Having the right expert on your team can be critical to your financial success. However, depending on your circumstances and goals, the top tax expert in the Roaring Fork Valley may not be the best fit for you. Because of this, it’s important to conduct due diligence and consider a variety of factors when making your decision.
1. What are their credentials?
The CPA (Certified Public Accountant) is the undisputed gold standard in the industry. However, if your situation is not complex, you may find it easy to work with an EA (enrolled agent). EAs focus specifically on taxation, while CPAs typically handle taxes and more.
Because the professional performs an important function and has access to some of your most sensitive personal information, it’s always a good idea to check if they have an active license and regulatory deficiencies on their record. Two places where you can check this are e.g Colorado Department of Pprofessions and occupations (select “Accounting”) and CPAverify.
2. Do you accept new customers?
Many tax professionals in the Roaring Fork Valley are not. So you may have to contact half a dozen to find two or three who have a vacancy. You can check outside of the valley if needed, but you should stay in Colorado as each state has its own tax rules.
3. Do they use tax minimization strategies?
Ideally, the tax professional you work with will be able to capture and report exactly what has happened over the last year and help you implement strategies that will lower your future tax bills.
The following questions can help you determine if they are a good fit in this regard:
- Do you provide forward-looking tax planning recommendations as part of our collaboration?
- What type of tax minimization strategies do you typically use with your clients?
- Based on what you know about my situation, what tax minimization strategies could you recommend?
4. Do you work with clients like me?
You should hire an accountant to work with clients like you. They are more familiar with your circumstances and proactive in offering solutions that meet your needs.
For example, if you’re a high earner with restricted stock units, capital gains, and rental properties, your CPA should understand these issues inside and out. Alternatively, if you’ve just inherited wealth and are trying to minimize your tax burden while familiarizing yourself with all the tax ramifications, you’ll want a tax professional who specializes in these areas.
Here are some questions to ask yourself:
- What stage of life or career are you in?
- What are your different income types, sources and amounts?
- Are you self-employed or do you own a company? How is this business structured?
- What is your net worth?
Once you understand some of the important characteristics that define your financial situation, you can start looking for a tax professional with the appropriate experience and expertise.
5. Do they feel good?
Once you’ve found a tax professional that fits your needs from a technical perspective, make sure you like and trust them. While your chosen professional doesn’t have to be a good friend, it’s often easier to build a strong working relationship with someone whose personality matches your own.
In addition, if you currently work with a financial advisor or wealth manager, you should consider asking them for a tax advisor’s recommendation. Many finance professionals have close working relationships, and your financial advisor likely has at least one tax specialist to recommend. Ideally, your financial advisor and tax specialist will work together to ensure that the strategies they implement are in line with your financial goals.
Brian Littlejohn, MBA, CFP®, CFA is the Founder of Sherwood Wealth Management in Basalt. Brian provides clients with bespoke investment management and comprehensive financial planning services to help them organize, grow and protect their wealth.