It is common to think that only businesses and corporations need accountants. However, many individuals have found it beneficial to have personal accountants. If you think that hiring an accountant to take care of your personal finances is a waste of money, you may be surprised to know that they often end up saving money for their clients instead.
What is a Personal Accountant?
Although the title ‘accountant’ is often used as a blanket term, it can refer to several different types of professionals who specialize in recording and managing financial transactions. Each role has different skill sets and limitations. Some of these are:
Bookkeepers – Bookkeepers are people who maintain your financial books. They are responsible for recording income and expenses and their tasks can include paying bills and disbursing salaries. Bookkeepers keep a close watch on account balances and compile reports for accountants.
Accountants – Most accountants hold an undergraduate degree. They can record financial transactions and create detailed reports and analyses. General accountants can prepare tax documents, but they cannot sign them on behalf of their clients unless they hold CPA certification.
Certified public accountants (CPAs) – CPA-licensed accountants have passed the strict CPA examination, completed their continuing education requirements, and earned their state certification. CPAs have the authority to file tax returns on behalf of their clients and handle their tax audits.
Who Needs a Personal Accountant?
While it can be argued that everyone should hire a personal accountant to keep their finances in order, some people need them more than others. Here are some people who should consider hiring a personal accountant.
Managing finances can be a hassle, especially if you run the business alone. You have to meet with clients, track inventory, fulfill orders, manage invoices, and plan your business strategy. Instead of spending your time struggling with filing receipts, creating invoices, and organizing your financial records, hire an accounting professional.
An accounting professional will not only help you with all these tasks, but they can also perform them twice as fast. In addition, they can help you to calculate your tax payments and make sure that you make the most of available tax deductions. Furthermore, a personal accountant can give you valuable advice on the right business structure and help you with the documents required to secure bank loans for your business.
The more property you own, the more complicated your tax situation becomes. Real estate investors have to deal with a myriad of financial management tasks such as keeping transaction records, estimating quarterly tax payments, and filing annual taxes. With issues such as renovations and maintenance taking precedence, it can be easy to fall behind on your financial responsibilities.
A personal accountant can help you to manage the financial records of each property and also take care of your assets as a whole. If you have tenants, they can help you to deposit rent checks and maintain an updated record of payments. This ensures that your financial documents will be ready for tax season. If you plan to invest in more property, your accountant can examine the health of your finances and help you make a calculated decision.
Individuals who earn a greater income are subject to higher taxes. Hiring a personal accountant can help you to find additional possible deductions and thus retain more of your income. If you have multiple sources of income or a mix of wages and investments, an accountant will assist you in navigating the complex tax reporting situation.
Should you have a sudden increase in income, you may be flagged by the tax department for an audit. An accountant can help to guide you through this process and prepare the appropriate documentation required. You may also face complications when receiving large sums of money—for instance, from winning the lottery or an inheritance—and you will need professional advice on managing and paying the right tax for this money.
Anyone who pays tax
Some people are good with numbers while others are simply not. It is common to be completely lost during tax season. Everyone has to pay their quarterly taxes but incorrect estimates will result in you receiving a bill from the government instead of a tax return at the end of the fiscal year. Because tax regulations can be intricate, having trained accounting professionals like TaxFig to estimate your taxes and calculate your deductions can help.
Anyone who wants to plan for the future
Major life events such as your child going to college and your retirement in the Caribbean can be expensive. If you have a dream for the future and want to take serious steps to achieve it, a personal accountant can enable you to make sound financial decisions. Your accountant can also create an investment or savings plan to help you set money aside. When you need to cash out, they can assist you in handling your financial logistics.
Money can be a boon and a burden at the same time. Hiring a personal accountant is a prudent decision to stay on top of your finances. Contact an accounting firm for a tailored tax plan that suits your needs.