People who need financial advice often turn to financial planners and accountants. Which professional you choose will depend on your personal and business requirements. In some cases, you may even need both.
Personal and business finance tend to be more complicated than they seem, and it only makes sense for people to look for professional help, particularly when it comes to making investments and filing taxes. If these are your main concerns, what you need is an accountant. If you need help managing your money, making investments, or maintaining a large inheritance, a financial planner is your best choice.
When Do You Need an Accountant or a Financial Planner?
You Need an Accountant When:
You are facing a specific situation regarding taxes, such as when you have a business, are earning over $200,000, planning to bequeath money or properties to your children, own rental properties, or are expecting to receive a sizable capital gain.
Put simply; an accountant will assist in areas of your finances where you need professional help with money and taxes. It is important to work only with an accountant who is knowledgeable in taxation and bookkeeping, and the laws and regulations that cover them.
An accountant is also the best professional to hire if you own or rent out real estate property. There are certain similarities between owning real estate and owning a business, and an accountant’s skills can prove invaluable.
If you are facing a complicated tax issue, consider hiring one. While many people can do their taxes using tax software, those who run a business or have significant investments may not have enough knowledge in tax laws to prepare their taxes correctly. It is also a good idea to hire a tax specialist or a CPA to help you if you decide to purchase property or adopt a child, for example, or earn/receive a sizable amount of money. In most cases, you might see an accounting specialist once every year, usually during tax time.
You Need a Financial Planner When:
You intend to invest, get out of a debt situation, or need advice on how to budget. A financial planner can work as your financial adviser when you are drawing up a budget plan or help you design a financial plan to help you create and build wealth. For these services, a financial planner usually charges a fixed fee. If he/she sells a financial product or customizes investments for you, he/she may earn a commission instead.
A skilled and knowledgeable financial planner will also help you manage your money wisely. If you are in debt, they will help you budget and plan your repayments before helping you make investments. The best financial advisers will make sure that you can handle your debt, pay it off, and maintain a budget before starting an investment.
Some financial planners work on their own, but many are connected with banks. If you prefer someone who is backed by a financial company, ask your local bank or ask friends who they can refer as a financial planner to you.
Another situation when you will need a financial planner is when you are getting ready to invest. Financial planners know the best investments for your needs and will help you decide which ones to put your money in.
A financial planner is also the best professional to turn to when you want to create a realistic budget. A budget may seem like a simple undertaking, but surprisingly, many people fail to make a plan that works for them. A financial planner can assist you not only in creating a budget that you can follow; he/she can also help you plan for savings and retirement.
You Need Both an Accountant and a Financial Planner When:
Your financial concerns are more complex and complicated, such as when you own a business. Both an accountant and a financial planner can work to help you keep track of and manage your finances and taxes. In some cases, you might even find an accountant who doubles as a financial planner.
When working with an accountant and a financial planner, trust is a key element. Both the client and the service provider should be able to trust one another, particularly since their transactions involve not only money but also the future of the client and his/her family. A professional in this field should have enough knowledge and experience to explain the intricacies of your finances so that you are fully informed. If there are things that you do not understand, these professionals should explain details in a way that is clear to you.
An accountant and a financial planner should also explain issues that will affect your finances and have an impact on your present and future decision-making. They should also help you examine the risks associated with financial steps you intend to take. You should also be able to understand and interpret any financial documentation that is related to you, your business, or investment.
A financial planner and an accountant play an important role in your financial success. They are your partners in helping you manage your money and properties, create wealth, and keep yourself financially stable.