Why You Need a Good CPA
When tax season comes around, it’s often tempting to file your own taxes to avoid paying for a professional. But if you’re self-employed, own rental property, are an active stock trader, have experienced major life events in the past year, or simply have a non-simple tax situation, hiring a good certified public accountant is likely to be your best bet. Here’s why.
How is a CPA different from a CFP?
First, what’s the difference between a CPA and a certified financial planner? They sound quite similar, but they play very different roles. According to budgeting expert Miriam Caldwell, a CFP “offers advice on budgeting, debt management, and investing,” while a CPA “offers advice on unusual or highly specific tax situations.” Though there’s some overlap, a CPA is much better suited to helping you and your business navigate the tax season. A certified financial planner is useful to have around when seeking advice about investments and managing finances. But when tax season comes around, business owners and individuals with complex income situations should turn to a certified public accountant.
CPAs are up to date on the latest tax code
One of the most time-consuming aspects of filing your own taxes is getting up to date on the ever-changing tax code. This is an important step because business owners need to be careful to respect the latest tax laws surrounding their operation, or else they could face potential audits and fees. Additionally, CPAs can help protect you against innocent clerical errors, as well as help you find tax breaks and deductions you might otherwise miss on your own. “Using a professional tax preparer can save time, reduce stress, avoid DIY errors, and potentially uncover tax savings that even the best tax software might not surface,” says New York Times editor Janet Berry-Johnson. If you do get audited, a CPA can negotiate with the IRS on your behalf to reduce costs. In fact, just through tax savings and ensuring you do not incur unnecessary fees, a good CPA can pay for itself and then some.
A good CPA saves you time and stress
Running a business is already a difficult and time-consuming task without factoring taxes into the equation. Even if you’re not a business owner, hiring a good CPA can give you the peace of mind that comes with knowing that when you file your taxes, all the rules have been followed and there is no IRS-related headache waiting around the corner. If you’re filing more than just a W-2 or a 1099-INT form, a CPA can save you valuable time you can spend on the things that truly matter. According to Caldwell, there are many situations in which you should pursue an accountant’s expertise: for example, if you make more than $200,000, if you own rental properties, if you plan to leave an inheritance to your children, and more. “You may only need to visit the accountant once, or only speak to them once a year around tax time,” she writes. “Either way, it’s financially prudent to have an expert you can consult if you have questions.”
Hiring a good CPA can help you and your business tremendously around tax season. Even if your tax situation seems uncomplicated, hiring a CPA can help you discover that it was more complex than it seemed on the surface — and thus save you money or help you avoid trouble with the IRS.