How to Find a Good CPA for Your Small Business: The 3 Things I Look For
Last reviewed: September 2026 · Educational, not individual advice
A good CPA for a small business asks three things before touching your return: whether you should be an S corp and what salary to pay yourself, how much retirement-plan room that salary creates, and whether they can explain the why and answer the phone in July. The price of the return tells you none of that.
If you are a business owner in Maryland, DC, or Virginia wondering how to find a good CPA for your small business, here is the test I use, why the cheapest quote usually fails it, and the three questions to ask before you hire anyone.
The return that told me everything
A friend asked me last month to look at her company's taxes (details changed). Her complaint was simple: I feel like I pay too much every year. My CPA only files taxes for me. He never helps me plan the taxes in advance.
I asked her two questions. Is your company an S corp? How much salary do you pay yourself?
She did not know either answer. So we pulled the return. Her own company had been paying her on a 1099. No W-2, no payroll. And there was no retirement plan of any kind, not a SEP IRA, not a Solo 401(k), nothing.
I told her, as gently as I could: you can change your CPA.
This is not a story about a bad accountant. Her CPA filed on time every year and never made an arithmetic mistake. It is a story about what happens when you pick a CPA on price alone, and the cheapest quote buys you exactly what it says: someone who puts the numbers on the form and sends it in. Nobody was ever paid to think about next year.
Why an S corp owner paid on a 1099 is the tell
The IRS rule is simple. If you own an S corp and you work in it, you are an employee of your own company. Employees get paid with a W-2. Not a 1099. Not a K-1. The IRS says this in plain words in its fact sheet on wage compensation for S corp officers (FS-2008-25): Schedule K-1 and Form 1099 "should not be used as an alternative to the Form W-2." Being the owner does not get you out of it. The IRS page on S corporation officers and shareholders lists seven court cases, from a veterinary practice to an accounting firm, that all ended the same way.
What happens if the IRS notices? It can treat those 1099 payments as wages. Then the company owes both halves of Social Security and Medicare tax on every dollar, plus penalties and interest. That is the loud cost.
There is also a quiet cost, and it hits every year. No W-2 salary means no room for a retirement plan. A SEP IRA contribution is a percentage of your salary. The company's share of a Solo 401(k) is a percentage of your salary. No salary, no contribution. Zero.
So when I see a 1099 from a company to its own owner, I already know two things. Nobody set a reasonable salary, and nobody looked at retirement. Those are the first two things I check for in a CPA.
The three things I look for in a small-business CPA
1. Do they ask whether you should be an S corp, and what a reasonable salary is?
A good CPA raises this before you do. The S corp election is not automatically right. It starts to make sense once profit is high enough to support a real salary plus the extra cost of payroll and a separate business return. Practitioner rules of thumb put that crossover somewhere between roughly $40,000 and $80,000 of net profit, but it depends on your state, your other income, and what those extra costs actually run.
Once you are an S corp, you have to pay yourself a salary. How much? The tax code does not give a number. The standard is "reasonable compensation," which means roughly what you would have to pay someone else to do your job. The IRS lists the factors courts use on its S corporation compensation page: your training and experience, your duties, the time you put in, what you pay non-owner employees, what comparable businesses pay for the same work, and whether you used a formula.
Notice that every one of those is something only you can tell them. A CPA who never asked about your role, your hours, or your industry could not have set a number that would hold up. The scale of the problem is not small. A 2021 Treasury Inspector General for Tax Administration report (2021-30-042) found about 266,000 single-owner S corp returns over three processing years with more than $100,000 in profit and zero officer compensation, roughly $25 billion of pay that may have gone unreported (Accounting Today's summary). My friend was not unusual. She was typical.
One more question a planning CPA raises in our area and a filing CPA rarely does: the pass-through entity election. Maryland lets an S corp or partnership elect to pay state income tax at the entity level on Form 511, and Virginia has a similar elective pass-through entity tax. Whether it helps depends on the federal cap on deducting state and local taxes and on your own return, so it is a question, not a recommendation. But if your CPA has never mentioned it, they are not looking at your business and personal returns together, and that coordination is most of what tax planning for an owner actually is.
2. Do they ask whether you have room for a retirement plan, and how much?
This is the same question as the first one, seen from the other side. For 2026 the IRS limits are (IRS cost-of-living table, Notice 2025-67):
| Plan | 2026 limit | What it depends on |
|---|---|---|
| SEP IRA | 25% of W-2 wages, up to $72,000 | Salary only |
| Solo 401(k), employee deferral | $24,500, plus $8,000 catch-up at 50+ ($11,250 at ages 60 to 63) | Must run through payroll by December 31 |
| Solo 401(k), employer share | 25% of W-2 wages | Salary |
| Solo 401(k), combined | $72,000 before catch-up | Both |
Illustrative example, 2026 figures: a salary of $100,000 supports a $49,500 Solo 401(k) contribution ($24,500 employee deferral plus $25,000 employer share). A salary of zero supports nothing. If your CPA set your salary without asking what you want to put away for retirement, they solved half the equation. I wrote up the full math, including how much salary it takes to reach the cap, in Maxed Out Your SEP IRA? Look at the Solo 401(k).
The tell here is timing. Employee deferrals into a Solo 401(k) have to go through payroll by December 31. A CPA who only talks to you in March cannot help you with that, no matter how good they are.
3. Can they explain why, and do they answer the phone in August?
I want to hear the reasoning, in plain language, for every number on my return that I could have influenced. "That is what the software did" is not an answer. "We set your salary at X because comparable dental practices pay associates about that, and it leaves room for a $Y profit-sharing contribution" is an answer.
And I want them reachable in August, not only in April. This is not a personal preference. The IRS's own tips for choosing a tax professional put it near the top of the list: look for someone available year-round, who asks to see your records, who does not price the work as a percentage of your refund, and who signs the return with their PTIN.
How much should a CPA cost for a small business?
There is a rule of thumb that circulates on small-business forums whenever someone asks how to find a good CPA: get three quotes and go with the middle. I think it is right, and here is why.
Answering the three questions above takes time. Someone has to read your profit and loss, look at your payroll, look at your retirement accounts, and think about next year. That time has to be paid for. The cheapest quote is cheap precisely because none of that time is in it. The most expensive quote is not automatically better either; sometimes you are paying for a big firm's overhead rather than for attention.
For reference, the National Association of Tax Professionals' 2025 fee study found business-return minimum fees averaging $634, with half of preparers charging between $350 and $850 before complexity add-ons (Accounting Today). Those are minimums for the return itself; a full S corp return with a state filing and payroll coordination usually lands well above them. If a quote for your S corp return comes in far below that range, ask what is included. Usually the honest answer is: the return, and nothing else.
The bonus: operating advice
The CPAs I trust most go one step past tax. They see your numbers every year, and they will say things like "your payroll as a share of revenue is high for a practice your size" or "your supply cost jumped and I do not see why." That is not tax advice. It is a second set of eyes on the business, from someone who has seen dozens of businesses like yours. You cannot demand it, but when you find it, hold on to that person.
When the cheap CPA is fine
I want to be fair here. If your business is small, your profit is modest, and you have no employees, getting the return filed correctly may genuinely be all you need. The three questions above start to matter once profit is steady and the salary decision starts moving real money. At that point the difference between a preparer and a planner shows up every year, and it compounds.
Questions to ask a CPA before you hire one
Call three CPAs. Ask each one the same three things:
- "My business nets about $X. Should I be an S corp, and if I already am, how would you set my salary?"
- "Given that salary, how much could I put into a retirement plan this year, and which plan?"
- "If I email you in July with a question about a hire or an equipment purchase, what happens?"
Listen for whether they ask you questions back. A good one will want your last return and your payroll summary before giving you a number. Then compare the three quotes and take the middle one, unless the conversation told you something the price did not.
How to verify a CPA's license in Maryland, DC, or Virginia
Before you sign an engagement letter, spend five minutes checking two things. First, the IRS directory of credentialed preparers confirms the person holds a PTIN and a recognized credential (CPA, enrolled agent, or attorney). Second, the state board confirms the CPA license itself is active and shows any discipline: the Maryland Board of Public Accountancy for Maryland licensees and the Virginia Board of Accountancy for Virginia. A CPA licensed in one state can generally prepare your federal return wherever you are, but the license lookup is where complaints show up.
Where a financial planner fits
I am not a CPA and I do not prepare tax returns. What I do is sit between the business, the personal balance sheet, and the tax return, and make sure the salary decision, the retirement plan, and the investments are one plan instead of three. That is the core of our planning for business owners, and it works best when your CPA is part of the conversation rather than a stranger to it.
If you own a business in Maryland, DC, or Virginia and want a second set of eyes on how your CPA has set things up, book a call. Bring your last business return and a payroll summary; that is usually enough to answer the three questions in one meeting. More on what we do is on the services page.
FAQ: finding a good CPA for a small business
Can an S corp pay its owner on a 1099? No. The IRS treats a corporate officer who performs services as an employee, and fact sheet FS-2008-25 says Schedule K-1 and Form 1099 should not be used as an alternative to a W-2. Compensation has to run through payroll. If the IRS reclassifies 1099 payments as wages, the company owes the payroll tax, plus penalties and interest.
How much should an S corp owner pay themselves in salary? There is no fixed percentage. The IRS and the courts look at your training and experience, your duties, the hours you work, what you pay non-owner employees, and what comparable businesses pay for similar work. The right number is specific to your business, should be documented, and should leave room for the retirement contribution you want.
How much does a CPA cost for a small S corp tax return? The 2025 NATP fee study puts business-return minimum fees at $634 on average, with half of preparers between $350 and $850 before complexity add-ons. A full S corp return with a state filing usually costs more. Planning work, such as setting salary or modeling a retirement plan, is normally priced separately, either hourly or as an annual fee.
Is a CPA better than an enrolled agent for a small business? Not automatically. Both are IRS-recognized credentials with unlimited rights to represent you before the IRS. Enrolled agents specialize in tax; CPAs are licensed by a state board and can also do audited financial statements. For a one-owner S corp, the individual's experience with owner compensation and retirement plans matters more than which credential they hold.
My CPA never asked me any of this. Should I switch CPAs? Ask them the three questions first: S corp and salary, retirement-plan room, and what happens when you email in July. Some good CPAs simply have not been asked to plan and will step up. If the answers are vague, the response takes weeks, or the fee for thinking about next year is "we do not do that," that is your answer.
Sources
- IRS, Wage compensation for S corporation officers (FS-2008-25); S corporation employees, shareholders and corporate officers; S corporation compensation and medical insurance issues
- IRS, COLA increases for dollar limitations on benefits and contributions (2026); IR-2025-111 / Notice 2025-67; SEP contribution limits
- IRS, Tips for choosing a tax professional (Tax Tip 2025-11); Understanding tax return preparer credentials; Directory of federal tax return preparers
- Treasury Inspector General for Tax Administration, Report 2021-30-042 (August 11, 2021), as summarized by Accounting Today
- National Association of Tax Professionals, 2025 Fee Study, as reported by Accounting Today (December 2025)
- Maryland Comptroller, Tax Year 2025 Form 511 Pass-Through Entity Election booklet; Virginia Tax, Pass-through entities
- Maryland Board of Public Accountancy; Virginia Board of Accountancy
Written by Danni Shen, CFA®, Co-Founder & Chief Investment Officer of Allset Wealth. Allset Wealth is a financial planning firm in Hunt Valley and North Bethesda, Maryland, serving business owners, federal employees, and tech employees across Maryland, DC, and Virginia.
Contribution limits shown are 2026 IRS figures. This article is for educational and informational purposes only and does not constitute individual tax, legal, or investment advice. The example described is a personal anecdote with identifying details changed; the dollar example is illustrative. Talk to your CPA or advisor before changing your salary, entity election, or retirement plan. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities and investment advisory services offered through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial. LPLE and LPL Financial are not affiliated with Allset Wealth.
