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JordanB Special user dallas, tx 626 Posts |
Hiring an accountant…… (The more you know)
All accountants are not created equal. In order to do book keeping or prepare taxes there is no formal training required and they are largely unregulated fields. Many book keepers advertise as accountants and it can be hard to tell who is qualified from who is not. I’d like to talk about judging some of the designations and what they mean. Certified Public Account (CPA) - CPA’s are regulated at the state level by each state’s board of public accountancy. The requirements to become a CPA vary slightly from state to state but generally include- at least 150 hours of college credit classes including 30 hours of upper level accounting courses and about 20-25 hours of upper level business courses. They also have to pass the 4-part CPA exam (covers Audit, Regulation, Financial Accounting, and Business Environment and Concepts). They also generally must have a minimum of a year or two of work experienced under a licensed CPA. Enrolled Agent (EA)- Enrolled Agents are regulated by the Department of the Treasury and are licensed to represent taxpayers at all administrative levels of the IRS- examination, collection, and appeals. To become an Enrolled Agent one must either work for the IRS for five years in a position that requires the interpretation of tax law or pass the Special Enrollment Exam (SEE) administered by the Treasury. They also have to pass a background check. Enrolled Agents are generally only involved in tax work; although some offer book keeping and other services as well. Attorney- must have graduated from an American Bar Associated law school. Generally 3 years beyond a Bachelor’s degree. In order to get into law school a Bachelor’s degree is required from any discipline. If hiring a tax attorney look for the designation LLM, this can indicate a post law degree specializing in tax law. All three of the above are licensed to practice before the IRS under what is known as Circular 230. Before hiring any of the above it is a good idea to talk to them about your needs and see what their particular experience is. Many CPA’s specialize in audit or financial accounting review and do limited taxes. Some CPA’s only do tax work. I would suggest looking up the CPA on the state board of public accountancy website to make sure they are in fact licensed and have not had any disciplinary action taken against them. Attorneys can be verified against the state bar website. Beware of any person offering larger than usual tax refunds or promising anything that sounds too good to be true. Often, it probably is. Remember there is no such thing as a free lunch. Also beware of any tax person offering to take a questionable deduction or credit. You can take a pretty aggressive tax position, but remember, you may have to defend it to the IRS. Hiring a CPA or attorney (or EA) to represent you in an audit or at appeals can cost a LOT of money. So make sure you take this into consideration. Attorneys are often good for specialized tax work. They are also very helpful if you are planning on getting involved in a tax controversy. Many attorneys will tell you that you need an attorney to help you file an election to be an S-Corporation and to start an LLC. Many CPA’s (and even EA’s) can do this type of work for a lower cost (just ask). There is a wide variety in prices between individual CPAs, EAs, and lawyers. Generally EAs are a little cheaper than CPAs and attorneys are much more than both. But…some lawyers are cheaper than some CPAs and so on and so forth…..if price is a concern, don’t hesitate to get a second opinion. Anyway…I just wanted to throw out some info that may or may not be of use. I follow this forum rather closely, but don’t contribute that much. Most of the information and questions seem to be concerned with marketing and related matters. My expertise and experience is more from a technical perspective (tax, accounting, regulatory matters, etc). |
Tim Friday Elite user 485 Posts |
I used Dave Ramsey's Endorsed Local Provider ELP tool to find my accountant and have been pleased. He also has ELP's for real estate, investing, and more https://www.daveramsey.com/elp/tax-services
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Mindpro Eternal Order 10587 Posts |
Great post and information. Glad to see more here than marketing as you mentioned.
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Orlan Loyal user WA 223 Posts |
Thanks for the info, and for the suggestions about ELPs. This might come handy in the future.
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