By Craig S. Cody, CPA, Certified Tax Coach.
Less than 40% of agency owners rate their accountant excellent.
That's not my opinion. That's what 100 marketing and PR agency owners told us when my firm ran a study with Audience Audit in 2022. The number that stayed with me wasn't the 40%. It was the gap next to it: 72% said they wanted to hear from their accountant at least monthly, and about one in three actually did.
Most of those owners weren't angry. They just couldn't tell what they were paying for. A return showed up, it was correct, the fee was reasonable, and nobody could say whether anything had been planned or only recorded.
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You can find out in one conversation. Here are the five questions, what a planning answer sounds like, what a preparing answer sounds like, and what to do with the score.
Ask your CPA these five, in this order: what did you change for me last year; when is our next meeting before year end; what's my reasonable compensation and when did we last revisit it; am I a specified service business and what in my file documents that; and what's the ceiling on my retirement plan and why that plan.
A planner answers all five with specifics. A preparer answers most of them with a pause. Three or fewer specific answers means you're buying preparation, whatever the invoice calls it.
Not what you filed. What you changed.
A planning answer names a decision. "We moved you to an S corporation in March and set your salary at a number we can defend." "We adopted the cash balance plan in October and you funded it in February." "We put your two contractors' agreements in the file before the year closed." The decision has a date, and the date is inside the year, not after it.
A preparing answer names a document. "We filed your 1120-S and your two state returns, and we got you an extension." All true. All things that happen to every business that files. A return records decisions that were already made; it doesn't make any.
The tell is the pause. If your CPA has to think about it, the honest answer is nothing, and that's useful to know before you ask the other four.
If there isn't one on the calendar, nothing in the rest of this article is going to happen for you this year.
A planning answer is a date. The shape of a planning engagement, the way my firm runs it, is a one-time tax plan and then a monthly relationship, not a spring appointment. The month doesn't matter as much as the fact that it exists and that it lands before December, because the moves that set an agency's bill have deadlines that a spring meeting can't reach.
A preparing answer is a season. "We'll get together when your books are ready" means April, and April is a conversation about last year. Our 2022 study put a number on this: 72% of agency owners wanted at least monthly contact, and roughly a third got it. The other two-thirds weren't being ignored. They were being served by a firm whose calendar is built around filing dates.
This one has a right answer and most owners have never heard it.
An S corporation has to pay a shareholder who works in the business reasonable compensation before it pays distributions. The IRS says so in plain language, and the courts have listed what counts: your training and experience, your duties, the time you put in, what comparable businesses pay for the same work, whether there's a formula behind the number. The case everyone in my profession knows is Watson, where an accountant paying himself $24,000 a year against six-figure distributions lost in the Eighth Circuit.
A planning answer is a number with a reason and a date. "We set it at $X in 2024 because comparable agency owners at your size earn that, and we revisit it every year when we run the plan." A salary set five years ago at a third of today's profit is a problem in both directions: too low and you're the Watson case; too high and you've paid payroll tax you didn't owe.
A preparing answer is "whatever it was last year." That's not an answer, it's a carry-forward. And the salary number moves four other numbers with it, which is why it belongs in a plan and not on a worksheet. If your agency isn't an S corporation yet, the threshold I use is owner profit solidly between $250,000 and $350,000; below that the election usually costs more than it saves.
This is the question a marketing or PR agency owner should ask first, because it's the one most likely to be silently wrong.
The 20% qualified business income deduction under section 199A phases out above an income threshold for "specified service trades or businesses." The regulation lists thirteen fields: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, investing, trading, dealing, and any business whose principal asset is the reputation or skill of its owners. Advertising and marketing are on none of them, and the regulation goes further: it excludes sales and economically similar services from the consulting category by name. So an agency often keeps the full deduction at income levels where a law firm or a consultancy has lost it. The deduction is also permanent now; the sunset that was scheduled for the end of 2025 was repealed.
A planning answer names what's in the file. "You're not an SSTB; your engagement letters say media, creative and production; we documented it, and if you ever start billing a large share as consulting we'll look again." That last clause matters. If a meaningful share of revenue is invoiced as consulting, the analysis changes, and a planner knows to check your engagement letters rather than your website.
A preparing answer is a shrug, and the return tells the story. I'll say this plainly, because I see it: many times agency owners don't even know they've been wrongly phased out of QBI, because they're using a tax preparer, someone just putting numbers in boxes, not a strategist. Nobody said anything. The return came back without the deduction, and nobody went back to look. Our 2022 study found QBI in use at 20% of agencies or fewer, with a quarter to 40% of owners saying they had never heard of it.
"Because it was easy to open" is an answer. It's not a plan.
For 2026 an employee can defer $24,500 into a 401(k), $8,000 more at 50, and total annual additions per person cap at $72,000. A cash balance plan sits on top of that with a defined benefit limit of $290,000 a year and a compensation cap of $360,000, which is how an owner of a profitable agency puts six figures away in a year instead of $24,500.
A planning answer names the ceiling and the reason. "Your 401(k) with profit sharing gets you to $72,000; at your profit and your age a cash balance plan on top takes you past $150,000; we chose it because your payroll can carry the employee cost, and here's what the employees get." The cash balance article walks the arithmetic.
A preparing answer is the name of the plan you have. "You've got a SEP." A SEP was the right answer for a lot of businesses at a certain size, and it's the plan a preparer suggests because it can be opened and funded after year end with no employees to think about. It's also capped, and it's rarely the ceiling for an agency owner past the S corporation threshold above.
Score it. One point for every answer with a specific in it: a decision, a date, a number, a document, a reason.
Four or five: you have a planner. Whatever you're paying, the relationship is doing the job, and the next conversation is about which lever comes next.
Two or three: you have a preparer who plans when asked. That can work, but the asking is your job, and you'll miss the deadlines you don't know about. Question 2 is the fix: put the meeting on the calendar yourself and bring this list.
Zero or one: you have a preparer. A good one, possibly. Good preparers exist, and I mean that. But a preparer conversation and a tax advisor conversation are two different conversations, and the second one is the only one that changes the number.
Don't go looking for a better preparer. The fix is to buy the other thing.
The other thing has a shape. It starts with a plan, built once, that walks every decision on the tax planning guide for agency owners: the entity, the salary, the retirement plan, the accounting method, how media sits on the books, the contractors, the states. Then it becomes a monthly relationship, so the decisions get made inside the year they apply to. My firm has never priced that by the hour. What a client pays for is the insight, and then the right numbers in the right boxes. The boxes are the part every firm does. The insight is the part you're asking these five questions to find.
One more number from the study, because it's the cleanest test I know. Only 52% of the agency owners we surveyed had ever filed an extension. Ninety percent of my clients do, every year, on purpose, because an extension is a planning tool and a preparer treats it as a failure. If your CPA has never suggested one, that's a sixth answer.
This is for a marketing, advertising or PR agency owner with a profitable year behind them and a CPA who has never called them with an idea. If you can't answer question 1 yourself, from memory, this article is about you.
It isn't for an owner whose agency isn't profitable yet; the five questions assume there's a bill worth planning around. And it isn't a case against your current CPA. It's a way to find out, in one meeting, which conversation you've been having.
Filing a return isn't a tax strategy. Neither is a correct one.
Ask what they changed for you last year, not what they filed. A planner names a decision made inside the year, with a date: an entity election, a salary number, a retirement plan adopted, contractor agreements documented. A preparer names the returns. Then ask when your next meeting before year end is. If there's no date, you're buying preparation.
Five: what did you change for me last year; when is our next meeting before year end; what's my reasonable compensation and when did we last revisit it; am I a specified service business and what in my file documents that; and what's the ceiling on my retirement plan and why that plan. Score one point per answer with a specific in it.
The salary an S corporation must pay a working shareholder before distributions, judged on factors the courts have listed: training and experience, duties, time and effort, what comparable businesses pay, and whether a formula was used. It's a number with a reason and a date, revisited every year, not a figure carried forward from when the business was a third of its current size.
Usually not. The regulation lists thirteen SSTB fields and advertising and marketing appear on none of them; it also excludes sales and similar services from the consulting category. So an agency often keeps the full 20% deduction where a consultancy would lose it. The exception is an agency that bills a meaningful share of its revenue as consulting, which is why the answer lives in your engagement letters.
$24,500 in 401(k) deferrals, $8,000 more at 50 or older, and up to $72,000 in total additions per person with profit sharing. A cash balance plan adds a defined benefit with a 2026 limit of $290,000 a year, which is how owners with the payroll to support it put well past $100,000 away in a single year.
Not necessarily, and not to another preparer. Decide what you want to buy: preparation is a return that's correct, planning is a set of decisions made inside the year and a monthly relationship that keeps them current. If your current CPA can offer the second, ask for it and put the meeting on the calendar. If they can't, that's the thing to shop for.
If you got through the five questions and the answers were mostly pauses, you already know which conversation you've been having. The next one is the plan.
I wrote a book called The 12 Biggest Tax Mistakes That Cost Agency Owners Thousands. You can request a free copy at the link below.
Nobody's looking out for your money but you. Let's go look together.
Craig S. Cody is a CPA, Certified Tax Coach, and retired NYPD Lieutenant. His firm works with more than 70 marketing and advertising agency owners every month, helping them keep more of what they make through proactive tax planning.
This article is general education, not advice for your specific situation. Confirm your own facts with your advisor before acting.