Many of us view the start of a new year as a time to take a rest from the hectic pace of the holidays or to take up new resolutions. Then, just as we are beginning to financially and physically recover from our holiday revels, tax statements remind us that April 15th is fast approaching. How you view this annual rite very much depends upon your stage of life and filing status.
Generally speaking, a very young filer, or the filer without need to itemize, does not view this event as any more than a nuisance. However, with changing marital status, property, diversified sources of income, and the addition of children, tax planning and preparation can take on gargantuan proportions. The task can seem positively daunting, but with a good tax accountant, you might just be able to come close to returning to those carefree days as a single filer of a 1040EZ.
The caveat is that you have to find and develop a relationship with a good tax accountant. With a little preparation and research, finding the right certified public accountant (CPA) can be a piece of cake. The first place to begin your search is with your friends and colleagues.
Consider among your acquaintances and co-workers whom you consider to have a great deal of financial know-how. The choice might not be immediately obvious. Just because someone drives a new car every year or wears designer clothing does not necessarily mean that they are smart with their finances.
Instead, look for people who have acquired real assets such as multiple properties. Because they are more likely to itemize their tax returns these individuals are probable candidates for using the services of an accountant. Another possibility, if you are in the right position, is to approach the chief financial officer of your company or maybe one of the staff accountants.
They may well appreciate your recognition of their expertise and give you a great recommendation. When all else fails and it seems as though no one you know uses the services of an accountant, you can always turn to the phone book or internet for the names of local accountants.
Whether you find your accountant through a friend or by letting your fingers do the walking, your next step is to do a little research on your candidates. It is not necessary to spend hours on the telephone or surfing the Internet. Rather, the best place to get answers to your questions is with the potential accountants themselves. Set up an office visit.
It may seem like a drag, but remember, you will be entrusting this person with your most intimate financial information. It is imperative that you not only know their experience and credentials as a tax accountant but also share a basic rapport. Is their office a disaster? Consider that to be a red flag. Some people work well in chaos, but do you really want to chance an audit by Uncle Sam should your return lack some crucial receipt? Also, do you like the person you are considering hiring? A relationship with a good accountant can last a lifetime.
You will be seeing this person every year, maybe several times a year depending on your needs. They will need to know the details of your family, spending habits, marital status, etc. If you would put headphones in order to avoid speaking to this individual on a commuter flight, you certainly will not be comfortable sharing your financial details! Okay, so assuming the office is organized and the accountant is affable, what’s next? Credentials.
Not all accountants are the same. For instance, some specialize in planning while others work only with businesses. At a minimum, you are looking for someone who has a bachelor’s degree in accounting and is state-certified as a public accountant. As a certified public accountant, he or she has passed a rigorous exam in accounting. Since not all states require an accountant to have a four-year degree it is best to ask about his or her educational background.
The next thing you are looking for is certification as an Accredited Tax Preparer (ATP) or Accredited Tax Advisor (ATA). Accountants can and frequently do hold more than one certification. The certifications are voluntary and require much more than merely filling out a form and paying a fee. A CPA with ATP and ATA credentials has completed extra coursework and exams above and beyond the necessary in the specific area of taxation.
In order to even take the CPA exam, most states require some accounting experience and it is almost a guarantee that an accountant with the aforementioned credentials is not fresh out of school. The importance of experience cannot be overemphasized. In fact, sometimes years of tax experience can make up for missing credentials. However if going with a credential-bearing accountant seems the best route, you can verify individual accreditations through a quick perusal of the National Society of Accountants member directory.
License status and disciplinary history can be obtained by contacting your state’s board of accountancy. Last but not least, check for complaints with the Better Business Bureau. Your state board of accountancy may only show disciplinary actions resulting from complaints, but not a history of complaints themselves.
Tax planning and preparation does not have to be a overwhelming task if you have got the right tax professional on your team. Remember, no matter the background of your selected accountant or whether his work is guaranteed, you are ultimately responsible for the information on your tax returns.
If your financial circumstances dictate that you seek the assistance of a professional, make absolutely certain you go with someone you can trust. Lastly, help your accountant by keeping all of your records in order and not making unrealistic demands. Good accounting takes time and, unless you are willing to risk an audit, does not stray into gray areas.
So, do yourself a favor by making certain you have the right accountant for your needs and then making him or her a key element in maintaining your financial well-being. Even if great wealth is not one of your personal goals, you and your tax accountant can work towards a positive and relatively stress-free outcome for this next and for all of the April 15ths to follow.