14 Reasons Why an Accountant Is Worth the Money

By Max Wong on 11 December 2015 0 comments

Anyone who is at all familiar with me knows that my yearly earnings put me squarely in the economic category commonly referred to as the Working Poor. So when I mention that I pay $550 a year for an accountant to help me with my finances, people typically give me that sad look that they reserve for mediocre subway violinists and ugly babies.

And then there's the thick pause in the conversation when the other person decides against asking this question out loud: Um, don't you write about personal finance?

In answer to the silent, questioning looks, and in defense of my financial decisions, there are so many reasons why my accountant is worth the money.

See also: How to Find the Right Accountant for You

1. An Accountant Is Cheaper Than Therapy

Oh my God. What if I forget something?

I would rather get oral surgery than do my own taxes. My financial life is complicated. I own a rental property. I run two separate businesses out of my home. I got 1099 forms from five different companies last year. I have a grant. I go to school part time. There are so many moving pieces in my life that just organizing my paperwork in preparation for my tax meeting with my accountant stresses me out.

As a reasonably organized person who spends a lot of time thinking about personal finance, I'm in that dicey position of knowing enough to get myself into trouble, but not enough to get myself out. I would rather pay and be sure that my finances are in order than spend hours filing my own taxes and still feel dread.

Additionally, my accountant is available to answer my financial questions all year long. While some accountants bill by the hour, my accountant rolls my calls about health care costs and asset depreciation into that yearly $550 flat fee.

2. They Can Save You Time (and Time Is Money)

I do my taxes once a year. My accountant does taxes all year long and all the livelong day. Guess who's better at doing taxes?

My accountant is a virtuoso with a calculator. She can hit the keys with the speed and precision of a concert pianist. Doing your own taxes isn't rocket science. That said, my father-in-law is actually a rocket scientist and even he uses an accountant! Why? Because it's cheaper for him to outsource his tax chores to a professional, so he can use the time he saves to make money doing something he enjoys.

My accountant also enjoys reading up on the latest changes in the tax code. Reading changes to the tax code is something I am sure that I don't want to do even once, never mind making it a yearly tradition. Because she stays on top of her game, she is able to help me make the best choices about how and when to spend and save money.

3. They Can Recommend Legal Loopholes to Save You Money

Every year I guest lecture at a university in London. My accountant helps me figure out how to arrange my lecture schedule so I can write off 10 days in London as a legitimate business expense, even if I don't work all 10 days. While I get paid a small stipend per class by the university, that amount usually only covers what I have to pay for the round-trip airfare from Los Angeles to London. While I wish the university paid for my travel expenses, and I didn't have to wait months to get my "reimbursement" via my tax return, just the fact that I can have a cheap trip to London every year is a huge perk that I wouldn't enjoy if my accountant hadn't stepped in.

4. They Know What Is Not Deductible

It's very common for people who work from home to write off part of their home as a deduction. However, since there are so many screenwriters typing away in their guest bedrooms and so many software designers banging out apps in their garages, the IRS and the state of California got wise to this loophole. Despite denials by the IRS that the home office deduction won't immediately raise a red flag in Audit Land, my accountant has seen first-hand how the IRS doesn't like it if you mix your business workspace with your personal space.

If the IRS audits you, they will look for evidence that your home office is not a pure workspace. This means that if you've got a copy of Dam Beavers downloaded onto your office computer or your kid's English paper is sitting in your office printer that the IRS can call your computer and printer "multi-use equipment" and you will not be able to write them off.

Since the upper threshold for the home office deduction is $1500, it's safer and sometimes more lucrative to write off every single business item in the home office from the computer to the tape dispenser, instead of going for the floor space deduction.

Even people who have the tricked out garage-turned-office can get into trouble with home office deductions when they try and sell their homes. Home offices are categorized as business property by the IRS, which means that depreciating your home office can negatively impact your capital gains, and subject you to Section 1250 costs.

Oh. You don't know what Section 1250 costs are? Neither did I until my accountant told me.

5. They Know What Is Deductible

I have Dam Beavers downloaded on the home office computer. Luckily my husband is an environmental designer for video games so this, and every other game subscription, controller, and console IS a work-related tax deduction for us.

A good accountant will be able to go through your personal and business expenses with a fine-toothed comb to find missing deductions that you never imagined.

6. A Good Accountant Is Like a Truffle Pig, But for Money

In addition to sussing out deductions, a good accountant can sometimes alert you to other missed opportunities. When my husband was in the process of selling his old house and buying our current residence, I asked my accountant to look over his financials to see if he'd missed anything. In addition to finding $8,000 dollars in missed deductions from previous years, she also alerted him to the fact that he was possibly due payment by a petroleum company for mineral rights.

Even most Angelenos don't know this fact: Los Angeles sits over the third largest oil field in the country. Oil and natural gas companies are drilling and fracking under a large part of the city that includes residential areas like Beverly Hills. To make a long story short, my husband's previously unknown mineral rights were worth over $3,000.

$11,000 is a pretty good gift-with-$550-tax-preparation-purchase, don't you think?

7. An Accountant Can Help You Plan for the Future

My accountant knows that my goal is to retire at age 55. Since longevity runs in my family, I have to budget and save for at least 45 years of retirement. To that end goal, she recommended that I start socking away money in a heath savings account, which has a triple tax advantage, in addition to my IRA and other retirement funds.

8. They Can Pull You Out of the Fire

I have been paying taxes since I was in middle school and I have yet to be audited. I say yet because just the specter of an audit sets the tweaker part of my OCD brain ablaze. I just know an audit is hiding behind every bush, just waiting to leap out at me when I least expect it.

Luckily, the small, rational part of my brain knows that if I am ever audited, my accountant will come riding to my rescue. I know that not only will she interface directly on my behalf with the IRS, but she will also save me a ton of worry because I know with her supervision that my books are in order.

If you are like one of my friends who didn't file personal income taxes for, oh, seven years because she just couldn't get her act together, an accountant can cut through the chaos and help you get back in the government's good graces. You will have to pay fees, but an accountant can do triage and stop the financial bleed. Either way, an accountant is a great ally to have by your side during an audit and can save you time, money, and stress.

9. Never Miss a Deadline Again

Every year I make it my goal to finish my taxes by February 15. Some years I fail miserably. Luckily on those years that I suck at scheduling, my accountant files for an extension, so I never get dinged with a late fee.

10. You'll Stop Giving the Government a 0% Interest Loan Every Year

While most people worry about owing money at tax time, getting a huge return every year isn't the best financial move. Instead of overpaying and getting a refund, that money could have earned interest in your account. An accountant can run the numbers and help you find your sweet spot where you get a refund as close to zero dollars as possible and still owe nothing.

11. A Good Accountant Is a Trusted Advisor

My accountant views her job as providing solid information to her clients, even if it's bad news. I just scheduled a lunch with my accountant so my husband and I can ask her advice about refinancing our mortgage on our second home and ways to save more aggressively towards retirement. Because my accountant has no emotional attachment to either our home or our plan to retire as expats, she provides us with an objective point of view that is based sole on running the numbers and not on magical thinking.

12. They Can Teach You Best Practices

I always feel better after talking to my accountant, even if she's giving me bad news. Knowledge is power. The better I understand my financial picture, the better choices I can make in the present and in the future.

Every year, when we sit down for our annual tax meeting, I ask her what I could do the following year to improve my financial situation. Since I am that person who gets exactly no pleasure out of balancing her checkbook, yet tends to get trapped in the details, my accountant has worked with me over the years to develop a bookkeeping system for me that is super simple, doesn't involve a spreadsheet (which hurt my brain), and still provides me with the big picture.

13. They Prevent You From Accidental Criminality

When you've got a lot of little financial irons in the fire, it's easy to forget that the money in your PayPal account from your eBay sales is actually income, and the crates full of trash-picked crap you are selling on Craigslist is inventory. My accountant makes sure that all my miniature businesses are operating legally, at least from the financial perspective. Accidental tax evasion has got to be the dumbest and least sexy way of breaking the law. I can do better.

14. No, Not Everyone, Every Year, Needs an Accountant

If you have a single, salaried job, and only a few assets, you could probably jam through your taxes on a 1040 EZ form in one evening with just a pen. Your entire tax preparation cost would be the price of postage. Some people go back and forth between freelance and corporate cookie work, so their need for accounting help changes with their financial circumstances.

And, not everyone hates accounting. For example, my neighbor, who is a professional musician, takes great pleasure in reconciling her books every month. She actually makes a few thousand dollars extra every spring doing other people's taxes.

Do you use an accountant or do you do your own taxes? Please share your low-stress, low-cost tax hacks in the comments section.

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