Is Your CPA Right for You?

The New Year brings so much joy.  A fresh new start, our annual visit from Cupid and a new spring season filled with hope and color.  Yet, just around this joyous bend lurks the proverbial grey cloud that we call tax season (sigh).

Likely from thoughts of courtship inspired by Valentine’s Day and the certainty of April 15th, this time of year lends to a common question (in one form or another): “How do I know if my CPA is right for me?”  I thought I would share some common questions I hear from clients and feedback I received from a couple of local CPAs and long-time firm friends of Beacon Pointe.

When is Turbo-Tax no longer appropriate?

First, if you don’t want to do your own taxes, then Turbo-Tax is no longer appropriate.  In theory, Turbo-Tax should calculate the numbers just as an accountant would.  However, like any software program, the output is just as good as the input and the quality of the input depends solely on your understanding of the questions and your desire to give them enough thought.

Our CPA suggests that, regardless of desire, you should consider turning to a preparer or CPA if you have additional sources of income above and beyond W2 wages (i.e. business income, royalties or investment related income).

What’s after Turbo-Tax?

If you’ve made the decision to “trade-up”, you will then need to decide whether you want to use a tax preparer (i.e. H&R Block or Jackson Hewitt) or a CPA.  CPA’s may be found within a tax-preparation organization like H&R Block or they may work as an individual or part of a larger partnership. Tax preparers are not required to pass a certification test to prepare tax-returns.  In addition to a certification test, CPA’s are also required to fulfill state education requirements.

The complexity of your tax situation should drive this decision.  Business income, partnership interests, rental properties and/or sizeable taxable investments are situations that would warrant the use of a CPA.  A tax preparer will be sufficient for a typical family of four with a mortgage and retirement savings.

How do I find a CPA that is right for me?

All of the CPAs we spoke with believe that referrals are your best source for finding a CPA.  A family member, co-worker or neighbor may point you in the right direction.  Your financial advisor may also recommend a CPA or provide in-house tax preparation as part of their advisory offering.  In most situations, I recommend working with a CPA that is separate and independent from your financial advisor, for two reasons: one, it is most important to work with a CPA that specializes in the areas that you need and will likely differ from your advisor’s other clients, and two, be wary of competitive investment management fees that include accounting services.  Remember, you get what you pay for.

When trying to determine if a potential CPA or preparer is right for you, simply asking them to describe their typical client can be very insightful.


How much should I pay?

Tax professionals typically charge in one of the following ways:

  • Flat fee per form
  • Fee based on prior year’s cost, adjusted for changes
  • Hourly rate
  • Flat annual fee

Some CPAs will have different fee schedules that can be adjusted based on your needs.  One of the CPAs we spoke to said that a good CPA will let you know when it is more cost effective to pay an annual fee versus an hourly rate.

What other things should I consider?

Preparation and filing are not the only services that should be considered.  A good tax professional can offer additional services such as identifying savings strategies for the self-employed or record keeping tips to lower your tax liability in future years.  One service that should not be overlooked is help in determining quarterly taxes due and, if so, calculating payments.  Additionally, a good tax professional should be open to speaking with your financial advisor (and vise versa) for year-end planning.

Succession planning is also important, although not often at the forefront of the interview process.  One of the advantages of working with an individual CPA is that he/she may manage their practice in an effort to provide deeper relationships with fewer clients.  However, without additional partners to continue the relationship, your CPA search will start anew when he/she ages or retires.

Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

© Beacon Pointe Advisors. All Rights Reserved.


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