Tuesday, March 12, 2013

How CPAs can help you save on your Taxes

CPAs can help us save us money and legal problems
A CPA is a Certified Public Accountant. An accountant in the United States has to pass the Uniform Certified Public Accountant examination and gain relevant experience to be certified as a CPA.

A licensed and active CPA can audit financial records and provide public attestation of financial records; though in some states there may be exceptions to this rule.

CPAs along with tax attorneys and EAs (agents enrolled with the Internal Revenue Service (IRS)) take up jobs dealing with preparing and filing of tax returns for individuals and small businesses. Along with basic tax return preparation, CPAs also guide their clients in matters of personal financial planning, savings, investments, exemptions and deductions, such that their client can save money and subsequently save tax.

When you engage a CPA you have engaged a guide for yourself, a guide who will help you with your personal finances and if you have a small business, with your book-keeping, diversification of investments, procurement of business equipment from a financial perspective and many such consulting services.

Now, you might say, that a normal tax preparer can also do the same, why should we engage a CPA? To give you a small example, there are many people who can suggest treatments and medicines, but we go to a certified and qualified doctor when we have an ailment. This is somewhat similar. As we have seen, a CPA is different from other tax preparers because of their qualifications, the examination requirements and the experience requirements before they can be qualified as licensed CPAs. So, a person who qualifies as a licensed active CPA, is bound to be hardworking and because of his or her sheer efforts in getting the license will not step out of line and ensure that the customers get value for their money.

Before selecting a CPA you need to check the following –

1. Does the CPA have an active license?

2. Does the CPA deal with clients similar to you, so that you are sure that the advice is correct.

3. Is the location of the CPA good for you, as you may have to have meetings with the CPA.

4. Do your personalities match or are you comfortable with the CPA do discuss personal and financial matters. This is important as you will be engaging the CPA for a longer duration and you do not want any clashes.

A CPA can guide you through your financial difficulties by helping you make the right investments and saving for the future, as well as helping you with your tax returns and filing them and responding to IRS queries, if any. But, keep in mind that you should choose the right CPA that suits you. Also, a CPA can only help you if you are truthful about your income and personal life, like dependents, marriage, divorce, kids, education, etc.

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