA or accounting firm?
First, understand where you are in your business. Are you just starting? Are you already established? What do you need right now?
If you are starting, get help to get started and set up properly. If you are in the middle of the business and do not have the structure you need, look for CFO help. There has to be a fit between you and your CFO. Take into consideration their personality, availability, your priorities, your goals, and of course, your budget.
For us, it works when we walk clients through these phases of growth. With a new business, we may say, “Start with these basics. Come back in six months or a year. Let us see where you are, and then maybe we move to the next phase.”
For a medium-sized business that is overpaying, overhiring, underhiring, or carrying too much inventory, we need to go back and fix those things. Nothing will be perfect, but there has to be a basic foundation that supports all those aspects.
Some businesses need CFO help and tax help. Some already have hiring and operations under control and mainly need taxation support. Others may not be doing badly, but they hire people and classify them incorrectly when they should be employees. Those small things are part of the business infrastructure.
If we do not do it right, six months from now a worker may collect unemployment and the business may face a state issue it did not expect. The kind of help needed depends on the stage of the business and the fit.
Good quality help normally costs money. But if you find the right fit, it is a great investment. If a CPA or accountant is not producing value and a return on what you are investing, especially through reduced taxes or stronger financial decisions, you need to think twice.
Tax preparation is putting completed numbers on a tax return. That is not the same thing as ongoing guidance. The experience of the CPA really matters. Their years behind the desk helping businesses, compatibility with the owner’s goals, and someone who truly understands the owner should all come into consideration.
Business owners have families, different ages, and different goals. One owner may want to retire in 15 years. Another may want to leave the business to their children. They need someone who understands those goals, and can help them plan for them correctly.
Get Help Before the Numbers Become a Problem
No responsible CPA can promise a particular result without reviewing an owner’s situation. But the lesson from Sonia Narvaez’s experience is clear. Waiting until tax season to think about taxes, records, or cash flow often limits the choices available and will often have you paying more taxes to Uncle Sam.
The earlier a business owner understands their financial position, keeps business activity organized, and works with qualified guidance, the more opportunities they have to make sound decisions. For owners who want practical help with tax planning, bookkeeping, accounting, payroll, cash-flow management, and business advisory needs, Sonia Narvaez and the team at CPA Accounting & Services of Orlando invite you to start a conversation.
CPA Accounting & Services of Orlando
Sonia Narvaez CPA PA
448 S Alafaya Trail, Suite 4
Orlando, FL 32828
Phone: (407) 382-6658
Website: www.cpaaccounting.biz
Email: sonia@cpaaccounting.biz
Business hours
Monday-Thursday: 9:00 AM-5:30 PM
Friday: 9:00 AM-12:00 PM
Saturday-Sunday: Closed
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