Accountants and CPAs play an important role in one’s financial health.
According to Cindy Kula, senior tax manager at Walthall Rea, and Carol Treska, senior manager at Pease & Associates, both in Cleveland, individuals should consider consulting a professional for any life changes.
“It’s being proactive rather than reactive when you have a financial life change,” Treska said. “For business owners, especially small business owners, CPAs can help interpret financial results and help them plan for the future. There is a lot of news that Congress has made efforts to make tax compliance easier, but for many people, they still need a CPA to take advantage of all the opportunities to lower tax liability, especially in a life change.”
Kula said there are many reasons people don’t get an accountant. But, that doesn’t outweigh the bonus of consulting a professional.
“That is because of the cost and that they feel their tax situation is not complicated,” she explained. “But any kind of tax software they use is only as good as the human input. I use Turbo Tax outside of my work software and the questions can be misleading. YouTube is good for some things, but the reasons why you should (consult an accountant) is because you have a complex situation like rental properties or a business, or life changes.”
The professionals said financial life changes run the gamut.
“Changes in life situations can include getting married, buying a home, questions about retirement goals, or if they are having any financial issues, like trouble meeting their mortgage or monthly payments,” Kula noted. “They can review your budgets and our intake and outflows. They will be able to make sure you’re matching or help you save a little. Many people are very averse to spending money on something they think they can do, but the added benefit of the professional does sometimes outweigh the cost.”
Treska added, “Some of the life changes might be that they are having another child, they’re making a lot more money, open their own small business or have a large capital gain. Those would be some examples of a life change that would trigger a meeting with an accountant. Another would be if they are selling investments or a business. Anything that will affect your finances in some way, whether that is a major or minor thing. There are also ways you can plan around things to limit the tax liability associated with it. If you sell something before consulting an accountant, you’ll miss out on that opportunity.”
The most important life change to consult your accountant about would be selling a business, Treska noted.
“There are so many opportunities to structure things to limit the tax liability,” she added.
Kula said even though many individuals feel they are knowledgeable enough to do it without help, it’s still beneficial to have a professional look everything over.
“People now are well-educated and they know what they have,” she said. “But, they don’t know if they are in trouble or not. Are they saving for the goals they intend to save for? They may be missing the boat on some expenses. It does help to have a professional still look at something. And if someone decides to do DIY, they should still have someone look over the return every so often to see if it’s right.”
Choosing the right accountant for your situation might be the hardest part, the professionals said.
“They should interview several CPAs and make sure that they think the person can be a trusted adviser for them,” Treska said. “Also get referrals from friends and family before you make a choice. That is an important input.”
Kula said “Ask for referrals, talk to friends and family and see if you can have a half-hour interview to see if there is compatibility. You want someone who you can trust. People who call me up, I tell them to come in and talk with me first. I want to make sure I’m as comfortable with you as you are with me. Nothing will get done if one side isn’t in sync with the other.”