Having the right CPA on your team can be critical to your financial success, especially for affluent individuals or families facing high annual tax bills. Yet depending on your circumstances and goals, the top CPA in your area may not always be the best fit for your needs. That’s why it’s essential to do your due diligence and consider a variety of factors when choosing a CPA.
Here are three factors to consider when choosing the right CPA:
While most CPAs are technically proficient, not all focus on tax minimization. Indeed, many CPAs are backward-looking, focusing solely on reporting what happened during the last tax year.
While your tax return may be correct with this type of approach, you may also be paying more than necessary in taxes each year. On the other hand, a CPA who looks to the future can help you thoughtfully plan and implement tax minimization strategies to help lower your lifetime tax bill.
When searching for a CPA, the following questions can help you determine if they’ll help minimize your tax liability:
- Do you offer forward-looking tax planning recommendations as part of our work together?
- What tax minimization strategies do you commonly use with your clients?
- Based on what you know about my situation, what are some of the tax minimization strategies you would recommend?
Their answers can help you determine if they have the necessary expertise to help you achieve your objectives.
Ideally, you want a CPA that works with clients like you. They’re more likely to be familiar with your unique circumstances and proactively offer solutions that match your needs.
For example, if you’re a high-earning professional with restricted stock units, investment income, and rental properties, your CPA should understand these issues inside and out. Alternatively, if you’ve just inherited a windfall and are trying to minimize your tax bill while understanding the tax implications, you want a CPA that specializes in these areas.
When searching for a CPA, start by identifying the unique attributes of your financial situation. For example:
- What stage of your life or career are you in?
- What are your various income types, sources, and total amounts?
- Are you self-employed or do you own a business? How is your business structured?
- What is your total net worth?
Once you have a better idea of your financial needs, you can then look for a CPA with relevant experience and know-how.
Lastly, once you’ve found a CPA who meets your technical needs, make sure they’re also someone you like and trust. While your CPA doesn’t need to be a dear friend, it’s often easier to develop a strong working relationship with someone whose personality pairs well with you and your family.
In addition, if you currently work with a financial advisor or wealth manager, consider asking for a CPA referral. Many financial professionals have close working relationships, and your financial advisor likely has at least one CPA they can recommend. Ideally, your financial advisor and the right CPA will work together to ensure the strategies they implement are in line with your financial goals.
Sherwood Wealth Management provides personalized wealth management services to help our clients organize, grow, and preserve their assets. Please contact us if you’d like to learn more about how we work with affluent individuals and families in Aspen, CO, and beyond.
This article also appeared in the Post Independent: How to Choose the Right Tax Pro.