As my client’s Personal Chief Financial Officer (CFO), I help them come up with creative design
ideas, coordinate with other advisors and help implement their financial objectives in regards
to taxes, legal, investments, cash flow, and insurances. It is not unusual for these families to
need an expert in one or more of these specific areas and don’t have one. We find, vet and
introduce that person. Oftentimes they already have their own expert; the most frequent
expert every family has is the person who deals with their taxes.
This month’s article is on the 5 different professionals who can prepare and file
a tax return.
Our families talk with us about their taxes, the collaboration between us and their tax preparer
is vitally important. Let’s go through the different types of service providers that can help you
with your taxes:
An individual who prepares, calculates, and files income tax returns on behalf of individuals and/or businesses. With a sufficient understanding of tax law, a tax preparer can review all of a client’s personal information, including Social Security numbers, income statements, and personal & business expenses, to determine which expenses and circumstances may result in tax deductions or credits. Based on the results of calculating a return, a tax preparer can also offer advice about the best steps to take to reduce their tax liability in the coming year.
Enrolled Agent (EA)
Is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. They focus narrowly on tax arrangements for businesses and individuals. They are considered experts on tax-related issues.
Anyone who does accounting functions can call themselves an accountant, even without a professional degree in accounting although usually an accountant does have an accounting-related degree. Often, accountants with no certification perform tasks such as bookkeeping, looking after general accounting matters, and taking care of some tax-related matters. However, all accountants with some training and experience can perform an extensive range of services. Approximately 50% of all accountants are CPAs.
Certified Public Accountants(CPA)
Have a more flexible and expansive repertoire than EAs. States approve CPAs, while the federal government approves EAs. They help clients set and achieve financial goals through money management, tax advice and financial planning. These goals could include anything from putting down a payment for a home to opening a new branch of business across the country. CPAs are the go-to if you’re looking for a broad scope of expertise.
Use their in-depth knowledge of tax and business laws to advise clients on the legal aspects of their taxes. They can also prepare their clients’ tax returns and are authorized to represent their clients before the IRS on all tax matters.
In summary any one of these individuals above can help a client and at different times we have recommended every one of these five to our client base. Most of the time we recommend a CPA for our clients because they will benefit the most from an expert who is capable of a broader range of tax thinking, can help outside of areas of tax preparation, has the requisite training and experience to provide our clients with the advice they require. We have a process to vet any of those five regardless of where you live throughout the country. We do not accept nor do we provide any “finder’s fees” to our CPA’s or them to us. We will not hire a CPA to be a part of our firm, nor will we accept working in their firm. We avoid conflicts of interest. Feel free to contact us if you want or need any 1 of the 5 above or questioning if the current one you utilize is best for your circumstances.
This report is intended to be used for educational purposes only and does not constitute a solicitation to purchase any security or advisory services. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Commonwealth Financial Network® nor Best Times Financial do not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Kevin Best CFP®, MS, AEP® Personal CFO Best Times Financial Planning 345 Woodcliff Drive, Suite 2A, Fairport, NY 14450 Office: (585) 504-3600